Thanks for this column, Maria. My mentor at the beginning of my career in the mid '70's was a Peter Drucker admirer who attributed the "What business are you really in?" question to him -- citing just the railroads example. Nevertheless, I am grateful to you for reminding me of how lucky I was to begin my career in communications and strategic marketing within the insurance industry under the tutelage of someone who began our work with that fundamental question. He and I would follow up that core question with three other questions that our clients probably can repeat decades after he and I left the company:

1. Who is your audience?
2. What are your objectives?
3. How will we know whether you (and they) achieved your objectives?

Some time after we both left that communications department, I ran into a former client. I asked how the folks in the department were doing at serving his needs. He unhappily said, "They do exactly what we tell them to do." Surprised a bit, I asked him what was wrong with that, and he replied, "You guys used to make us think, which meant we did the right thing the right way. I really miss those grillings."

Persistently asking the right questions is at the core of consultative services. It is especially crucial when folks start to talk about innovation. If we can't get a credible answer to a simple "Why are we doing this innovation?" question, limited resources are doomed to be wasted before the heavy lifting even begins. Being a "professional three year old" right at the start of a strategy's development is sometimes underappreciated as a tool to increase productivity, profits, employee retention and customer loyalty.

Thanks again. By the way, I called my mentor about 25 years after our careers had gone in different directions. I specifically wanted to thank him for drumming those core principles into my brain, pointing out to him that I had applied them to work in government relations, marketing research, and strategic marketing. I've asked those questions of Fortune 500 clients and small nonprofits.

True to form, Joe laughed, said something appropriately unprintable, then thanked me for the call and for staying committed to those questions.

Consider thanking your mentors for what you are now sharing with us. It'll be good for all concerned.

Bob Adler
www.adler-strategic-marketing.com

Hi Maria,

Thanks for your article. Very interesting, and to the point.

When there is risk, there is an opportunity. I work in actuarial consulting business - not far from insurance really. We work with pension, health, and other risks, as well as other mathy things that no one else wants to look at.

Lifestyle Continuity is a nice phrase for the customers. Nowadays, managing risk is one of the big things when it comes to having a smooth continuous lifestyle. Of course, in 2008 people wished they had bought some insurance on their 401k and investment accounts.

What I am curious though, is your last question. I am going to rephrase it (and/or expand it). Risk can be a very general term to describe everything that threatens our lifestyle. This I am very familiar with. What else though, besides risk, can be a threat to having an uninterrupted lifestyle. I am sure there are other things out there, I just cannot think of any right now.

Back to risk though. There are two ways of managing risk. One is on the individual level, and this is where insurance products come in. An individual can pay a small premium into a big pool, and when something happens, get back a significantly larger sum back from this pool. Insurance companies determine premiums based on the risk being insured. Nice model really. It goes way back, when villages and communities would combine resources and efforts to help out one unfortunate member.

Another way is on a corporate level. How do insurance companies, for example manager risk. Or big corporations. One solution, price all the insurance products right in the first place. Another one, balance various risks. For example, sell annuities and life insurance - this way the mortality risk is hedged. Another example, sell home insurance, and invest in construction business. Things like that. Finally, a third solution, is to make sure you are always covered for the present value of your risk. This is, for example, what companies have to do with their pension plans.

Don't worry, there is a point to all of this. Back to your question of new ideas and products. What would it take for these large corporations and insurance companies to change the way they look at risk and the way the deal with it. If one comes up with a new way to ensure Lifestyle Continuity, then there will have to be adjustments on the business side as well.

Am I making sense, or am I just babbling at this point?

Thanks!
Sasha

Got it. Risk products need to become something other than just measuring risk. It's about prevention, advance warning, and solutions to an already problematic situation. And of course, many more things that we cannot think of right now.
Thank you! This was a very insightful article!

What's your point? Insurance is going the way of buggy whips? We need a new name to stay relevant? I have been in this business (commercial property and casualty) for over 40 years. I have seen plenty of innovation and it keeps on coming. We don't need cosmetic changes.

Maria,
Excellent article. I think you hit the nail right on the head by letting us know that the industry needs help. I really like your views and I think that the industry needs to be the ones to step back and re-evaluate itself before we are not needed. I am a 30 year old insurance agent so I can see the gen y's perspective and the insurance fields lack of perspective. Insurance needs a spark and I think now is a great time to do it with all of the change going on.

Brandon

Very relevant article. Thanks.

BTW, we see this also in many other industries: automotive immediately comes to mind. Fundamental innovation has not happened since early 1900s when it comes to the product itself - the internal combustion engine. All we have seen is what can only be termed as "creeping incrementalism".

In reality as marketers, how would you go about convincing someone that they need innovative solutions? Our company has developed an innovative means for measuring complexity in products and processes. We have been getting blank stares from the insurance industry when we approach them and offer them a means to address something as fundamental as managing complexity.

It's not just someone else that's taking over the business, it's the government. That's huge. Radical reform calls for counter revolution.

Thought provoking article. Well done.