Archive for the ‘Financial Services & Insurance Industry’ Category

The virtue of strategic consistency

“Adapt or die” may be one of the most over-hyped business phrases of the last decade. The reality is that most firms don’t face disruptive threats. And seasoned leaders understand the serious business risks of poorly designed transformations.

Fortunately, there is another way to ensure competitiveness and growth. Companies that stay true to a winning corporate strategy over the long run can be very successful. How do you do this, especially when unforeseen internal and external events test your convictions?

In an ideal world, leaders craft and follow a clear, compelling and multi-year strategic plan. Realistically, this approach often doesn’t survive more than a few quarters. Headwinds such as slowing customer demand, rising costs, or competitive moves often spur managers on to increase spending, or to make deep cuts. In essence, leaders overreact to short-term noise instead of focusing on the long-term market.

Furthermore, organizational dynamics can lead to management prematurely hitting the panic button. These include:

  1. Some leadership practices have a built-in bias towards quick reactions at the expense of deliberation and patience;
  1. The need to hit short-term metrics to meet goals creates incentives to do things at any cost;
  1. Without the anchor of an existing strategy or priorities, it’s easy for companies to zigzag with no clear direction.

All of this can lead to operational distraction, wasted investment, high employee turnover and a compromised brand image.

Staying the course

Consistency pays off over time. And companies that stick with a good plan will become more efficient and develop better relationships with customers and partners. Importantly, there is no trade-off between speed and deliberation in a strategically consistent business. Staying the course also enables quicker decision-making and follow-through.

Canadian telecom provider Telus Corp. has successfully used strategic consistency. Telus’s focus on service, brand and culture helped it outperform its rivals during the last 15 years, according to a strategy+business article published on Aug. 31. During this time, the Vancouver-based company’s revenue more than doubled to $12 billion and it returned 351 percent to shareholders, making it a global leader in the sector, the article stated.

Staying the course is particularly important in business services, where clients measure performance over years, or decades. For example, the investment-servicing company CIBC Mellon built profitable market share by remaining true to its goals of focusing on clients and reliability.

“Consistency over the long term has been critical to earning the trust of our clients,” said Claire Johnson, senior vice president, strategic initiatives. “Choosing the right strategy and supporting it through ever improving products and services is the key to long-term market success and customer satisfaction.”

Becoming strategically consistent

Any organization can maintain strategic coherency. Here’s how Telus and others have made it work:

1. Define values

Leaders need to define the winning strategic values (i.e. how the company competes and with what capabilities) that work for their firm and use these to guide important decisions and actions over the long term.

2. Take a long-term view

Compensation programs and reporting tools should prioritize long-term shareholder value creation and reflect the performance of key strategic values.

3. Encourage clear leadership

Every employee, supplier and shareholder takes his or her cue from what leaders say, and more importantly, do.  When short-term emergencies arise, managers need to have the patience, support and fortitude to focus on what is truly vital.

4. Understand the relationship between time and change

New events, competitive moves, or technologies often encourage a short-term overreaction at the expense of more deliberate thinking and prudence. Remember what Bill Gates said: “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”

Mitchell Osak is managing director, strategic advisory services at Grant Thornton LLP

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Rebooting wealth management firms

It’s never been tougher to be a wealth manager. A significant growth in assets under management over the past seven years (last week’s correction notwithstanding) has not translated into suitable top and bottom line growth. Many industry observers blame this on structural challenges that belie an easy fix and are not going away in the short term. To reboot profitability and position their firms for growth, wealth managers should go back to the fundamentals and re-examine where and how they compete.

Every company is experiencing strong headwinds including market uncertainty, insufficient scale, poor brand differentiation, fee compression, and rising costs (for regulatory compliance, information technology, etc.). On the horizon is another threat, technology-based “robo-advisers,” such as Toronto-based startup Wealthsimple, which use an automated platform to target specific, tech-savvy segments with a focused value proposition and lower fees.

It is the three “M” wealth management firms — mid-sized, me-too and middling — that face the greatest business risk. They can no longer be all things to all clients or get by merely on the strength of personal relationships. Their best approach would be to go back the fundamentals: re-examine the segments they pursue, choose the best value proposition for the target client and build the capabilities needed to deliver it. While each firm will define their own approach, they may want to consider two strategic opportunities:

The gender gap Most wealth management firms lack the practices, understanding and tools to satisfy and address one large but relatively untapped segment, women. Women create, control and influence a huge amount of wealth — upward of 39 per cent of U.S investible assets, according to research from the Center for Talent Innovation.

The research found that 47 per cent of U.S. female wealth creators (53 per cent globally) and a shocking 75 per cent of women under age 40 do not have a financial adviser. Among the U.S. women that do have an adviser, 44 per cent report they are not understood by their adviser. There is no reason to believe that Canadian female clients are managed or treated any better than their U.S. or global counterparts.

Wealth managers need to gain a deeper understanding of women investors’ needs, requirements and fears using quantitative and qualitative research (advanced tools like ethnography can help here). Insights and lessons can be gleaned from industries such as automobile and consumer electronics that have pioneered female-friendly marketing and product design. Tactics could include: crafting more gender-neutral messages and imagery, employing principles of behavioural finance to remove hidden bias, training advisers in gender-smarts and creating a more collaborative and inclusive client experience.
To best capitalize on this opportunity, consider customizing products and services to suit women, including creating a risk profile that is markedly different (according to a study from consultants BCG) from one created for a man.

“We discovered early on our female clients have unique needs. They look for more collaborative, education-focused advisers with a holistic, long-term approach to financial planning,” said Jennifer Boynton, an investment counsel at Toronto-based RealGrowth, which is growing by focusing on addressing the needs of female clients. “Addressing these needs, while still meeting their investment targets, has enabled us to consistently exceed acquisition, retention, and most importantly, client satisfaction goals,” she said.

Build digital capability Given the wide range of consumer activities that can be done on a smartphone or desktop, it’s surprising that digitization has advanced so slowly in this space. While incorporating new technologies can be difficult, it no longer can be put off. Doing so will help you remain relevant and attract key segments such as high income digital natives or millennials who are very comfortable performing day-to-day activities online.

Furthermore, going digital is vital for streamlining back-office operations, enhancing reporting and improving data and analytics capabilities.

Digital tools can provide clients with mobile, real-time and user-friendly views of their portfolio (including value, costs, transactions) along with self-serve options for research, recommendations, buy/sell and support. Advanced data analytics can be leveraged to proactively tailor your investment advice and content based on each client’s profile, or support internal investment decisions. Finally, many wealth managers can make better use of social media networks to disseminate information, build moderated communities of interest (say around tax planning) and gauge investor sentiment and needs.

When it comes to realizing the digital dividend, the secret is to understand your client’s needs, and build back from there. That requires companies to create a 360 degree review of each client’s assets, requirements and behaviour patterns, an understanding of existing processes and a willingness to re-engineer the client-experience model (including practices, culture and policies), before exploring technology solutions.

5 steps to rebrand your business

The successful rebranding and strategic pivot of Tangerine, formerly ING Direct, was the product of strategic insight, thorough analytics and diligent planning. Just as critical was the firm’s ability to pull off a complex transformation in a time of market uncertainty and regulatory change. With 70% to 80% of change initiatives ending in failure, Tangerine holds many lessons for companies looking to strategically reposition themselves or undertake other change initiatives.

“Managing change can be both challenging and rewarding,” says Peter Aceto, president and CEO of Tangerine. “Since we all perceive change differently, it is a journey that must be met with honesty, regular communication, reassurance and, above all, a positive attitude.”

ING Direct was purchased by Scotiabank in 2012. The new entity had two ambitious goals to be achieved by 2014: first, to rebrand under a new name and identity (soon to be Tangerine); second, to expand beyond the firm’s core positioning (tagline: “Save your money”) to include new services and products relevant to their Web-based customers (tagline: “Forward banking”).

Execution missteps, such as ignoring cultural issues, poor planning or lack of management follow through, make real change very difficult to pull off. The challenge for a 1000+ employee bank like Tangerine is to execute major change initiatives with existing resources without compromising existing revenues, service levels or regulatory compliance.

“While it definitely had its challenges,” says Mr. Aceto, “I can say that we’ve come out stronger than ever before while staying true to our core values and the brand that Canadians know and love.”

Tangerine’s leadership deserves credit not only for formulating the right strategy, but also for executing on that strategy — arguably a much bigger challenge. The company pulled off the repositioning without missing a profitability beat or alienating its parent company. Since announcing its name change, Tangerine has exceeded its profitability and custom acquisition goals without compromising its image.

What best practices for managing change can other companies learn from Tangerine?

Start at the top

Successful change requires cross-functional involvement by senior leadership throughout the entire transformation process. Management accountability ensures appropriate focus, ownership and resources, as well as providing timely attention when unexpected problems arise (as they inevitably do). In alignment with Scotiabank, Mr. Aceto personally led the brand transition from the initial discussion through the planning and execution. He was also active in removing resource and organizational roadblocks when they occurred.

Create a narrative

A “change story” should be developed at the outset, connecting the change with who you are as an organization, how you generate consumer value and where you are going. Where cultural change is required, management needs to deploy detailed programs outlining target behaviours, processes and practices. Tangerine expended a considerable amount of effort developing a positive narrative for its customers, employees and partners — namely, that the acquisition was the best way of enabling future growth beyond the core business.

Communicate regularly

The likelihood of misinformation, rumour and uncertainty is quite high during transitions. To avoid these traps, leaders must regularly communicate to all stakeholders in a direct, honest and succinct fashion. Initially, key messages should articulate a desired end-state, a high-level roadmap and the benefits and risks associated with the strategy. Once the transformation has begun, communications should reinforce the narrative, acknowledge positive role models and provide progress updates.

Pay attention to the human element

Management actions early on signal to workers the priority and tenor of the change initiative, as well as what life will be like post-change. Successful change pays attention to each employee by creating individual metrics and adjusting priority lists. While plans and processes are important, ignoring the human dimension can scuttle buy-in and morale and increase business risk. When necessary, Tangerine’s managers undertook the “tough” conversations with employees in the spirit of mutual respect.

Don’t mess with success

Tangerine’s leadership, planning and execution were vital to ensuring the transformation happened in fewer than 18 months. However, credit must also be given to the role played by Scotiabank. Many acquirers feel compelled to take charge and be highly prescriptive in their oversight. Scotiabank’s post-acquisition leadership team understood much of what they were buying was a unique culture and aligned early on with Tangerine’s senior team to avoid over-managing during the transition or in ongoing operations.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

6 traits of great cultures

Several studies confirm the correlation between corporate culture and financial performance, employee engagement, levels of innovation and customer satisfaction. Companies such as P&G, Southwest Airlines, FedEx and Starbucks have been able to differentiate and excel in highly competitive markets in part by developing and sustaining healthy cultures. By the same token, the toxic cultures of firms such as GM, Blackberry and Air Canada have contributed to declining market performance.

In short: culture matters. But what exactly is culture?

A culture can be defined as the norms, practices, history and values of an organization — in other words: “how things are done around here.” The health of a culture is generally quantified through employee engagement scores, with Canadian companies averaging 40-50% engagement.

These days, companies are looking to enhance their organizational life without turning their company inside out. While the differences facing each firm often call for unique approaches to cultural renewal, best practices cut across different sectors and organizational structures and are always based on inspiring leadership and skilled management. Below, I’ve identified six tips for developing a highly successful corporate culture.

Lead by example
Leaders don’t work on culture, they work in it, tracking it, modelling the right behaviours and communicating core messages. Savvy leaders look beyond yearly employee surveys to regularly gauge sentiments and enlist feedback during weekly chats or informal events. David Agnew, CEO of RBC Wealth Management Canada, undertakes frequent branch visits, meets directly with clients and regularly and directly communicates with all of his team, as well as rank-and-file employees.

Tell your story
Every company has a story. Great leaders capture and articulate this story in an inspiring way in order to develop a powerful mission or ethos that serves as an organizational “North Star” (or guiding principle). A good example of a North Star is Google’s inspiring mission to organize the world’s information and make it universally accessible and useful.

Provide purpose
In a healthy culture there is an implicit — if not explicit — awareness of the connection between mission (what value you deliver), values (what inspires your activities), actions (what needs to be done day-to-day) and behaviours (what becomes second nature). Employees within these cultures tend to strongly identify with their company’s purpose, values and goals, improving both engagement and satisfaction.

Solicit feedback
Internal practices, tools and policies play a vital role in promoting or hindering desired behaviours. These practices need to be regularly reinforced and tweaked as necessary to ensure high performance and adaptability to new conditions. Some proven steps include having monthly town hall meetings, encouraging interactions outside of work and utilizing knowledge management systems.

Inculcate and reinforce
It is easier to attract and build an esprit de corps and promote the right behaviours when the firm has effective mechanisms to manage human capital. RBC Wealth Management Canada has extensive on-boarding and training programs for new hires, culture-reinforcing performance management systems and ongoing practice management for seasoned professionals. “It really helps us to attract and retain the industry’s best people,” says Mr. Agnew.

Embrace differences
Healthy cultures are not homogenous. Numerous studies have demonstrated that higher organizational performance and innovation come from diversity, not uniform workforces. Though RBC has a dominant ethos, it does not seek out one specific kind of employee, believing diversity of talent and style can help contribute to continued growth. “There are no shortcuts to establishing and maintaining a positive culture,” says Mr. Agnew. “It requires an investment of time, effort and resources at all levels of the organization.”

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

4 rules for running a business

Many companies in mature sectors have been known to embrace the latest management thinking (or fad) to help cope with low market growth, margin compression and lack of differentiation. Examples of these “big ideas” include lean management, outsourcing, business process re-engineering, offshoring and, lately, social business and cloud computing. Despite considerable effort and investment, most of these firms have been unable to outperform their peers over the long term, often due to weak strategic fit, poor planning or flawed execution.

In fact, only 344 of 25,000 public companies analyzed in the Harvard Business Review by Michael Raynor and Mumtaz Ahmed of Deloitte consistently produced above average return on assets from 1966 to 2010.

What made these firms special? Two rules identified in the study — noteworthy for their simplicity, reliability and practicality — helped drive the extraordinary business performance. Below them, I’ve included two other rules for achieving exceptional performance well worthy of consideration.

Better before cheaper

Companies need to focus first on service, quality, design or distribution — not on being the lowest-price competitor. Non-price differentiated brands tend to command richer margins, which can support further product and marketing investments, which, over time, further sustain the firm’s competitive position and profitability.

Revenue growth before costs

Leaders should prioritize top-line revenue by driving volume gains, competing in growing categories and taking advantage of every opportunity to maximize pricing. Volume increases also bring other benefits, including scale economies and channel optimization, which help drive down operating costs and block out competition.

Brands matter

“Brand equity might be the only asset that consistently generates differentiation, higher margins and long-term revenue streams,” says Jerry Mancini, president, Dole Packaged Foods Company. “Dole’s focus on value, quality and brand-building has helped deliver almost 100% brand awareness in close to 100 countries. This allows us, for example, to provide transient consumers around the world with the same quality and unique products they are familiar with, wherever they go.” This strong brand equity has enabled Dole to more easily tap new markets and categories — and drive higher volumes.

Maximize human capital

“Competition, technology and customers are never static,” says Paul Bruner, a partner with McCracken Executive Search. “The key to long-term success is attracting and developing leaders of exceptional character, with the brains, passion and resourcefulness to adapt to and lead through changing circumstances.” Organizations need to focus on recruiting and training the right employees and reinforcing positive behaviours through innovative training and compensation programs.

To be clear, the above four rules suggest a direction, not specific strategies and tactics; it is up to management to make the tough strategic choices and back them up with good plans and sufficient investment. Leaders still need to understand where they should compete (i.e., which markets with which value proposition) and what they are especially good at (i.e., organizational and asset fit). They’ll also need to support their mission by assembling the right capabilities and cultivating them through a culture of continuous improvement and adaptability. Finally, the company and shareholders must recognize they are playing the long game — they will need patience and resilience as well as management systems that reinforce long-term thinking.

For more information on our services or work, please visit the Quanta Consulting Inc. web site.

Maintaining a winning customer experience

A customer experience strategy is an amalgam of practices, systems and values that guide interactions with customers and prospects across different sales channels, platforms and geographies. In an increasingly competitive and commoditized marketplace, creating a ‘wow’ customer experience is one of the few tools left for companies to retain customers, sustain margins and build a long-term competitive advantage.

Elements of a good customer experience strategy include customer-centric process design, passion-driven employee engagement, coherent interactions across multiple touch points and operational integration. Companies as diverse as Nordstrom, Lexus, Disney and Singapore Airlines have built industry-leading market share, profitability and shareholder value by consistently delivering ‘wow’ (i.e., higher than expected) customer experiences at every interaction.

In many cases, however, designing the ideal experience is the easy part, particularly if it is built on a foundation of product, brand and service excellence. The tougher challenge is maintaining this capability over time. Companies can preserve their winning customer experience by (1) developing real-world measurement systems, (2) institutionalizing key values and (3) staying close to changing customer needs and requirements.

Dropping the ball

Ten years ago, my company worked with the functional teams of a large IT solutions company to develop a customer experience strategy for their sales, support and professional services. The model was developed by working backward from their desired client interaction, and tailored to their different segments, customer types and channels. The new customer service strategy embraced every touch point, from the sales teams scripts and customer on-boarding practices to support triaging and billing processes. After only 12 months in market, the new model was credited with boosting loyalty as well as cross selling rates.

Three years out, however, the firm’s growth stalled. The metrics showed declines in customer satisfaction, online engagement and service levels. A deeper analysis indicated that their customer experience had degraded due to a variety of factors: changing client requirements and expectations (they went higher); a lack of organizational continuity (increased turnover of front-line staff prevented the inculcation of customer experience values into new employees); and clumsy integration of new enterprise software (which reduced service levels and complicated processes). Ultimately, a gap had developed between the initial customer experience strategy and its supporting capabilities.

Sustaining your customer experience strategy

Companies can preempt these issues by better institutionalizing their customer experience management practices and values. Some ways to do this include:

  • Frequently research your customers to stay in sync with their dynamic needs and requirements as well as ensuring your customer experience is consistent through new sales and support channels.
  • Make cultural fit and internal alignment a priority. Every customer-facing employee must inculcate customer experience purpose and values (e.g., ‘the customer is always right’). Rotating customer ownership through senior leaders in key departments is a good way of keeping focus and alignment.
  • Develop early warning systems to track progress, identify problems and generate learnings that can improve existing programs. These systems should track actionable metrics that align to each department’s and individual’s performance goals.
    A Canadian leader

One company that does a good job of maintaining a compelling customer experience is Sun Life Financial. The insurance and wealth leader did all the right things when they designed their customer experience in 2012, such as linking the program to key business metrics and adopting a global and holistic business view. Moreover, Sun Life Financial did not leave the program on auto-pilot.

To ensure focus and follow through, Sun Life Financial created a global working group made up of senior leaders from many departments, including marketing, finance and operations. This group meets often to track and review a variety of customer metrics, including net promoter scores and how they are tracking against improvement measures across all lines of business, as well as to review the latest customer and brand research. Importantly, they are not a corporate rubber stamp body: Their strategic mandate includes exploring opportunities for scale economies, sharing learning between regions and businesses and recommending changes in tactics (if necessary) so that customer needs are placed first and foremost.

“Our customer experience program reinforces the philosophy that the customer is at the centre of everything we do,” says Mary De Paoli, Executive Vice-President, Public & Corporate Affairs and Chief Marketing Officer, Sun Life Financial. “Delivering exceptional customer experiences requires a commitment to asking your customers, regularly, how you can improve the products and services they depend on from you. We believe this is the number one driver of the long-term success of our business.” Although it is still early days for the working group, the program has been credited with creating a winning online experience and better enabling the channel (e.g., plan sponsors, brokers and consultants) experience.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Optimizing the insurance broker’s channel

Gone are the salad days for many P&C (property and casualty) insurers, the companies that insure our cars, homes and belongings. The sector is facing many headwinds including rapidly changing consumer needs, increased risk (particularly around climate change) and rising costs. One vital component of the P&C insurer value chain, the independent insurance broker, is at the centre of change. Insurers that can deftly navigate this transformation will deliver higher consumer value, increased revenues and enjoy better relationships with their broker partners.

Historically, most insurance carriers distributed their products through local insurance agents or brokers. However, times have changed as new distribution channels emerged. Web-based technologies now allow customers to quickly and directly deal with insurance companies and get around-the-clock peer feedback. Insurers now have better predictive tools, advanced pricing algorithms and straight-through underwriting data that allow them to offer quotes instantly while minimizing risk and cost. Finally, providing a differentiated customer experience has become more challenging when consumers can deal either with brokers or with insurance companies that offer their products directly to consumers and influencers. These changes have important implications for the provider-broker partnership.

Contrary to the hype of a decade ago, the Internet is not dis-intermediating channels like insurance brokers even when consumers have a direct-provider option. To wit, a 2012 McKinsey study of the U.S. auto insurance sector found 59% of consumers dealt with a broker and directly with an insurance provider through their customer journey. For the foreseeable future, good brokers will continue to play an important role in the marketing, selling and servicing insurance products by providing choice and advice to consumers.

While marketing through this multi-channel world can complicate an insurer’s business model, it also presents opportunities to outflank competitors and deliver more consumer value. How can insurance companies work better with their brokers and deliver on joint goals?

In our client work and research we have found that P&C insurers share similar channel issues as other sectors including banking, travel and industrial goods. Leaders in these markets have thrived in a multi-channel environment by using strong, intermediary relationships to deliver an omni-channel brand experience — a compelling value proposition consistently delivered through every online and offline channel. Some best practices to enhance the broker relationship include:

1. Align around the consumer

Many factors — social media, mobile computing and a continuing recessionary mindset — are affecting the way most consumers research products and want to deal with brokers and insurers. Successful providers and brokers are embracing these trends through: an integrated, customer-centric model; the capture and utilization of partner knowledge of local markets and sub-segments, and; sophisticated, qualitative Big Data analytics that enable insurers to better understand customer needs wherever they are in the purchase or support journey so they can provide the brokers with the right products, tools and information. Failure to stay abreast of consumer needs can result in a compromised value proposition and lower market share.

2. Get closer to the channel

Smart providers understand that partnership is the foundation of a high performance broker channel. The way to achieve this is through multi-level communication, common goals and ongoing collaboration — not conflict. This partnership mindset includes understanding its entrepreneurial brokers, aligning everyone’s business interests and giving the broker a differentiated reason to favour them over other providers. Market leaders seek to embed this cooperation into their cultures as well as management practices.

“Insurance companies who rely on brokers for the sale of their products will succeed only if brokers are successful,” said Monika Federau, chief strategy officer for Intact Financial Corporation. “This is why we aim to be the insurer that is the most conducive to their growth by providing them with financial, technological, and marketing support.”

3. Enabling the broker’s business

Making significant investment in technology, innovative products, joint marketing and capabilities are needed to reinforce verbal commitments. For example, Intact has invested millions of dollars in technologies that make it easier for brokers to deal with it and allow them to focus their efforts in better serving their own customers. Furthermore, Intact provides differentiated products and services that meet the bespoke needs of its 2,800 brokers and their customers.

Intact’s strategy has paid off. Today, the company is the leading P&C insurer in Canada with a market share that is nearly double its nearest competitor. Furthermore, Intact has consistently outperformed the industry in terms of revenue growth and profitability. Clearly, working with — not against your channel — can pay significant dividends.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Organizing for global growth

Management guru Alfred Chandler asserted that business excellence comes about when “structure follows strategy.” Unfortunately, many Canadian firms with global ambitions fail to heed this axiom. In their drive to tackle international markets, they often pay insufficient attention to how certain groups, like marketing, end up being organized and perform their functions. This neglect can kibosh even the boldest plans. Fortunately, managers can fall back on a rich trove of best practices.

Companies go global as part of an organic growth strategy or because of an acquisition. The potential returns are great but so are the risks. Given the high stakes, leaders should tread carefully but not too hesitantly.

Managers need to address three key questions up front:

1. Which organizational model — centralized at the home base or decentralized at the local office — can best deliver the growth plan?

2. What are the tradeoffs between a single, global message/program and more tailored, local campaigns?

3. How do you foster integration, collaboration and sharing of best practices between the different offices and teams?

Addressing these questions will expose latent tensions and implementation issues (and new synergies) between various approaches and groups. The story of how two firms addressed the challenge of going global differently illuminates some best practices and key pitfalls. Lets start with a company that has done it right — Manulife Asset Management, the investment arm of insurance giant, Manulife Financial.

Though a global business, it was not leveraging its international marketing and distribution capabilities to market as a local one. The leadership was looking to drive more cross-pollination of best practices and tools, better servicing of local client needs and more efficient processes and practices. A senior Manulife executive, Anthony Ostler, was brought in to reorganize the entire marketing structure. Some of the major changes included: establishing a centralized CMO office; retuning roles and responsibilities, as well as workflows; and promoting richer communication. After 12 months of transformation, the results were impressive. Lead generation and RFP success rates soared and margins widened while overall marketing spend fell.

What they did right:

  • Collaboratively redefined success and the marketing and change strategy that would deliver it, aligning all teams and offices to that single vision
  • Looked at the business holistically but did not shy away from getting the details right, like refining employee career paths, adjusting metrics and optimizing workflows
  • Adopted a “hub and spoke” model that centralized key activities like strategy and RFP creation and decentralized others like product development and local marketing support.

Ostler believes “Focusing on the client experience helped to guide all the decisions and was critical to success. At the same time, efficiencies could be recognized by globalizing certain aspects and we moved aggressively to do this. This client focus coupled with efficiencies helps the business to grow.”

At the other end of the spectrum is a professional services firm that acquired a successful overseas competitor in order to get a foothold in a market it deemed vital for growth, and to ensure retention of its multinational clients. This was not a hostile takeover and the clients viewed it favourably. However, after 18 months the forecasted revenues were not materializing despite significant marketing investment and considerable head office attention.

What they did wrong:

The new firm was managed in a controlling, overly formal fashion that was at odds with the professional services firm’s more entrepreneurial culture and practices. For example, local marketing programs were abruptly cancelled in order to capture early cost savings. Since both offices shared many of the same clients (often on the same project), the acquiring firm assumed the habits and needs of these clients were similar across geographies. In reality, each client subsidiary acted very differently leading to problems and gaps in service and delivery. Finally, the acquiring firm lacked the stamina to fully integrate many of the systems between the two companies. As a result, they were never able to leverage their important knowledge and human capital management systems and achieve the desired productivity and innovation gains.

Going forward:

Since every situation differs, a “one size fits all” approach in areas like organizational design and sales & marketing planning rarely works. Organizational, channel and program integration is not easy but must be relentlessly pursued in order to maximize program efficiency & effectiveness, minimize internal strife and drive collaboration. Using proven change management tools is critical. At its core, excelling as a global company is about dissimilar people working together. Ignoring the needs and aspirations of your teams will compromise organizational performance and business results.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

Tangerine repositions for growth

Market success, even one based on disruptive innovation, is often fleeting. Many new businesses burn bright but quickly fade away due to competitive moves, changing consumer tastes, or ill-fated acquisitions. This need not happen, as the story of web-based bank ING DIRECT, now rebranded as Tangerine, illustrates.

Dutch bank ING Group introduced ING DIRECT into Canada in 1997 as a phone and web-based retail bank with a unique brand proposition – no fees, higher savings rates, simplicity and approachability. The business was instantly popular, especially among educated and tech-friendly consumers. By 2010, ING had attracted 1.5 million customers and over $20B in deposits, primarily owing to its innovative high interest savings account, no-haggle mortgage, and low-fee mutual funds. The firm was also an early adopter of social media and mobile banking. Despite the success, storms clouds were appearing on the horizon.

ING began to lose market differentiation and was close to its market potential in its core segments. The Big 5 Canadian banks had taken notice and were picking up their game in terms of market competitiveness. Importantly, ING’s savings rate advantage was evaporating in a falling interest rate environment. Finally, ING’s consumers were evolving, looking for a greater variety of products and services. Clearly, the firm was at a strategic crossroads: continue to focus on its core market with a niche, largely “savings” offering, or evolve towards more of an everyday bank that was capable of truly meeting the needs of the emerging “direct” banking consumer.

In 2010, the Company decided to go for growth and reposition ING as a more full-service ‘everyday’ direct bank for individuals, families and small businesses. To do this properly, however, ING needed capital. Their Dutch parent was in no position to deliver, but Scotiabank was, and in 2012, they agreed to acquire ING DIRECT’s Canadian business. As part of the deal, the firm had to undergo a rebranding and name change – which culminated in the launch of the Tangerine brand in April 2014.

“Changing the name of a beloved Canadian brand that always delivered on its promises needed to be approached delicately. Our challenge was in how to leverage the equity of an iconic brand, while forging new ground and establishing leadership in everyday direct banking in Canada,” said Andrew Zimakas, Chief Marketing Officer at Tangerine. “We knew this change would be highly scrutinized by our employees, customers and the market overall.”

Research shows that upwards of 80% of all M&A deals fail to generate incremental shareholder value. Quite often, the acquired brands end up being scuttled. Yet, this did not happen with Tangerine. Management of both companies prudently followed four key principles:

Establish brand primacy
The repositioning has always been a Tangerine marketing-led initiative. This ensured equal attention was paid to crafting and communicating the right narrative and message to the overall market – as well as to each Tangerine employee or brand ambassador. Unlike many acquisitions, this was a growth-focused, value enhancing story, not one of cuts.

All parties understood the value of Tangerine’s unique brand, growth imperative and value proposition – and the importance of not compromising it for short term gain. Safeguarding Tangerine’s brand heritage, authenticity and differentiation were paramount before and after the deal was completed. Going forward, both Scotiabank and Tangerine’s management have remained true to this mission.

Enhance customer value
To remain relevant and ensure message clarity, Tangerine conducted extensive customer and employee research immediately after the deal was consummated. The Company learned that they had to enhance their value proposition to maintain loyalty and to improve their odds of successfully growing the number of customers and the number of products they purchased. To this end, a number of service enhancements were introduced concurrent with the rebranding, including new ATM distribution and a fully responsive web site.

Execute with excellence
Many acquisitions and strategic pivots give short shrift to execution, significantly increasing risk. From the outset, senior leaders understood it would take 12-18 months and sufficient resources to effectively re-brand the operations – which impacted over 3000 consumer touch points across digital properties, call centers, marketing materials etc.

Get the governance right
Having good governance is vital to making deals work. This acquisition featured clear roles & responsibilities around who was leading the Tangerine rebranding and how this effort was plugged into the Scotiabank governance structure. Even though the Tangerine team maintained autonomy, Scotiabank was part of the transformation team from the outset and provided important support for the rebranding strategy and execution.

The Tangerine story is a best practice for strategically repositioning a brand into new markets as well as how to prudently integrate a successful company without compromising its brand values. Many of the lessons include: getting the right people committed to the same goals; understanding and delivering on consumer & employee needs and; executing the transformation with excellence.

For more information on our services and work, please visit the Quanta Consulting Inc., web site.

The best way to grow

For the first time since 2008, the majority of executives we speak with are talking about growth, not cost cutting. Companies refuse, however, to throw caution to the wind; they want to avoid the pitfalls and high cost of an acquisition. Many leaders are looking to organically grow by expanding into new, adjacent categories. While less risky in many ways, new market entry is not a no-brainer. Success requires both deliberate planning and a start-up mindset.

Companies face many barriers when expanding into new categories or markets. Achieving meaningful brand differentiation is difficult particularly when the market has been commoditized. In other cases, competition has locked up channel partners such as retailers or distributors, preventing the new player from gaining sufficient access to the market. Finally, generating a strong ROI will be tough if the entrant is unable to achieve sufficient volume or economies of scale.

Canadian financial services giant, Sun Life Financial, provides a number of lessons for sensibly expanding into complementary markets. In 2010, Sun Life made the strategic decision to expand its investment management presence in Canada with Sun Life Global Investments, seeing it as a complement to their successful insurance franchise. Sun Life Global Investments was launched with a handful of employees, 12 funds and zero assets under management. Fast forward to 2014, the firm has grown to nearly 140 employees, 87 funds and $7.8B in client assets under management. How did they do it, particularly in a tough investment management climate?

Once the decision to add asset management to their strategic growth priorities was made, the Company moved quickly to assemble the right team. First, they recruited within Sun Life Financial high-performers who were familiar with the culture, brand and practices. To maintain momentum, this internal start-up was quickly supplemented with external hires who possessed key investment industry experience.

Secondly, the team explored and then aligned around a singular mission – to bring the best asset managers and investment solutions from around the world to the Canadian investor.

“We focus on the end investor and work closely with advisors and pension plan sponsors to build solutions that meet investor needs,” says Lori Landry, chief marketing officer and head of institutional business at Sun Life Global Investments. “We fill in gaps where other offerings may fall short, and we work hard to put the customer at the centre of everything we do”.

With a strong team and mission in place, senior managers got to work on developing a brand and marketing strategy that best leveraged their channel and addressed investors’ and financial advisors’ needs in a compelling way. The goal was to build a distinct reputation for Sun Life Global Investments as an asset manager with a unique and authentic value proposition (offering the best global investment managers and products regardless of provider) and go-to-market approach (sell through trusted and expert advisors or through employers), while leveraging the awareness and credibility of the corporate Sun Life Financial brand.

As the above example demonstrates, companies need to really understand their own business, target customer’s needs and market dynamics when looking to expand into new markets. This simplified four-step framework can help managers evaluate growth opportunities:

The market gap

  • Is there a value ‘gap’ between what providers deliver and what customers want? Changing buying habits (e.g. mobile commerce) and a recessionary mindset is shaking up the customer’s value equation in many categories, putting a reliance on thoroughly ‘knowing your customer.’
  • Does the market have untapped ‘white space?” New technologies and business models give firms an ability to reorder existing product categories or create new ones (e.g. iTunes)

The offering

Available capabilities

  • Which competencies, assets and customer relationships can be quickly leveraged? The fastest way to market and ROI is by using existing capabilities and then driving scale economies.
  • Can the resource gaps be quickly addressed? Sustaining early market success will depend on identifying resource and skills gaps early on and quickly filling them.

Competitive reaction

  • What competitive moves could hamper your plans? Many executives give short shrift to understanding their competition. The reality is that most incumbents will not sit idly by and let you steal market share without responding. Managers can analyze competitive moves by using simulation tools like business war gaming and game theory.
  • Do non-industry players pose a threat? Large and profitable companies in low-growth environments may also choose to leverage their scale, customer franchise or new technologies to compete in your target market (e.g., Rogers in home monitoring).

For more information on our services  or work, please visit the Quanta Consulting Inc web site.