Setting yourself apart

Pick up any insurance journal and it will be immediately clear that the subjects keeping most CEOs and executive boards awake at night across the insurance industry are frighteningly similar.

Despite there now being fewer pure insurance players, competition is increasing, along with the ongoing desire to be the first to realise the next great idea.

As a consequence, the drive to attract and retain high-calibre staff is becoming a bigger issue, with the need to develop a more responsive and flexible workforce in order to deliver improvements. The challenge is to do this while still promoting diversity and employee opportunity.

Organisations often spend too much time looking at the threats facing them now and in the future instead of using the time to build the right competencies and capabilities in order to fend off those threats.

Most organisations understand that enhancing capabilities and resources is critical to ensure the continual development of the business.

By identifying the core competencies, organisations can deliver an element of differentiation, be that a service, product or operational delivery.

The traditional approach to resource building has focused on so-called gap analysis. Essentially identifying what you haven't got and working out how to go about getting it - by development or acquisition.

With all these dilemmas, what can be done to continue the development of businesses?

Sharing knowledg
Auditing the organisations, understanding the capabilities they possess and, most significantly, how the staff work together is an important step forward for any business. A greater priority should be placed on building an organisation based on networks where the sharing of knowledge is a prerequisite.

This has become increasingly important as the insurance industry gets to grips with larger and more diverse workforces after an intensive period of mergers and acquisitions.

Organisations need to understand what it is that they do better than the competition - defined as core competencies - and invest in supporting this capability.

The skills and expertise of the employees of a business are one of the few differentiators that are difficult to replicate and can help propel a business into a market-leading position.

Businesses can leverage their capabilities by concentrating on the key areas in which they do well and identify opportunities in other markets and sectors where this ability can be replicated. Just because you are able to manage a portfolio of personal lines business, does not mean that you will be able to manage a Lloyd's syndicate writing satellite risks. The emphasis isn't simply on sector knowledge, but on the knowledge, skills and capabilities that have made you successful in your particular field.

Norwich Union's recent purchase of the RAC is an example of an organisation understanding how to use its competency in customer management to broaden its portfolio of services and penetration of its existing and potential customer base.

There are a number of important steps that can help make the most of any business.

Unique selling poin
Audit and identify your company's key resources and capabilities. Is it your staff's expertise and knowledge, is it the deliverables your IT system can produce, is it your distribution network, how do you exploit these in terms of your value chain? Be clear on what makes you unique.

Understand your organisation's strengths and weaknesses compared to your competitors and the importance of particular capabilities in enabling you to differentiate your business.

Being as good as your competition will give you parity in the short term. However, if you want to set your business apart from the market also-rans, you will need to do more. Ask yourself how your firm compares with high performance teams in peer companies. What makes them so special and what attributes among their staff give them a leading edge?

Start to think about how you exploit your key strengths. Take time to evaluate which markets you have the ability to exploit, which segments represent greatest risk and which distributors can add the most value to your brand.

Action pla
Next, develop an action plan which focuses on immediate priorities and the ongoing development of your skills and capabilities. In order to compete for the resources this will require, a longer-term vision of the benefits that improved capability can deliver will often need to be formulated.

In a world where bean counters rule expense budgets, it is not always easy to provide tangible evidence to support investment in skills and knowledge. Where in the balance sheet do they appear and how can you see the benefits? For instance, if you want to invest in risk management for customers, it's a fair question to ask how much will be spent on training and developing your surveyors in order that their actions lead to the avoidance of a £1m claim.

The most successful teams in many areas of life, business, media or sport do not become successful overnight. The same is true for competency development within organisations. A realistic timeframe is perhaps three to four years depending on the starting point and the existing culture and expertise.

Mentors perform a key role, the experts in the business need to be internally recognised and appraised on their ability to coach, pass on knowledge and develop others for the theory to become reality.

Clearly some businesses in the sector take this seriously, with the development of claims, marketing and underwriting academies.

These can be actual or more likely virtual in nature; they tend to be based on academic foundations with tuition increasingly being approved by external verifiers, assessments to progress through to the highest levels of capability and the successful completion of these programmes increasingly becoming a prerequisite for progression within the organisation. Some examples of organisations that have developed academies are Allianz Cornhill, Norwich Union and Swiss Re.

Future opportunitie
On a final point, a move into a new area may provide additional opportunities as markets converge or business models evolve. An open mind on what the future may hold will always provide additional potential for growth. However, avoid the honey trap of moving into a new area without the knowledge or infrastructure to support the new activity.

All the above will not necessarily ensure success, but time spent assessing these points will ensure that you have focused your energies and will help to align an organisation's current abilities with its future ambitions.

' Jo Causon is director of business strategy at Brandsmiths