The word strategy, derived from the Ancient Greek word strategos, usually translated as general or commander, is a very popular term in financial circles; and has become so layered and freighted with accretions of what those who use it believe it stands for that it can be used to mean many things. Yet no self-respecting bank or insurance company can afford to be without its “strategic planning” department, or “head of strategy”; and woe betide the CEO who cannot clearly articulate his or her firm’s “strategy”!
We could write many posts on what the word can mean, so let us confine ourselves here to the fact that it relates to ends, ways and means; identifying objectives and ensuring that the resources are available to achieve them. However, strategy in the real world involves dealing with conflict, threats and competing interests. It is not just an abstract concept.
The reader will have gathered that the title of our latest post is somewhat “tongue-in-cheek”; because, while it is easy to mock the “transforming” or “essential” strategies supposedly beloved of the myriad of consultants who make a living persuading senior managers and Boards of directors to implement them, in reality no enterprise can succeed or prosper without at least a basic, viable strategy and an understanding of how it may need to be adapted to the environment in which it operates.
Slavish devotion to a strategy can lead to very unfortunate outcomes: “No plan of battle ever survives contact with the enemy” (Helmuth von Moltke) is a favourite of ours, as is Churchill’s “However beautiful the strategy, you should occasionally look at the results”.
Of course, we all know that insurance is a “contact sport”, so the use of military metaphors may not be out of place…
A little more seriously, at Awbury, we have learnt from experience that a key attribute of success is the ability to design and implement a coherent and easily explicable strategy in the FinCAT arena in which we compete, while at the same time recognizing that, just because one has created a strategy, that does not mean that it is now fixed or inviolable.
(Re)insurance companies (as well as bank) are at juncture where many, if not most of them will have to re-examine many of the assumptions that they have made about their business models, competitive landscape and regulatory environment, if they are to survive and prosper, rather than join the ranks of the “living dead”, unable to compete, and subject to event risks that they are unable to avoid. We shall write about this topic further in future posts.
-The Awbury Team