Why ‘Why’ is the X Factor

Ever since we were kids, we have always asked the question “Why?” – “Why can’t I have any candy?”, “Why can’t we go to Florida?”, “Why can’t Johnny sleep over?”  All of us, in unison, can repeat the answer we were most commonly given by our parents – “Because I said so.”

Interestingly enough, our insatiable need to know ‘why’ did not abate as we entered the workforce, and I increasingly see the manner in which companies respond to the ‘why’ question as critical inflection points that drive organizational culture, and in turn drive (or limit) overall organizational success.

As a general rule, people want purpose in their lives.  We seek purpose in our family relationships, our social networks, our ‘off time’ (church, volunteering, leisure activities, etc.), and if we are lucky enough, our vocations (unfortunately, not everyone is passionate about their current career position.)  We want to be working toward something, we want to add value, we want to make a difference, we want to understand how what we do is an important part of a bigger objective. We are generally not interested in just punching a clock, taking orders, going through a rote routine, and repeating it day after day.

We want to know ‘why?’

  • “Why am I being asked to do this?”
  • “Why is this important?”
  • “Why did we choose to take this approach as opposed to that one?”
  • “Why is my role changing?”
  • “Why are we implementing this new system?”

The ‘why’ questions are endless because committed, motivated employees actually want to fully support our companies’ missions and strategies.  They want to know how what they do each day supports those objectives, but all too often we as leaders are still giving “because I said so” answers.  Few things are more culture killing than giving what is effectively a response that a parent would give to a nine-year old.

Successful leadership unleashes the passion that exists in all motivated employees by explaining how the decisions you make, and the work you ask them to do, contributes to achieving the organizational objective.

For example, let’s say you institute a new procedure that requires an additional step to your current sales process.  You choose to send a bland communication to your team that simply states “you are now required to complete this new form every time you take an order.” With no further context, this change will in all likelihood be viewed as ‘just more bureaucratic paperwork’ by your staff.  Alternatively, if, when you communicate the new procedure, you explain that the new form will allow the company to do a more effective job segmenting the market, leading to a more effective targeting of sales prospects and thus drive new revenue opportunities, you have directly addressed the ‘why’.  You have clearly stated why the form is important to the organization’s success.  The employees who need to complete the new form will have the knowledge that if they do their part well, they will have played a valuable role in increasing the revenue of the company.

With the economic expansion reaching its ten-year anniversary and labor markets incredibly tight, it becomes increasingly important to maintain a corporate culture in which your employees understand exactly why they do what they do each day, and how what you ask of them contributes to your organization’s success, and their own individual success.  Those leaders that consistently answer the ‘why?’ with clarity and conviction will find that achieving alignment of purpose throughout their organization is seldom an issue.

Back from Sabbatical

For those familiar with sabbaticals and the Old Testament origins of the term, you know that every seven years, Jews in the land of Israel are expected to take a year-long break from working in the fields.  In modern times, sabbaticals are most often associated with colleges and universities, where professors often take a semester or two off every seven years to research a topic of interest.  However, sabbaticals have found their way into the business world as well.  A good friend of mine has worked at Intel for over 20 years, and every seven years he has been afforded eight weeks of paid sabbatical to go off and recharge his batteries before returning to the hectic world of high tech.

Why my interest in sabbaticals?  Well, setting aside the fact that I believe strongly in them as a mechanism to allow valued employees to pursue personal interests for a material chunk of time (climb Mt. Everest, teach a class at one’s alma mater, volunteer full-time at a summer camp, travel across the country in a motor home one last time with the kids, etc.), more to the point, I have been on one from this blog for almost exactly seven years.   And I think that’s long enough.

What have I been up to these past seven years?  A lot.  I spent four tremendous years helping a New Zealand-based company gain a foothold in the US auto collision repair market.  Our team rolled out a transformative electronic marketplace which allows body shops to buy collision parts efficiently and profitably.  The beachhead firmly established, I then returned to the disaster restoration industry nearly three years ago by joining BELFOR, the world’s largest and most capable restoration firm.  I have helped the team continue to grow the business in manner that is the envy of our peers.

As you might surmise, much has changed in the disaster restoration industry over the last seven years, but as the saying goes “the more things change, the more they stay the same.”  Our industry continues to struggle with the same issues that it has for decades, though additional issues have popped up.  The good news is that there remain dedicated professionals who are committed to doing their best to address those issues for the benefit of all.

Along this vein, my last post in April 2012 encouraged industry stakeholders to attend the second meeting of the Property Insurance Conference, or PIC on April 15, 2012.  The PIC was created in January 2012 with the express purpose of bringing all parties from across the industry to the table on a regular basis to collaboratively discuss difficult issues facing the industry and seek common ground solutions to them.  And when solutions couldn’t be found, to at least create a greater understanding amongst all parties as to why the other parties behaved the way they did.  It’s very hard to vilify another party (as some are wont to do) when those parties come to the table and discuss their perspectives openly and in good faith.

I’m sad to say that the PIC died a rapid death shortly after I left the industry in May 2012, but I’m just as excited that the concept was resurrected as the Property Insurance and Restoration Conference (PIRC) in October 2016.  We are now seven(!) meetings into the new forum structure and I am excited with the progress being made.

For Bob Newhart fans, you know that arguably the greatest television series finale in history occurred when Bob woke up beside Suzanne Pleshette (his wife on the Bob Newhart Show) at the conclusion of the Newhart show, telling her that he’d just had the weirdest dream.   Well I feel about the same way about this blog.  When I ‘fell asleep’ seven years ago, I had just encouraged people to attend the PIC in Orlando in April 2012.  And now, as I return to my writing seven years later, I am encouraging people to attend the next PIRC in Frisco, TX on June 27, 2019.

I am delighted to be recharged.

Are You Attending this Weekend’s Property Industry Conference?

The annual PLRB Claims Conference opens this Sunday afternoon in Orlando, with a few thousand insurance executives, claims personnel, and suppliers to the property claims industry in attendance.  I’m sure it will be another outstanding educational event.

On Sunday morning, before the PLRB officially opens, the second meeting of the Property Industry Conference (PIC) will take place at the Orlando World Center Marriott from 8am to 1pm.   The PIC represents a structured open forum where all of our industry’s primary segments – insurers, restorers, software providers, manufacturers, training organizations, independent adjusters, consultants, associations, etc. – can meet to discuss and effectively address issues that create inefficiencies in the property claims handling process.  Through the collaborative work of PIC participants, all industry segments can benefit, with the ultimate winner being our common customer – the property owner.

The first meeting of this group in Austin, TX in January produced some encouraging momentum for our industry in tackling some tough issues.  I hope you are planning to attend this second meeting and continue the ball rolling.

If you are looking for more information on the Property Industry Conference or if you want to pre-register for the meeting, you can go visit http://www.propertyindustryconference.com.   I know that same day registration will also be available.

Closing the Gap – Part 18 – The Final Part

It seems fitting that as a lifelong and fanatical golfer, Part 18 of this month-long series is the final part.  And like any 18th hole, it is the most challenging but most rewarding one of the round.

In my last post I recommended the creation of a Property Industry Conference so that all parties in our great industry can come together on a regular basis to discuss and resolve issues that face us, allowing each industry player to compete more efficiently and effectively for the direct benefit of our common customer.  I am pleased to say that this recommendation is now being made a reality.

On Sunday, January 22, 2012 at the Hyatt Lost Pines Resort outside Austin, TX, the inaugural Property Industry Conference will take place.  Facilitated by Mike Condon of Condon Consulting, this very first, one day meeting will commence at 9am and is open to anyone in the industry.  There is no charge to attend this first meeting, which will be focused on explaining the Property Industry Conference (PIC) concept and determining what types of issues the attending group would like to see addressed by the PIC.  The highly collaborative session should set up a very productive second PIC meeting this April in Orlando, FL.

If you are interested in learning more about the Property Industry Conference, if you’d like to review the agenda, or if you would like to register for the inaugural meeting, please visit the PIC website at www.propertyindustryconference.com.  There are already several dozen people registered from all segments of the industry, so the concept is off to a great start.

I hope to see you there.

Closing the Gap – Part 17

Having discussed a solution that would be effective, but unfortunately is out of our immediate control, let’s look at a solution that is.

Solution 2 – Create a Property Industry Conference

As was stated in Part 12 of our series, the leading barrier to progress is that the property insurance claims and the property damage repair industries do not institutionally speak with one another. There currently exists no meaningful forum to discuss and resolve structural issues that affect both industries for the benefit of both industries.  And in this regard, it is not just insurers and restorers who need to have a dialogue. It is also information providers (e.g., Xactware), product vendors (e.g., DriEaz), TPAs (e.g. Code Blue), and other third-party service providers (e.g., Cunningham Lindsey, FRS Team, Horticultural Asset Management, Wondermakers, etc.)  It is the entirety of the property damage industry.

Therefore, what I propose as a more practical solution is to collectively create a new forum called the Property Industry Conference, or PIC, that would meet four to five times a year to collaboratively address significant issues facing our industry. If this sounds like a pie in the sky concept, it is not. In fact, it is a time-tested idea that works. All we have to do is look to our colleagues in the auto collision industry to see this.

The Collision Industry Conference was created in 1984 and has a clear mission:

“The Collision Industry Conference (CIC) is a forum where collision industry stakeholders come together to discuss issues, build broad understanding, find common ground and communicate to the industry at-large, findings and possible solutions.” 

Its vision is a noble one. It calls for “a collision industry in which all segments work together efficiently, effectively, ethically and respectfully to enable a complete and safe repair while facilitating the most pleasant experience possible for our mutual customer, the consumer.” 

Amazingly, it works.

One of the reasons it works is because it is open to everyone and there is no hierarchy. Everyone comes to the table as equals four to five times a year. Chairpersons of the CIC are elected every two years from amongst the entire industry, and past chairpersons have included body shop owners, insurance claims executives, information provider executives, consultants and newsletter publishers. Everyone gets to participate.  Committees that do real work have participation from anyone who wishes to be involved, representing all industry segments.

Twenty-eight years after its creation, there are currently 11 CIC committees to address critical issues as defined by all CIC participants. They include Education and Training, Business Improvement Task Force, Governmental, Human Resources Task Force, Data Privacy Task Force and Insurer Relations. Committee members currently include representatives from Amica, Allstate, Storm Appraisal, California Casualty and Progressive, in addition to Chrysler, Mercedes Benz and nearly 50 other industry organizations and companies, many of them independent auto body shop owners.

Working committees do not exist merely to exist. When their work is done, they disband  and their results are available for all to use.  There are 20 such committees whose work is complete (such as Cycle Time Task Force, Vehicle Repairability, Estimating Practices and Procedures and Database Task Force), their tasks have been combined with other working groups (Legislative combined with Governmental), or they have been spun off into a stand-alone organization (Electronic Communication.)

It is this last committee that represents CIC’s greatest task-oriented achievement.   Fifteen years ago, the body shop industry faced a financial crisis because there were three computerized estimating systems in the industry (think of them as Xactimate, Simsol and MS Boeckh) and different insurers required the use of a specific system to participate in their network programs. This required thousands of body shops to license all three estimating systems. They often ran on three different computer systems, tripling overhead expense because none of the systems could talk to each other through a standard interface.

To stem this crisis, CIC created the Electronic Communication Committee. Its task was to create a common communications standard so that a body shop could license the estimating system of their choice, and it would effectively communicate to any insurance carrier in the language that the insurer wanted. In essence, the goal was to meet everyone’s needs in the most efficient and affordable way possible.

That committee spawned the Collision Industry Electronic Commerce Association (CIECA). For the last decade, shop owners have made their own choice about estimating systems rather than having it dictated to them. CIECA currently has five officers and 22 trustees, including representatives from all segments of the industry.

In spite of the valuable attainment of estimating system interoperability, the greatest overall achievement of CIC remains the fact that insurers and shop owners, parts suppliers and estimating system providers are all at the same table. They are working together to solve common problems so that all can prosper. Imagine the impact that such a structure could create within our industry.

Indeed, imagine BELFOR, Crawford Contractor Connection, American Family, Xactware, Dri-Eaz, DKI, Itel, Alacrity, Symbility, Liberty Mutual, IICRC, Home Depot, Jon Don, WonderMakers, Business Networks, Fiberlock, Sunbelt Rentals, State Farm, Code Blue, RIA, Paul Davis, independent restorers and dozens of other entities meeting regularly as equals at a Property Insurance Conference to address the issues facing the industry. To be sure, many of the participants will be fierce competitors. But there is a difference between two companies competing strategically and two companies flushing money down the drain because of market barriers that create waste without creating value. Imagine if we could collaboratively figure out how to:

  • best address the impact of mortgage companies holding on to claims payments that rightfully belong to a contractor for work provided,
  • reduce the necessity of filing liens against property owners,
  • enhance communications between repairers and insurers, and
  • develop best practices for documentation so that claims could be paid faster,
  • and much more

The benefits to our industry are endless and the actual cost of action very small.

Collectively, we can do it.

At our company, we have enjoyed a wonderful relationship with one particular client. At the very heart of our strategic success with them is a single word: communication. It is the focus of everything we do because we jointly understand that high quality communication minimizes problems that waste the precious resources of time and money. We have minimized the gap between insurer and restorer with one client, proving it can be done. It is my hope that we can extend this simple concept to our entire industry through a Property Industry Conference so that the gap can be minimized by all.

(To be continued with the final installment of this series…)


Closing the Gap – Part 16

Welcome back from the holidays and Happy New Year.

For the last dozen-plus posts we’ve been talking about the challenges related to bridging gaps between restorers and insurers, and for that matter, all parties involved in a property-related claims ‘transaction’.  We’ve itemized challenges, identified barriers, and discussed facts.  Now it seems appropriate to offer up solutions.

From my perspective, there are potentially many solutions, but for now I want to discuss two.  Here is the first:

Solution #1 – HMO and PPO Policies

For nearly 20 years, I have been an advocate for HMO and PPO policies in the auto insurance world, and for 10 years, I have been an advocate for a similar structure in property. The impetus is not related to cost control; it is all about expectations.

When consumers buy health insurance, they generally know exactly what they are buying. The biggest reason is because of our general familiarity as consumers with the health care process; we use the system frequently. So before a consumer buys a policy, they check doctor lists (is my doctor in the network?), hospitals, co-pays, exclusions, etc. There is virtually never a surprise over which doctors a consumer can use or what will be covered.

However, whenever consumers buy auto and property insurance, and especially property, they generally have no idea what they are buying. They are generally ignorant about the claims process and they have usually never read the policy. Most people experience an insurable loss (a car accident or property damage) once every seven or more years, so even if they have had a previous claims experience, it is likely they have forgotten the details about it. Thus most claims events are procedural surprises with significant differences between expectations and reality.  By then, it is too late to fix the expectations damage that has been done.

By offering two types of policies in property – one in which a policyholder must use a restorer within the insurer’s network (an HMO policy) and one in which the policyholder can use any restorer he wants without pressure (a PPO policy) – the purchaser will know what to expect upfront.  They can pay less and have fewer choices or pay more and have greater choices. By taking this approach, we could eliminate all the anti-steering legislation and complaints about insurers “influencing” policyholders because each purchaser would have a clear, overt choice upfront when he buys. There would be no need for any alleged “steering” and no soapbox speeches about consumer choice.

Restorers would also have a clear choice. Each restorer could evaluate each insurer’s HMO program and determine if they wished to pursue participation. If they should choose not to, they would still have equal access to all the PPO policyholders of that same insurer.

Unfortunately, as effective as this idea may be, implementing this approach is out of the hands of restorers and the insurance claims community. This idea solely rests with an insurance company’s product management team and underwriting department. Until those folks can get their arms around the concept, we will be left with the confusing, one-size-fits-all property insurance policy we have today.

(To be continued…)

Closing the Gap – Part 15

Fact #3 – Auto Portends Property

This is a simple one.  Because of their lesser complexity and, to some degree, massively higher volume of claims, insurers have tended to implement material changes to their auto claims processes before they implement comparable changes in property.  As a general rule, the implementation of property claims strategies tend to trail similar auto strategies by about 10 years.  The clearest example of this is direct repair programs (DRPs), or networks. DRPs were introduced to the auto world in the later 1980’s.  The DRP concept in property was introduced in the later 1990’s.

So What?

So there you have it.  Ten core challenges, one critical barrier, and three overriding facts.  All of which must be considered before attempting to propose any type of solution which will close the gap between insurers and restorers.  When we return from the holidays and embark on a new year, I will offer up one possible solution, and then follow that up with a more desirable and practical  solution #2.

(To be continued…)

Closing the Gap – Part 14

Fact #2 – Operational and Data Complexity

Turning again to the three insurance fields—health care, auto and property—and the logistical challenges confronting an industry professional relative to work environment and expectations (with the general exception of EMT-type or battlefield medical work), there is a clear progression of complexity from health care to auto to property.

In health care, a service is provided in a (relatively) antiseptic office. The damaged property (the patient) typically can provide intelligent information to the service professional about its condition (e.g., “I have headaches intermittently”). The property can also provide intelligent feedback as to the effectiveness of the treatment (e.g., “It still hurts when I walk”). There are no artificial outside agencies that can affect the provision of services, and relative to expectations, the service professional likely has decades’ worth of empirical data regarding the efficacy of the proposed treatment.

In auto, the service is provided directly to the property (the auto) in a controlled environment (the body shop, which is likely dry and has a temperature between 60 and 80 degrees) with no outside agencies that can affect the provision of service. Most specifically, the owner drops the vehicle off and picks it up when the repairs are completed. The owner does not participate in the repair process and certainly doesn’t hover over the service professionals, suggesting to them what they should do. While it is true that the auto cannot talk back to the professional like a patient can about what is wrong with it (other than through some onboard computer systems), there is, on average, three to 10 years of specific, objective, scientific repair data on the particular property (e.g., a 2002 Infiniti G20) that can be helpful to the service professional in prescribing “treatment.”

In property, the service is provided in a completely uncontrolled environment (indoors/outdoors, high humidity/low humidity, hot/cold, wet/dry, clean/dirty) with multiple outside agencies that can affect the provision of services (property owners telling the professional what they can or can’t do, turning off equipment at night, walking through contained areas and spreading contaminants to wider areas, etc.)  Other factors that must be considered are any health issues of the property’s inhabitants (immune system issues, asthmatics, etc.), how far the property is from the professional’s office (nearly 100 percent of health care and auto repair services are provided at the professional’s office, not in the field), and time. A damaged auto doesn’t get ”worse” five days after an accident whereas it could easily cost two to three times more to mitigate a water-damaged structure five days after the ”accident” versus starting mitigation within a few hours.

Additionally, while 95 percent or more of auto crash repairs are worked on by a single “restoration company” and are generally limited to no more than $40,000 in repair cost (average cost is less than $3,000), a structural property loss is often worked on by not just the primary restoration company, but many subcontractors (electricians, plumbers, roofers, etc.) and frequently, third-party professionals (industrial hygienists, art conservators, structural engineers, etc.) Not surprisingly, given the many different types of structures (apartments to resort complexes to office high rises,) the cost of restoration can range from $500 to $50 million.  Finally, not only can the property not talk to the professional, but there is very little specific, objective, scientific data available on a particular property to assist in providing treatment. Data on a 1973, four-bedroom Colonial is meaningless. Property professionals must therefore apply industry-specific training and scientific knowledge to each completely unique situation.

(To be continued…)

Closing the Gap – Part 13

Fact #1  — ‘Model’ Complexity

The three most common forms of insurance purchased by the average American citizen are health, auto and property insurance.

In the health insurance field, there are two basic models: male and female.  They each have 206 ‘parts’ and the two models have been essentially unchanged for many, many centuries.

In the auto insurance field, there are hundreds of different models on the road – Ford Taurus, Volkswagon Passat, Toyota Prius, and so on.  These models have a finite number of parts, and from a manufacturing perspective, a Taurus is a Taurus is a Taurus.  Additionally, the only models with any true relevance in the insurance field from a repair perspective are those manufactured in the last 15 years, as 82 percent of all vehicles on the road are 15 years and younger (source: Experian Information Solutions, Inc.).  Nearly all vehicles older than that will be ‘totaled’ if they are involved in an accident.  But even if they were repaired, the repaired Taurus is a Taurus is a Taurus.

In the property insurance field, there are millions of different models sitting atop land.  In fact, every single model is unique, at least within a few years of its initial construction, due to material modifications made to it by its inhabitants (new roof, remodeled kitchen, finished basement, replaced windows, new addition, applied wallpaper, etc.)  And construction could have taken place anytime from 2011 all the way back to the 1700’s here in the United States, and centuries earlier in Europe.

(To be continued…)

Closing the Gap – Part 12

One Barrier

Over the last several postings, we’ve discussed 10 challenges facing the insurance industry and the restoration industry.  They are

  • A stratified insurer market
  • Three parties to a transaction
  • What is the ‘insurance promise’?
  • Whose contract matters?
  • What does ‘choice’ really mean?
  • Who really knows disaster restoration?
  • Onsite evaluation
  • Structural market imbalance
  • Value justification
  • Who defines ‘best practices’ or ‘standard of care’?

I am sure there are more, but those are 10 that occur to me and sit, to some degree, at the intersection of our two industries, though we really participate in one larger industry, just from two different business models and perspectives.  That is why the single, most critical barrier that inhibits progress to shrinking the gap between insurers and restorers is so ironic. It’s because we don’t talk to one another.

Now I don’t want to suggest that individuals literally don’t talk to one another. Of course we do. Restorers talk to insurers as individuals all the time on job sites, at local claims association meetings, on the phone discussing payment, or scope, or coverage, perhaps even over lunch.  But institutionally and as industries, we don’t converse.  If you attend PLRB, you will find hundreds of restoration professionals plying their wares, but will find very few restorers in any educational sessions, and you will not find a Town Hall Meeting where restorers and insurers can discuss issues pertinent to them both.  At RIA, you will find several insurers trying to sell restorers on their various property, environmental and liability programs on the trade show floor, and periodically there will be a panel discussion like there was in Colorado Springs this past Spring.  But there was only one carrier represented in Colorado and I expect they did not feel comfortable speaking for the entire insurance industry, nor should they have been expected to.

The bottom line is we talk a lot about each other, but we don’t to talk to each other.

Now before we can propose solutions to any of these challenges, there are three set of facts that must be well understood.

(To be continued…)