Forgive Philip H. Urban if he makes running a billion-dollar business sound simple.
He’s sitting on the back of a bus with some senior executives from Grange Mutual Casualty Co. talking casually about how the insurance provider has nearly doubled in size, to $1.3 billion in revenue, since he joined in 1999.
He’s relaxed as he goes through the story because this portion of his annual bus tour is almost over. He and his senior leaders hit the road to do 16 large presentations across 13 states for independent agents selling their product.
But almost lost in his demeanor is the fact that a bus tour like this didn’t exist before he came to Grange. The company was doing well, but it wasn’t the standout provider in an extremely crowded field. What Urban brought to the company is a philosophy that he now shares at every graduation for the company’s management class.
“Figure out what’s expected of you and then exceed that expectation in terms of performance or delivery,” he says. “If you want to stand out and be successful, the clearest way is to figure out how you’re going to be measured and do a better job than that, then you stand out. It’s that simple.”
But that simple isn’t exactly simple. In his 10 years with Grange, Urban has overseen a transformation in the way his 1,600 people do business with independent agents. A lot of it was Business 101 to him, but the rub was exceeding expectations. That mindset started with Grange completely rethinking its advantage in the market and building off of that. Along the way, the company changed hundreds of processes and ingrained a new philosophy into its culture.
So while Urban, who announced in May that he will be retiring in February 2010, shrugs it off now, a trip back to 1999 shows a glimpse into how he grew Grange.
Plan your trip
When Urban joined Grange, it was already a strong company, but he thought it could grow into much more. When you want to take on that challenge, you start by understanding what you can and can’t do already.
“You have to figure out what current skills and abilities your organization has,” he says. “Then you have to figure out if there’s a big gap between where you are and where you want to go and can you even close the gap.”
So he sat with his senior leadership team and board for a conversation about success.
“We spend a lot of time talking about what is success, how do we define it, what does it look like,” he says. “And that helps us then assess our current capabilities and skills and then you can do a very basic gap analysis: Here’s where we are, here’s where we need to be, how do you get from here to there, and for us, it’s really three things. We think about our mission statement, which is why we’re here. We think about our vision, which is that exciting view of the future, and then we think about the cultural aspects of our company that we want to preserve.”
Urban believes there is a three-step process to the assessment, starting with a sit-down meeting with your leadership team to plan your trip.
“Think about it like you’re going to plan a vacation,” he says. “The first thing you have to figure out is where you’re going to go, so we spend a lot of time saying what do we want to look like in five years, 10 years.”
When the trip’s planned, you need to do a critical success factor analysis, looking at what things have to be present in your industry for success.
“You take any industry and you can make a pretty long list of all the things that need to be present for a company to be successful in that industry,” Urban says. “I’ll use as an example the fast-food industry. You have to have a good menu, it has to be cheap, it’s got to be quick, you have to be at an easy to get in and out of location, you have to have a drive-through — you get the idea. So when you do that analysis for the insurance industry, let’s say there are 50 things that need to be present for you to be successful. Then we do an analysis to say, ‘All right, of those 50 things, which do we really have in good measure today, and which of the 50 don’t we have in good measure?’ And then you prioritize the ones you want to work on and that creates a work plan for getting your company to be in the game.”
During that process, identify anything your company excels at or specializes in, and that can be your calling card.
“Identify if there is something about your company that you can either build on that’s already there in part or you can create, something that makes you successful, something that makes you different from the competition and it’s something that’s hard to copy,” Urban says.
Your company can be successful without taking these steps, but you’ll never be the go-to person in the market.
“If you want to be a true outperform company, you need to have at least one sustainable competitive advantage, otherwise you’re just going to be kind of average,” he says. “So you go through that process and maybe the good news is you discover you’ve got something that you can build on and that leads you to being in a position where you can outperform.”
Strengthen your strength
While you may be excited to see that you have a game-changing advantage in the marketplace, Urban says that’s not the end of the process.
The senior leadership team at Grange realized in the summer of 1999 that its sustainable competitive advantage was its relationship to its distribution channel — the independent agents selling the product. But just leveraging that type of advantage isn’t enough.
“You remember I said a sustainable advantage has to have three characteristics, it has to make you better, different and it’s hard for the other guys to copy,” Urban says. “So we said, ‘Well, our relationship with our independent agents really could be that.’ But we also noticed that there are a lot of other companies in our space that would sort of claim that position themselves, so we asked ourselves, ‘Are we really different?’”
In order to fully challenge an assumption, you have to take a step back to think about who is best served by your advantage and the processes you could create to strengthen that. Urban knows independent agents represent several agencies, so he worked on figuring out what led them to their final decision.
“So if you ever wonder what is it that causes an agent to pick company A versus company B, versus C, there are lots of reasons that go into that particular selection,” he says. “But when we thought about it, we said, ‘Human nature being human nature, what if we made ourselves the company that is so easy for the agents to do business with that they would most likely pick us.’”
From this came a process Grange calls EODB — ease of doing business.
“The idea was to figure out what agents wanted us to do differently that would make it just flat simple for them to use us so that literally they would think, ‘Oh man, I want to put this customer with Grange because they’re just really easy to get the product quoted, to get the policy issued, have the claims handled, etc., etc.,” he says.
This is another time where you can’t get tripped up by how simple Urban makes it sound. That process involved hundreds and hundreds of changes to even the most basic portions of the business, such as creating a paperless system for independent agents. In fact, the system is still being tweaked at this moment.
But the willingness to constantly challenge and improve upon a market differentiating strength has made Grange the destination in the insurance business.
“When there’s ever a survey done on which company is the easiest to do business with, we win every time,” Urban says. “And we know that that position has enabled us to get really a preferred position in the majority of agents that represent us.”
Include it in your culture
While all this was going on, Urban didn’t forget all these processes would affect a culture that he loved. When you have to mix a new idea into an existing culture, he says the trick is to add it as an enhancement to what already works.
“The first thing you do is you codify the culture,” he says. “You step back and you say, ‘OK, what are the things that exist in the culture today that we want to make sure get perpetuated?’ And they’re pretty basic things. Things like, we want to work together in a team environment. You want to have people that are open and will tell you what’s on their minds. ... And those become the basis of your core values, and then you make sure that everybody understands those.”
It starts with putting managers on the hook for using them daily, something many leaders don’t take seriously.
“They usually have a sheet of paper with, here’s how to be a good manager and one of the steps on there is have core values, so they come up with core values, they check the box and say, ‘OK, got that, let’s move on,’” Urban says. “But there’s so much more. You have to implement it; you have to hold people accountable for it.”
At Grange, that means putting those core values in the measure of someone’s performance.
“Everybody at Grange has performance objectives; part of their performance objectives are how they live and demonstrate the core values in how they function at the office,” he says.
At Grange, 20 to 30 percent of an employee’s performance rating ties directly to his or her use of the core values, which have come to include making EODB a priority. The employee’s overall rating then ties to merit increases and promotions.
“So you might have one, teamwork, and the performance instrument will list four or five behaviors that are present when somebody’s really good at teamwork, and so, the evaluator can look at the individual and look at these behaviors and make a reasonable assessment,” Urban says. “It’s clearly subjective, but it is still a pretty good way to give an indication if the person is exhibiting those behaviors or not. That’s not that hard to do, really, you just have to want to do it.
“When somebody is up for promotion, we take a look at the performance reviews, which is a demonstration of those cultural values to try to understand how the rest of the world sees that particular potential promotee, and that weighs very heavily in our decision.”
The end result is that the culture Urban loved when he came to Grange has expanded as the company has grown to 1,600 people, and those people understand that EODB is a core function of their daily business.
“That’s really a part of who we are now, that’s a big part of Grange, and I’m so excited to think that the majority of our people and the majority of our independent agents get it, they believe in it,” Urban says. “And we’re actually kind of flattered because we’re seeing more and more of our competition talking about ease of doing business, and we know they’re doing it because they’re hearing about Grange from our agents, and if imitation is the sincerest form of flattery, we’re feeling a little bit flattered by that.” <<
How to reach: Grange Mutual Casualty Co., (800) 422-0550 or www.grangeinsurance.com