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Gem of a strategy Featured

4:25am EDT November 23, 2005
Scott Addis saw a jewel of an opportunity to serve middle-market companies with risk management services when he started The Addis Group in 1990.

Addis was right. Providing comprehensive audits of potential clients and advising them on ways to cut their risks and insurance costs brought a deluge of business and performance levels for The Addis Group that beat competitors by a mile. With its insurers enjoying loss ratios with Addis Group clients a fraction of industry averages, revenue per employee twice that of competitors and reduced insurance costs for clients, Addis built his agency, now at 40 employees, without a sales force or marketing effort.

But the growth challenged Addis, president and CEO of the company, when it came to making sure that relationships with clients, insurance companies and his own employees remained warm. To ensure closeness with those groups as the company grew, Addis introduced a program he calls “Acres of Diamonds,” inspired by a fable that advises the reader to take care of treasures closest to home.

The effort, Addis says, has succeeded in maintaining strong ties with clients and insurers and in preserving entrepreneurialism in the company, a factor he says has been critical to The Addis Group’s success.

Says Addis: “I think we’ve been cognizant of how we go ahead and continue growing, having the systems in place but making sure the entrepreneurial spirit remains.”

Smart Business spoke with Addis about the challenges of growing his business and maintaining relationships as he does so.

What’s been the biggest challenge to growth for The Addis Group?
Our mission statement states that our clients represent the foundation upon which we build our dreams. If you think about it, without having a sales force here, the only way we grow is by having raving fans, not just satisfied customers, (but) people who say, ‘I just can’t believe the work you’re doing for me.’ We don’t even ask for referrals. When you think about it, we must have very enthusiastic — I call them stakeholders, and stakeholders are obviously our customers, but it includes ourselves, the insurance carriers, law firms, the community itself. The biggest challenge has been ... how do we put in place strategies to stay close, not only to our customers, but to our other stakeholders?

How have you approached that issue?
About a year ago, we instituted what we call a formal stakeholder intimacy program. What we did was call the program “Acres of Diamonds.” What I keep reinforcing on a weekly basis is — because it’s such common-sense, you know, people forget it sometimes — sitting right in front of you are diamonds.

So the exercise that we’ve done with our staff is say, ‘OK, who are our diamonds?’ I think it starts with ourselves. We’ve got to make sure that everybody here feels they’re treasured, they’re polished, they’re cared for.

Then it gets into our clients, it gets into (law and accounting firms), insurance carriers. So for every one of our diamonds, we literally have a formal program and an action plan for staying close to them.

What motivated you to start a stakeholder intimacy program, and how does it benefit the company?
Our audits take a lot of time, a lot of energy. I personally got involved in a majority of audits. On the back end, there are tremendous service requirements. It could be acquisitions, claims, all sorts of internal issues that companies might have, so there’s a tremendous service component.

I know we have great people here, but I’m a Nervous Nellie, and I just needed to make sure that every client is being cared for in a very significant way. I’m very confident now that there’s a lot of creativity and freedom as far as how we handle each client.

I know there’s a definite program in place for each client, and we can measure that in all sorts of ways, measure it through referrals, through retention, through our quality assurance survey.

How do you stay close to the various groups?
I think the most critical thing we’ve done is come to the realization that we cannot grow without staying close to our customers. An example might be, for our clients, building a formal quality assurance process or a risk management education forum.

For insurance companies, we actually have an intimacy program on a quarterly basis. They receive a token of our appreciation. It could be chocolate pretzels from Zitner’s in Philadelphia, Johnson’s Popcorn from Ocean City, Virginia Peanuts, thanking them for all the work they’ve done on our behalf, as well as having a casino night

What lesson have you learned while leading a fast-growth company?
Any business starts with entrepreneurial spirit, and I think what ends up happening over time is that you have to put in systems and controls to make sure that quality assurance is there, that customer service standards are there. I think we’ve been very cognizant of how we go ahead and continue growing, having the systems in place that make sure the entrepreneurial spirit remains.

How do you keep that spirit alive?
The best way I can phrase it is we look at it almost like a football field. We say to people, ‘Play within the boundaries, do as you wish.’ We know we have to do certain things, but giving people the freedom to play within those boundaries, I think that’s been appreciated.

How to reach: The Addis Group, www.theaddisgroup.com