At a glance
- Economist Intelligence Unit report says firms with clear long-term goals will advance
- Brokers can leverage technology to improve productivity and competitive advantage
- Report warns that short-termism may increase business risk going forward, especially in current economic climate
In these times of economic uncertainty, fears of overcapacity and the growing threat of disintermediation, many brokerages are being forced to adapt their business models to survive.
However, according to a recent report, businesses that focus primarily on the here and now are more likely to face significant competitive challenges in the long run.
The latest Economist Intelligence Unit research, commissioned by Zurich entitled ‘Adapting in tough times: The growing resilience of UK SMEs’ focuses on the health and wellbeing of small and medium-sized enterprises, and the steps that they are taking to ride out the current economic malaise, the findings can easily be transposed on to the UK’s many insurance brokerages, both large and small.
One of the key takeaways from the study found that those businesses with clear long-term goals, such as improving productivity, had more of an ability to execute tactics that will also strengthen their operational and financial strength for the future.
Therefore, brokers who undertake improvements such as leveraging technology, which enable them to spend more time in front of customers and improving client service, as well as being able to interface more easily with the carriers, are likely to improve productivity in the long run. The second report by the EIU, ‘An expanded network of risk and opportunity’, found that technology adoption is increasingly related to stronger business performance and competitive advantage.
Most brokerages know that to succeed in reaching your destination you need to know where you are going – your long-term goals – and set your path accordingly by way of your short-term goals.
But this strategic approach is being abandoned by many UK businesses as they attempt to ride out the moribund economic conditions.
The report findings suggest that low-performers are more likely to just focus on short-term measures such as cutting or freezing wages, delaying investments and reducing credit to customers.
Low-performers look to be undercutting their own long-term performance, competitive fitness and sustainability by failing to invest and prioritising temporary gains. They are still operating on the short-term, pre-crisis horizons.
The report added: “Broadly, high-performers have elected to continue to invest in the business, potentially securing a long-term future and building competitive advantage – to the detriment of low-performers.”
In every market cycle, there are always winners and losers. However, as the dust begins to settle on this new economic reality, a widening chasm is emerging where low-performers are being left behind with out-dated business models while high-performers storm ahead with increasing competitive advantages and technological know-how.