We’ve now held the fourth edition of the Property Insurance and Restoration Conference and, toward the end of the latest session, one of the contractor attendees (I’ll call him John) asked a question: “When should we expect to see the results of our efforts?” While that query is quite valid, it is also very difficult to answer. Jeff Hendler, the current administrator of the Collision Industry Conference (the 35 year old, elder sibling to our infant venture) provided a crisp answer to those in attendance in Salt Lake City, but I think it only touched one aspect of the impact that PIRC can have and, I might argue, already has. Let me offer a perspective across a few dimensions.
When we first issued a call for a property-oriented version of CIC nearly 10 years ago, its origin stemmed from the core reality that the property inter-industry didn’t discuss their issues and ‘pain points’ with one another. Each segment of the industry dealt with their unique challenges in their own silos, often blaming other segments for their problems in homogeneous settings. We’ve all been in those sessions at one time or another in our careers and they can absolutely get out of control if permitted to do so. (If you don’t want to be too introspective, think NFL players blaming all their problems on NFL owners at the annual NFL Players Association meeting, while owners blamed all their problems on players at the annual owners meeting. It’s completely counterproductive.)
All this did was cause each segment, and in some cases each individual market player within each segment, to create unique and often inefficient solutions to common, non-value-added problems (imagine if every US retailer had to create their own unique payment currency rather than being able to rely on the US Dollar as a solution to a common problem.) The result over the years has been to increase the cost of doing business for everyone – restorers, insurers, TPAs, distributors, technology firms, etc., while sub-optimizing the level of service delivered to our ultimate customer – the property owner.
Over the last four PIRC sessions, we have managed to put dozens of companies in the same room in a collaborative atmosphere that, under the old paradigm, would seldom even be seen together. Think about that. TPA’s, individual restorers, franchisors, insurers, estimating companies, management system companies, distributers, trade associations, consultants, rental companies and more having a discussion. Not presenting, not pontificating, not shouting or arguing, but having an intelligent discussion of relevant issues. I would challenge anyone to come up with another time or place in our industry when such diverse industry players all sat at the same table and talked. That simple fact - recognizing that each party has a perspective, being willing to listen to their day-to-day challenges and frustrations, and having the opportunity to share yours in return - is a major step forward in being able to break through old biases and rationally and intelligently approach current day challenges which, not surprisingly, we have often found to have commonality across all market segments.
Before moving to the next dimension it bears mentioning that nothing we have discussed to date, or that would be discussed in the future, is intended to interfere with fair, robust competition. In fact, it should serve to do just the opposite. It should accelerate competition and innovation, as less time will be spent on middling issues, and greater focus can be placed on those areas of each party’s respective businesses that can really move the dial from a value perspective. This has certainly been proven to be true in the auto collision business.
What naturally follows from a free exchange of ideas and perspective is a greater understanding of the other guy’s position. So many of today’s business decisions are made with less than complete information at best, and with virtually no external data at all at worst. I would think we can all agree that we make less than optimal choices when we don’t have all, or least sufficient information to make an informed decision.
And that is precisely one of the core benefits flowing from PIRC - an opportunity to ensure that before the other guy makes a business decision, they have a clearer understanding of how that decision might impact other stakeholders in the inter-industry. By simply being in the room, and gaining a greater appreciation for what keeps you up at night, and understanding what roadblocks you face to take care of their customer, the other guy can’t help but make a better, more informed decision.
And that, unfortunately, is the fundamental challenge in answering the question posed by John. You can’t directly measure the influence that any dialogue has on others. You literally have to take it on faith. Not blind faith, but faith nonetheless. And here’s why. It is entirely possible (not likely, but possible) that over the next 10 years, the PIRC effort does not produce one Best Practice, not a single Definition, no Matrix, nor any other work product flowing from the group’s efforts. But I am 100% confident that when Jack, a PIRC attendee from Insurer ABC, is asked at an internal strategy meeting about his thoughts on how the contractor community will react to a proposed change in their claims practices, Jack will be able to share a far more accurate and meaningful answer than if he hadn’t been an active PIRC participant. And when Jill, a senior manager at TPA XYZ is tasked with developing a new initiative that will change photo protocols, or some other aspect of the TPA’s program requirements, she will do so with a better understanding of the real impact that such a change will have, and may in fact recommend that such an initiative not be pursued because the costs will outweigh the benefits.
In each of these two cases, those attending PIRC will never know that their PIRC discussion significantly influenced a decision that could have materially impacted their business, but influence it they did.
Now there are examples where influence can be a bit more overt, though still never documented in the list of the forum’s official accomplishments. To wit, a few years back one of the larger insurers announced at CIC that they would be rolling out a major initiative in two years’ time and invited the industry’s input to the initiative. This invitation was extended at ‘Open Mic’ on more than one occasion. Very few stakeholders took them up on the offer, but the offer was sincere, and from firsthand experience I know that the eventual rollout of the initiative would have gone more smoothly had more feedback been offered during development rather than afterward. But the more important takeaway is that CIC offered a forum which allowed, in this case, an insurance carrier to seek input from the broader industry before making a decision. And there are countless other examples where, via the CIC platform, other industry players have sought development feedback from their peers. And yet you will find none of these instances on the memorialized list of achievements on CIC’s website.
Of course not every individual company initiative is run by the forum first, nor should it be. Every business has a responsibility first and foremost to its own financial stakeholders. But there is an equal responsibility to those financial stakeholders for the business to make good, informed decisions, and in this regard, the PIRC forum can provide an effective check and balance. Let me provide an example, again borrowing from the CIC experience.
A few years ago, General Motors made a strategic decision to change their entire approach to parts pricing, an approach that would have a revolutionary effect on existing processes and systems up and down their supply chain and across the industry. I can’t overstate the impact of the change that GM was making. But while GM had been working on their new approach for quite some time, they did not give the impacted parties (of which there were tens of thousands of them) much advance notice of the change. Indeed, when GM announced their new approach at the same time that CIC was taking place in the same city, just a few doors away, the response was immediate. With literally every impacted party (or their surrogate) represented in the room of over 400 CIC attendees, the industry calmly but firmly shared with GM the impact that the change would have on them; most specifically they shared that several key computer system interfaces could not be reprogrammed in just 30 days’ time and would bring much of the auto claims process chain to a grinding stand still. It absolutely had the potential to irreparably damage years and years of good relationships that GM had forged with key market segments.
So what ultimately happened? Having heard a cogent, well-reasoned argument from several key constituencies at CIC, General Motors made a management decision to delay the implementation of their new program by approximately six months. When they did roll it out, all of the critical market connections were in place and the implementation went very smoothly. To be clear, the change was an incredibly market disruptive action, as GM literally changed a decades-long entrenched pricing methodology that still left its competitors scrambling for a strategic response. But as opposed to GM achieving significant strategic upside while simultaneously earning itself a self-inflicted black eye in the process, by listening to the feedback at a CIC forum, GM captured virtually all of its upside, but absolutely minimized what could have been a very damaging downside. That is impact.
Now while I am confident in saying that PIRC has already had influence (as defined in the prior section,) the forum has not been around long enough for anyone to argue that it has had impact. It takes time to have impact, but even more importantly it takes scale. PIRC is off to a great start, and 40-50 attendees is significantly more attendance than CIC had in its first few years, but for PIRC to have impact, it will require both greater attendance in gross numbers, but specifically greater diversity and depth in its attendees. It is imperative that over time, all critical market segments are vibrantly represented.
The next PIRC meeting is currently being scheduled for this summer. I encourage you to consider attending and becoming part of the discussion. As you debate its merits, I will offer three short thoughts:
· You do not risk ceding competitive advantage by attending. You do not compromise any strategic plans you may have. All you can gain is a deeper understanding of market dynamics and a greater knowledge of inter-industry thinking. Simple logic suggests that knowing more is better than knowing less, especially in the information age.
· PIRC is not an organization. You don’t become a member. PIRC has no authority to act or legislate. It is merely a roving conversation, a forum, where people who care deeply about addressing common industry problems can do so in a productive, collaborative manner, so that they can spend more effective time back at their respective organizations focused on the things that really matter – those strategies and tactics that deliver real competitive advantage.
· PIRC needs you to be involved. The forum is off to a great start, and over time, it will surely become the place they sang about in Hamilton - “the room where it happens.”
I encourage you to be part of what happens.