In the third post in this series, we discussed the fact that SOS relieves insurers of operational pressure and suggested the inevitable need for that kind of relief. And we indicated that, since it pertains to the entire insurance lifecycle, SOS can be applied selectively — or employed wholesale — depending on insurers’ needs and their target operating models.
In this fourth and final post on SOS, we’ll point out the ways in which, with the help of SOS, insurers can begin to view their business as franchises (in the sense of predictable repeatability, as detailed by Michael Gerber in his book, The E-Myth Revisited ).
Let’s Start There
Here’s a key distinction for those who believe SOS is simple or conventional outsourcing, activity redistribution, or task reassignment. It’s not. Rather, SOS involves the franchising, if you will, of entire strategic disciplines and their attendant processes. And unlike traditional outsourcing (typically undertaken to offload or augment the execution of particular non-core activities at specific times), SOS entails strategic problem-solving — be it for a single project or as a long-term engagement. As a result, SOS creates value by helping insurers achieve transformational outcomes more quickly and uniformly.
Insurers that adopt SOS don’t assume the typical costs associated with acquiring resources — recruiting, hiring, onboarding, training, total compensation, turnover, et al. SOS constitutes the trained, experienced people required to perform strategic activities, so costs are lowered by definition. And because SOS providers assume accountability for their outcomes — including compliance with budgets and timelines — they lower insurers’ risks in numerous ways. And insurers no longer need to worry about the obsolescence of intellectual capital as the SOS provider is responsible for maintaining currency.
This may all sound too good to be true to most insurers — and since we all are subject to degrees of disbelief — here’s the dirty little secret: SOS helps insurers gain control of operations and expenses, rather than lose it.
The Bottom Line
SOS is not simple or conventional outsourcing. SOS enables insurers to franchise strategic disciplines and their attendant operational activities. SOS comprises strategic problem-solving. And SOS creates value by helping insurers actually achieve their individualized target operating models and the functional transformations the entire industry is debating and envisioning.
The SOS path to productivity and growth may not be obvious (yet). But it is inevitable. The insurers who recognize it first, will be among the industry’s leaders.
That’s a pretty compelling bottom line.