We have all heard about the big, bad bogeyman — disruption — and how it is supposed to propel us into a future without agents and advisors if we’re not careful.
But after 10 or so years of looking over our shoulder, we might be forgiven if we discount the threat. And even though Peter Sheahan warns people about disruption for a living, he would agree with you.
Sheahan would point out that disruption looks like a long way off until it is here. When disruption shows up, it is difficult for a business to recover from it — sort of like planning for a flood as the water is pouring through the door.
So, how does a person or a business prepare for disruption? That would be the next question, but Sheahan would say it is the wrong one. In his latest of his seven books, Matter: Move Beyond the Competition, Create More Value, and Become the Obvious Choice, Sheahan tells how to identify an individual’s or company’s edge of disruption and use it as a competitive advantage.
In this interview with INN Publisher Paul Feldman, Sheahan reveals how to stop fearing disruption and why it is better to run toward it.
FELDMAN: Agents and advisors have heard about a massive disruption for years, but the impact is not always well defined. How do you see disruption playing out?
SHEAHAN: It's already playing out in a pretty meaningful way, but not necessarily at the sales and agent level. We're seeing the operations platforms at companies being completely rebuilt.
The amount of manual labor and inefficiency that exists in the value chain is crazy. It doesn't make for a good quality experience and it doesn't make for agency efficiency and productivity. I think you'll certainly see disruption continue unabated at the manufacturing level.
Over time, we'll start to see the benefits of what large amounts of high-quality data can do. We see that in the mortgage industry where places like Rocket Mortgage are able to massively reduce the heavy lift, for either the broker or the customer to get their information aggregated and their needs met.
It poses risks to brokers and agents if you’re bringing value that’s easily replicated to a client. That’s a threat.
Nothing replaces a great relationship-based salesperson. Nothing replaces proximity to the local community. We have to make sure we're creating value above and beyond process and transaction, and above and beyond access to product.
FELDMAN: You mentioned that disruption has not been as meaningful at the agent level. What would you say to agents who aren’t too worried about disruption?
SHEAHAN: One, I'd say fair enough. Two, I'd say change is actually really slow until it's not.
The question is what assumptions are you making about how disruptive this could be? You could think about the P/C space. People talked about the disruption of direct-to-consumer models in property and casualty insurance for decades. This crept up slowly and slowly and slowly and then we woke up one day, up to nine out of 10 consumers went direct.
The risk of that happening in annuities may not be as high because the complexity and the product variability is higher. Complexity will probably prevent that level of rapid transition but when it happens, it happens quickly.
I'm not big on this whole “innovate or die” mantra. But I will tell you one thing I've learned is that the people who are most happy in the late stages of their careers are the ones who find meaning in the work that they do.
Just protecting what you have created and not doing or learning anything new doesn't create that meaning. My challenge for these guys is, what could you do to continue to learn or grow yourself? What opportunities do these present?
Forget technology as a disruptor. What about technology as a massive efficiency creator within your practice? So, now you're taking two days off a week for the same economic return. What about the joy that comes from the learning curve of leaning into that? The edge of disruption doesn't always have to be radical, drastic stuff. Your edge of disruption could simply be half a day, make the same return, working 25 percent less by leveraging tech.
Now I think maybe my final response to that is I don't see any of the big carriers waking up anytime soon and just completely abandoning their brokers. It's still distribution-dominant for the industry.
FELDMAN: You mentioned the “edge of disruption.” Can you explain that for our readers and how they would find that for themselves?
SHEAHAN: Your edge of disruption is a combination of things. It is what exists at the edge of your capability. It's probably not in your core daily activity. It's not in your standardized processes in your business. But you know you have the ability to serve in a new way and have a bigger impact than you're currently having. That's one circle.
The second circle is that the emerging investor consumer or client has needs that the client places disproportionate value against because no one sorted them for him. So, you have this circle around your capability and what's in the edges of that, and you have this circle of investor and consumer need and what sits at the edges of that.
Then you have the third and final circle, which is what's changing — things like data analytics, demographic change. Things like a greater propensity for consumers and investors to self-serve and access through technology.
Where those three circles overlap is what we call the edge of disruption. What are the opportunities for differentiation? What are the opportunities to stand out of the crowd?
FELDMAN: What about people who are later in their career?
SHEAHAN: You're the 55-year-old guy making 180-grand a year and you're asking yourself the question, “Why should I bother?”
It’s because it's going to be hard to make $180,000 next year. It's going to be harder in five years because not everyone is going to sit around and rest on their laurels and be complacent with that stuff.
The edge of disruption might simply be what is a more clearly defined value proposition that's differentiated and delivering a client experience that is worthy of that promise. That's an edge of disruption.
How do I use new technology either at a practice level or a marking level to get that done? How do I double the effectiveness of my prospecting and triple my conversion rate?
They're gray questions. They all sit in the edge of your capability, the edge of your consumer need, and the overlapping, emerging and converging of change and disruption.
FELDMAN: What are some ways to differentiate yourself in a world in which everyone seems to be copying each other?
SHEAHAN: We did a lot or research on this and we published a book called Matter that really looked at what the areas were.
So I am going to give you the five headlines but then I'm going to tell you what it has to do with insurance.
No. 1 is: What are the higher-order problems?
There are problems the clients will resolve, such as “Hey, I need some life insurance.” But there are some higher-order problems, such as, “I need income protection for retirement.” One thing is easy and one thing is hard. Where are you, which problem are you positioned against?
You might still sell a core life insurance or annuity product I might need. But one problem, insurance versus income, has a high kind of criticality in the mind of the investor. One is potentially a greater threat to them.
No. 2 is: Where is the complexity that the consumer is afraid to lean into? Where is the complexity other providers avoid? Can you create a set of solutions or remove friction that allows you to absorb that complexity for the consumer and can you help them to see value in that?
No. 3 is about friction and ease of doing business. We've seen these across every category. People like it to be easy. Everyone thinks that Amazon's kicking everyone's ass because they're cheaper. Amazon's not cheaper, they're easier.
Amazon is friction-free. It removes a whole bunch of physical and temporal constraint as well as transparency. And yes, they're price-competitive.
No. 4 is related to risk, which I know sounds strange given you're selling risk products. But we saw across all categories when you were able to remove risk from someone's life or from their balance sheet or a transaction that they had, they will place value on that.
Then No. 5 is purpose. It’s the feeling as though you were doing well by doing good or that you were choosing to buy from people who had that that same philosophy.
But there was this underlying piece that we saw particularly in professional services. That was expertise. In times when people are facing change and uncertainty, they gravitate toward people who have a confident, expertise-based point of view.
We are seeing vertical expertise emerge in a more prevalent way. If you want to be seen as a thought leader, then you better have leading thoughts.
FELDMAN: Then there is delivering those thoughts.
SHEAHAN: Yes. It's a part of having an elevated perspective, and there are two sides to that. One is we must have some leading thoughts, genuine expertise and a point of view. But if you have a world-class point of view and no one knows about it, what's the point?
We saw across some industries a lot of interesting stuff happened where people have been holding on to things they knew, but they didn't realize the market would find those things intensely valuable.
They didn't want to share those thoughts because they didn't want to give away the value. But at the same time, they were being commoditized because they weren't seen as valuable enough.
FELDMAN: How do you make thought leadership a way of life?
SHEAHAN: That's a pretty big question, but I would say there's probably not an industry on the planet that doesn't get more access to content than the financial services industry does.
Everyone's got a conference. Everyone's got a newsletter. Everyone's got a monthly market update. Everyone's got a calculator. You're inundated with this stuff.
But it's shocking how few agents and brokers make use of that content. Next time you go to a conference, make a set of notes on what you've learned and put it as a point of view to your clients.
You start with a mindset of, how do I share what I learned? Because if you're in the financial services space, you're always learning.
It doesn’t have to be sheer market stuff. It's stuff like the three reasons people failed to follow through with life insurance even though they need it. What did you learn about human nature and risk aversion and unwillingness to act?
FELDMAN: You also talk about not being vanilla with your opinion.
SHEAHAN: Yes, having a strong point of view. I mean, let's be clear. Content-based marketing is where everyone's doing all their work right now and so there's so much content it's insane.
The only things that are cutting through are things that are unique. So, if you're not bringing something unique, don't waste your time. Just make five more phone calls.
NEXT MONTH: Peter Sheahan reveals how to align your business with your strengths.