Case Study No. CS050711
Advisor: Doron York
The Company: A 70-year-old family-owned insurance agency & financial service company in Dearborn, Michigan.
THE CHALLENGES
After a successful transition to the second generation, the agency was contemplating its transition to the third generation and faced the following challenges:
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Revenue in the property/casualty line of business was stagnating, losing approximately 4% per year.
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Revenue from the life department was subsidizing the business.
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Total agency profit, without contingencies, was predicted to be a $50K loss.
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Compensation expense was high for a company of this size.
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There was a high degree of frustration and tension among the partners.
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The workplace was not a pleasant place to work.
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There was no collaboration, strategic action plan or cross-selling occurring in the company.
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Customer satisfaction was at an all-time low.
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The managing partners were not aligned on the future development of the business. The Breakthrough Target
THE PREDICTABLE FUTURE
Without intervention and/or reinvention, the business would have continued as follows:
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The partners would struggle to create and develop an effective transition plan with the alignment of all the partners
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The agency would continue to lose money
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The life department would continue to subsidize the business
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Most likely, the younger generation would pursue other career opportunities and the company would be sold or closed down within 5 years
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The family legacy would be goneThe breakthrough targets were as follows:
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.Breakthrough in the ability to generate revenue
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Increases the firm market share
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Creation of a viable operating model
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Divers the firm value proposition
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Creation of a bold future for the company
THE BREAKTHROUGH TARGETS
The breakthrough targets were as follows:
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To effectively transition the management of the business to the third generation
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To redesign the business and create a 5-year strategic plan, identifying new business and market opportunities
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To invent an inspiring and invigorating future for all parties
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To increase revenue, reduce operating expenses and have the company be profitable by year-end
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To create a pleasant and fun workplace
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To develop an exit strategy for the senior partner’s Results
THE RESULTS
After a year of coaching, the business achieved the following results:
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Completed a comprehensive and effective transition of the company to the third generation
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Redesigned and remodeled the entire office with a new, inspiring physical space and a complete overhaul of technology
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Created a new operations management model
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Updated the company’s by-laws, and redistributed ownership of the stock
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Shifted the management decision-making process from family-driven objectives to one based on business objectives, with specific accountability and ownership
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Instituted a new financial decision process model
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Drastically reduced operating expenses and redesigned the partner’s compensation plan.
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Completed a 3-5 year strategic business plan with specific growth targets and financial accountability
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Aligned the partners on the strategic direction of the company
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Increased company revenue by 9%
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For the first time in many years, the company generated a surplus at year-end
THE R.O.C
Based on the year-end financials, the breakthroughs coaching generated 4X times R.O.I.