For The Future Indicative, Ep 1 Part 1
Transcript
ALEX EFFGEN
Welcome back to the Future Indicative. I’m Alex Effgen, and in Part 2 of our look at Origin, we’ll continue to explore the four-category framework that we define as the Four S in the word business. Part 1 investigated SPECIALIZE and SELL. What is this? And who needs this?
MATTHEW JOSEFOWICZ
“I think that the model that Novarica had, which was the focus on that executive and building a team of people who were equally focused on that executive, some of whom had had that role themselves, or a similar type of role…I think that personal trust that we built with that community of several hundred insurance CIOs was the core value of the company.”
ALEX EFFGEN
That was Matthew Josefowicz, entrepreneur and founder of the insurance research and advisory firm, Novarica. He found his niche and built a team that communicated (and delivered) its value to the principal heads of architecture at North American insurers. But as we learn over and over again from world history, it’s one thing to build an empire. It’s an entirely different thing to keep it.
In Part 1 of this episode I defined SECURE by a question: What can disrupt this? In business (and life for that matter) disruption can be an external force–cyberhacking, regulation, emerging technologies, even a shift in your market’s priorities. But it also can be an internal force. It is within the nature of systems to fall apart, and sometimes that failure comes from an inherent flaw.
In his Poetics, the philosopher Aristotle defined hamartia in Greek tragedy as the protagonist’s error in judgement that leads to “a chain of actions which culminate in a reversal of events from felicity to disaster.” In short, to make a mistake, not necessarily from a moral failure, but from an inability to account for all variables, whatever the reason.
MATTHEW JOSEFOWICZ
“I’m going to sound a little bit like a broken record in terms of keeping focus on customer needs. A lot of times you can lose sight of customer value and customer needs as you focus on growth imperatives, or as you focus on operating efficiency, and you can start to sacrifice customer experience for better profitability or product portfolio expansion, or something that you think is going to lead to growth.
And both of those are important. It’s important to keep growing your product portfolio and to keep improving your efficiency to the degree that you can. But when they come at the expense of customer value, that’s kind of the beginning of the end because unless you are selling something with a tremendous amount of lock-in where the customer really doesn’t have alternatives. As soon as they start to feel like they’re not your priority anymore, it’s very easy for them to go elsewhere.”
ALEX EFFGEN
Two thousand years later the Aristotelian poet Alexander Pope wrote, “To err is human.” How can we secure ourselves from our own mistakes?
MATTHEW JOSEFOWICZ
“Everybody makes tons of mistakes throughout your career and making sure that you learn from them and don’t repeat them is what mistakes are for. It’s certainly forgivable to make a mistake once, and everybody’s going to. And the question is just how do you avoid making that same mistake repeatedly? One mistake that I made early in my career, when I was raising money for my first startup, was really a version of having the perfect be the enemy of the good.
The truth of it is letting anxiety and insecurity prevent you from acting effectively. So when I was raising money for my first startup, during the Web 1.0 Boom, there was an investor who was a friend of our technology partner who was interested in what we were doing and asked to see some of our customer feedback.
And we had a lot of customer feedback in the form of raw emails, but it wasn’t consolidated, it wasn’t well presented, it wasn’t highlighted effectively. And it took me a few days to wrap my head around doing that and then putting it together in a form that I was confident in.
And I didn’t communicate effectively with the potential investor while I was doing that. And so by the time I showed up at his office to drop off a packet of customer stuff—and this was you know in the days before emailing long documents was typical—his response was, I asked you for this three or four days ago and I haven’t heard anything from you since then, so now I don’t believe anything you say.
And it was an important lesson for me; it goes back to being audience focused and being focused on your stakeholders rather than yourself. I was managing my own anxiety about presenting information I wasn’t confident in. And I wasn’t even thinking about his anxiety of collecting information about a young entrepreneur he was thinking about investing in. And what can I do to make him feel more comfortable with me as a potential business partner?
So that’s one example in my personal career of learning from the past. And I think that’s the most important thing that anybody can do is make sure that your mistakes are not in vain. It’s a little bit like that old story about IBM that some guy lost a million dollars and walked into Thomas Watson Jr.’s office expecting to be fired, and he said, Why would I fire you? I just spent a million dollars educating you on what not to do.
Our mistakes can be very expensive lessons as long as we learn from them.”
ALEX EFFGEN
In talking about security, Matt mentioned the importance “to keep growing your product portfolio and to keep improving your efficiency to the degree that you can.” Reinforcing your base is important, and a good defense can be a great offense. But to SCALE your business opens up the possibility of introducing disruption. How do we expand this business without setting ourselves up for failure?
MATTHEW JOSEFOWICZ
“A lot of failures come from trying to expand beyond your natural market without recognizing the additional investment required to do that.
Scaling and scaling rapidly and sustainably is a very challenging goal for a lot of organizations.
We used to say it’s easier to move one square than two. If you have a product set that’s working for a particular role, you can either try to develop more products that work for that particular role or you can try to see what other roles might be interested in the same kind of approach.
So for example, early in the Novarica journey we tried to expand into another financial services vertical. And we realized that the profile of the CIOs in that vertical was too different from insurance CIOs.
The industry was too consolidated, so they were too top heavy. The main firms were already well served by other market competitors, whereas insurance had been kind of neglected. And that other vertical was less well-primed to share information in our sort of cohort model than insurance was, which had 100 years of LOMA and IASA as a model of information sharing within the industry.”
ALEX EFFGEN
Then if your clients are already captive, you should continue to learn about their needs and deliver value?
MATTHEW JOSEFOWICZ
“So for us, it was about increasing our customer intimacy or continuing to build on our customer intimacy by providing additional services. We also realized that one of the biggest challenges for insurance CIOs was team education, you know making sure that members of their team understood the whole broad area of insurance technology beyond their immediate point.
And that’s when we introduced the online training capability and built out a whole online training course, which was well received by the folks that used it, but we didn’t have the resources or the organizational bandwidth to promote it super effectively at the time.
What I would say is if it grows out of customer intimacy and anticipating customer need, then it has a strong potential for success. And if it’s coming from your own need to shove more stuff down a pipe you’ve already built, then you might be successful with it temporarily, but it’s not really going to be on as solid a foundation as if you start with what does the customer need or want even if they don’t know it yet.”
ALEX EFFGEN
Scaling takes a foundation of solid customer understanding combined with correctly allocated resourcing. I’ll put it another way: overcommunicate and do not underestimate.
MATTHEW JOSEFOWICZ
“The most important thing is not to underestimate what the resources are of expanding either into a new market segment, even if it’s an adjacent market segment or a new role within your current market segment or a new value proposition within your current market segment.
And again a good example of that is the online training. We were able to build that product very easily, but we did not have the sales organization to sell that product to the people in charge of buying online training, because our business development organization was directly targeting the CIO. And even if the CIO was the indirect beneficiary of our online training program, the budgets and the way that those organizations buy online training was different from the way that they buy research and advice. And so we actually didn’t have the buyer relationship that we thought we had, when we introduced that product. Because the buyer was actually somewhere else in the organization: usually inside HR. And they were used to a different kind of experience—buying an online training program—than our core client was used to buying high-touch advice.
So that was an example where I think that could have been successful if we had made the organizational investment to essentially hire a full-time product manager and a full-time salesperson that were focused exactly on that constituency.”
ALEX EFFGEN
We began this episode of Origin at the liminal threshold of Novarica’s story. In 2021 it merged with other research, advisory, and data companies to become Datos Insights, a research and advisory partner covering not only insurance, but also banking, payments, securities, investments, and cross-practice topics like cybersecurity and fraud/anti-money laundering.
MATTHEW JOSEFOWICZ
“One of the reasons that we were receptive to the opportunity to … become part of a larger organization is we knew that we didn’t have the organizational bandwidth to scale further as an independent company.
And so the opportunity to join with a company with more resources and more established footholds in other markets was something that we wouldn’t have been able to do on our own without significant investment–not just financial investment, but organizational investment. We would have had to bring on teams to expand into different verticals and give those teams enough runway. And it takes in a relationship-heavy business like what we had, it takes a long time to build that position of trust at a level of scale.”
ALEX EFFGEN
Thank you for joining us on the Future Indicative, a podcast produced by me, Alex Effgen, and Indicate Marketing. Our mission is to show what great narratives accomplish for your industry. As mentioned before, the views expressed here are solely our own, but we love to share them, so reach out to us at IndicateMarketing.com. Let’s explore how our humanity can help drive your business growth and market positioning. We appreciate your patronage, and continued support.
