Strategic leadership key to sustainable growth in insurance

TODAY, we revisit an article that was published on February 6, 2020, espousing the significance of strategic leadership to sustainable growth in insurance.
As renowned leadership guru John Maxwell asserts, “Everything rises and fall on leadership”.
Achieving sustainable growth is a desire that is challenging to achieve in every organisation.
It is particularly crucial to insurance firms whose collective contribution to Zambia’s gross domestic product (GDP) is still less than three per cent.
Therefore, strategic leadership becomes a pivotal catalyst in realising sustainable growth.
Given the rapid change in insurance, driven by several factors such as climate change, economic challenges and rapid technological changes, strategic leadership plays a pivotal role in ensuring the industry achieves sustainable growth.
While strategic leadership should inevitably start from the top, it should not only be reserved for those at the top; it is about discovery and the ability to influence the group towards achieving a corporate objective positively.
Strategic leadership has many definitions.
One scholar refers to strategic leadership as a manager’s potential to express a strategic vision or part of it, for the organisation, and to motivate and persuade others to acquire that vision.
It can also be defined as a disciplined deliberative effort of providing long term direction that takes account of environmental factors and motivating others to execute that direction.
Simply put, a strategic leader provides strategic direction, communicates and actualises it.
On the other hand, sustainable growth is a progression that stands the test of time whilst being ethical and responsible for current and future communities.
The insurance industry is part of the financial sector.
It is a critical factor in Zambia’s economic stability and growth, helping businesses and individuals to recover from all kinds of financial losses.
Zambia’s financial sector accounts for eight per cent whilst insurance accounts for less than two per cent of Zambia’s GDP.
The industry has recorded a decline in financial performance over the period between 2014 and 2018.
Gross premium income growth per annum fell from 18.1 percent in 2016 to 9.6 percent in 2017.
It further dropped to 6.1 percent in 2018, although gross premiums over the period rose from K1.2 billion to K1.9 billion in 2018.
As we link strategic leadership to the insurance sector, it is essential to cite a few examples of organisations that failed to sustain their growth, and this can mainly be attributed to failed strategic leadership, consistent with John Maxwell who attributes everything to leadership.
Kodak, founded in the late 1880s, became a giant in the photography industry in the 1970s but filed for bankruptcy in 2012.
For almost a hundred years, Kodak was at the forefront of photography with dozens of innovations and inventions, making this art accessible to the consumer.
Analysts attribute the failure of Kodak to lack of strategic creativity which led to misinterpreting the same line of work and type of industry that it was operating with a fundamental shift towards the digital age.
It was coupled with the failure to reinvent itself as well as an organisation overflowed with complacency.
Many other companies can be likened to Kodak such as Nokia, Blackberry, and Yahoo, among others.
Locally we have organisations like Zampost and Zambia College of Pensions and Insurance College Trust, whose existence has significantly been threatened by competition.
With specificity to insurance, two insurance firms were liquidated in 2018 by the Pensions and Insurance Authority.
The reasons that led to the failure of the organisations hitherto relate to either uncontrollable of controllable issues.
The former relates to the dynamic and complex business environment, while the latter underpins failure through inadequate strategic leadership.
According to Forbes, fewer than 10 per cent of leaders exhibit strategic skills.
Some of the key features of strategic leadership include strong communication skills as well as collaboration.
Communication in insurance is very vital, both within and outside the organisation. Internal communication involves clearly outlining the strategic direction of the organisation by leaders and convincing the employees by projecting the fruitful outcomes of the changes.
External communication has many facets ranging from marketing, advertising, engaging, etcetera.
Strategic leaders are interested in increasing mind share as they grow their market share.
For example, one of the best African insurance markets good with mind share is in South Africa.
They create appealing messages and use various platforms to communicate with customers.
As observed by Alexander in 1985, communication is mentioned more frequently than any other single item that promotes successful strategy implementation.
Although inexhaustible, other critical features of strategic leadership are good listening skills, innovation, information-driven, broad skills base, focus and courage.
Given the severe need to achieve sustainable growth, strategic leadership becomes very useful to the insurance industry.
Strategic leaders exhibit their agility by aligning short term to long term goals as too often; leaders organisations get mired in the day-to-day goals.
Many thanks to Dr Mweemba Muungo, president of Zambia Institute for Strategic Management for contributing notes to today’s topic.
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