Think Inc.
A forum for Hawaii's
business community to discuss
current events and issues.
Think Inc.
A forum for Hawaii's
business community to discuss
current events and issues.
Holistic vision | Sept. 11 fallout spills over to insurance
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Holistic vision involves the ability to visualize and consider all viable options before proceeding. Leaders with holistic vision are aware of their position and place in the grand scheme of things. They know that their holistic vision must be used to make decisions within a context greater than their own. Holistic vision
By Jerry Glover and Gordon Jones
Adaptive leaders need planning methods that enable them to consider alternative futures, not just assume that the future will reflect the past. Unfortunately, traditional strategic planning has not usually contributed to holistic vision. Strategic planning, which is based on linear and sequential Western cultural values, grew out the need in corporations to plan for future growth. As it traditionally has been used in board rooms and management workshops it has not encouraged leaders to look for options or alternative futures. In our rapidly changing global community, leaders cannot assume that the past will predict the future.
A fundamental premise of traditional strategic planning is that the past can be used to predict the future. To predict future growth trends corporate and government planners use information and data from past performance or market trends. Rarely are alternative scenarios, envisioned from conditions and events not currently occurring, used in the typical strategic planning process.
We recall the story of a marketing vice president of a regional airline in a developing South American nation that had experienced considerable tourism growth during the past decade. In a speech given to a group of local accountants, he presented his analysis of the past increases in tourism growth.
His positive outlook for the nation's tourism industry was supported by polished graphics illustrating recent years' growth trends. In recent years, the numbers of inbound passengers had grown in a linear fashion, and his speech left no doubt that this growth would continue.
He pointed out that the government of the nation had made tourism a major focus in recent years and had committed several million dollars to advertising the nation's attractions in global markets. Market surveys revealed that visitors raved about the beauty of the nation's beaches and the weather. His graphs also showed that local people were increasingly being employed in resorts and other tourist-related enterprises.
The vice president then proudly conveyed to the audience that his airline had just completed a strategic plan, which included purchasing new aircraft and establishing new routes to important international markets. When asked by a member of the audience what the future held, the presenter could only say positive things.
Five days later, a political coup replaced the government. A new government was formed to satisfy the majority ethnic group's desire for greater political representation and equal economic access. The consequences for tourism in the small nation were drastic. Tourists, fearing violence in the aftermath of the coup, cancelled their reservation in droves. Load capacity for the airline went from 90 percent before the coup to 20 percent after it. Resort occupancy decreased to around 20 percent; some resorts even closed. The bright future described by the airline executive only five days before the coup was no longer in sight. Both government and business leaders began thinking and acting in basic survival mode.
The airline executive had assumed the past would predict the future in developing the strategic plan.
Despite the voluminous amount of data collected, the perceptual process of the airlines' leadership did not let them see what was coming. The leaders ignored social unrest that had been signaling the possibility of a coup. In fact, they had been oblivious to the signals they were receiving from the community, choosing to see their linear models and projected future as reality.
Had the leaders been more open to signals present in the country, they might have been able to develop other scenarios and responses to minimize the crisis. The social environment was changing under their collective noses, but the airlines executives and tourism leaders did not see it. The result was maladaptive for the airline.
Albert Einstein said, "Problems cannot be solved at the same level of awareness that created them."
In the next column we will discuss ways for learning to be adaptive.
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Are you Insured? As the fall out from Sept. 11 continues to unfold, many businesses are feeling the effects via their insurance renewal process. Sept. 11 fallout spills over
to insurance, and hits
business in the walletMore and more companies and
individuals are finding themselves
uninsured after paying premiums
for years because they did not follow
or understand the conditions of
their insurance policy.By Tom Harper
All companies must have at least three types of coverage, general liability, limited liability and workers compensation coverage.
Almost all companies in Hawaii will see a double digit increase in their premiums for these types of insurance. Higher risk companies will see a triple digit increase. Business and government leaders across the state are scrambling to find ways to offset these cost increases.
There are really only three effective ways to offset or reduce the increases proposed by most insurance companies.
The easiest way is to increase your deductible or the amount you are willing to pay in the event of a loss before your insurance company covers the remaining balance.
The danger here is that when companies choose this option they may not be liquid enough to meet their short-term debt obligation in the event of a claim, and instead file for bankruptcy protection.
Companies may also opt to switch from a "per occurrence" to an aggregate policy. This means a company may keep a running balance of claim activity up to a certain amount of coverage verses a fixed amount of coverage per incident. The problem here is that companies may be tempted to not report claim activity when their aggregate limit is about to be reached.
The third option is to add additional riders or exclusions to your policy.
These are effectively disclaimers that will make any insurance coverage null and void should certain conditions not be met.
An example of this may be crew complements or certain working conditions like masks, or state licensing requirements.
So what should you do before you enter into business partnership?
Make sure all the companies you do business with are properly insured. Do not accept a policy from a vendor or partner and file it; instead read it and always ask for documentation on these three questions.
>> What is your company's insurance deductible and are you financially able to pay it in the event of a claim?
>> Does your company use an aggregate or per occurrence policy and what are the financial limits placed on both?
>> What are the riders and/or exclusions that will effectively waive all insurance coverage in the event of a claim?
More and more companies and individuals are finding themselves uninsured after paying premiums for years because they did not follow or understand the conditions of their insurance policy.
Additionally, business partnerships should be scrutinized because as any lawyer will tell you if the primary insurer is unable to pay companies and individuals can seek compensation from parent companies and/or other business partners.
Now are you Insured?
Thomas J. Harper is regional manager at Loomis, Fargo & Co. Hawaii. He can be reached at tharper@loomisfargo.com.
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