Fairly high on the crisis-management priority list, between calling the fire brigade and sacking your press officer, must come revising your website. As Independent Insurance, the erstwhile &£1bn shooting star of its sector, called in the liquidators this week, its website was still carrying the legend: “Looking for a job?” It promised a “spectacular career move” illustrated by an aspirant executive strapped to a kind of rocket on rails.
It would be unkind to suggest that, from the photos I’ve seen, you’d need a fairly powerful rocket – a space-shuttle booster perhaps – to lift Michael Bright, Independent’s outgoing (in every sense) deputy chairman and founder. So I won’t. But he may be looking for a job for some time after the Financial Services Authority (FSA) has finished with the report from “forensic” accountants PricewaterhouseCoopers into Independent’s demise.
If the FSA concludes that Independent’s underwriting procedures were at fault, Brighty (as he’s blokishly known in the industry) can expect a rocket of an entirely different kind. That’s a shame, not just for him – beleaguered staff and clients and for the insurance industry, but also for the marketing profession.
Whatever the faults that caused Independent’s meltdown, nobody can doubt that Bright made that “spectacular career move” in the late Eighties when Independent had its genesis. In a notoriously dull industry, Bright burned brightly. But not in the manner of other bright young things who pontificated that insurance wasn’t worth the paper it was written on unless it was online, or those who had prescribed earlier that insurance was a direct marketing industry in which intermediary salespeople were a waste of margin space.
It is the fate of the imploded star of an otherwise dry and dusty business to be subjected to a minute scrutiny of the more esoteric elements of his colourful lifestyle, while the essential achievements of building a business in a manner that has not occurred to anyone else disappear into a black hole. So it is that we learn Bright used to lay out copies of Playboy in reception. Perhaps he occasionally parked on yellow lines or travelled a station further on the train than his ticket allowed.
The more interesting aspects of Bright’s business acumen are likely to be subsumed in such prurient details. I am no apologist for him, nor do I take lightly the prospect of any malpractice that may have left investors short or ruined. We’ve seen enough of those over the years, from Roger Levitt to Robert Maxwell, and it’s as well that any shortfall in reserves in financial services companies is identified early and inadequate traders removed from the market.
But good ideas get lost in bad practice. And, whatever the merits and demerits of Bright’s insurance practice, the fact he was exceptionally innovative in a pedestrian me-too industry will be lost. As I say, this tendency is manifest in the rush to deal direct with the market and to serve the client online.
Not every great marketing idea has to be revolutionary or the work of an inventor. Some of the best marketing arises in circumstances where an operator identifies an abandoned or discredited methodology that still presents a market opportunity. Look at the sandwich chain Pret A Manger, or airline easyJet. The former spotted that there was a market for good, fresh, prepared, snack food where accepted market wisdom had it that there were only narrow-margin fast-food emporiums or small independents. The latter recognised that budget pricing was more than a niche market in air travel, while the majors pursued complex premium and executive offers.
Bright recognised that, while insurance companies in the Nineties pursued ever more austere ways of cutting costs, there was a huge and relatively sophisticated brokerage distribution network going begging. Independent set out to be the brokers’ friend. To that end, Independent was a paradigm of counter-intuitive marketing expertise.
Distribution, as a business function, is all too often the poor cousin of more glamorous metropolitan marketing resources such as research and development and advertising. Or perhaps distribution is more subject to febrile and fickle fashions. Little more than a year ago, distributive wisdom had it that anything – and particularly financial services – would be delivered more cost effectively by the Internet. Prior to that, it was all telesales in financial markets.
Bright saw through that, to prosaic old systems of personal service and motivation by commission payments. And it is instructive that Independent’s meteoric rise was on the back of an identification of a market neglected rather than a market discovered. As a consequence there are good lessons to be learned from what is otherwise a sorry tale.
The first is that, if you’re going to commit to a distributive system that is more costly than your competitors’, you’d better be careful where you attempt to make commensurate savings. I suspect that this is where Independent came unstuck. The second is that good marketing is let down by lax administration just as much as a strong business is let down by weak marketing. Bright’s may have turned out to be a business basket case. But it could yet offer a model for sound marketing practice.
George Pitcher is a partner of issue management consultancy Luther Pendragon