Certainty in An Uncertain World

Certainty in An Uncertain World


by James Berkeley


What does the future picture of your organization look like and how can you stay true to that vision? Last summer in a traditional London restaurant over steak and kidney pie, I sat with the owners of a fast growing Southern Californian brokerage discussing their thoughts. The answer to the first question came quite easily, a larger and more diverse version of today’s business or part of a larger national or global firm. The answer to the second question, implementation took the rest of lunch to answer. As change accelerates, it doesn’t challenge the vision of the future but it certainly creates obstacles on the route to it.

Where do we turn to advice, which fortune teller’s booth do we run to or which charitable investment banker might shine a torch on our road? In reality, there are no hallelujah moments. What we do know is that the route map will take a diagonal, not a vertical line from today to the future. There are simple business management approaches that we need to keep excelling at if our businesses are to operate at or close to their full capacity. Management must be exemplars and oversee the appropriate operating beliefs consistent with the organisation’s strategic direction.

The challenge for many owner-managers of brokerages is that they find thinking hard work. Taking conceptual ideas of how to transform their business into pragmatic steps that everyone within the firm can readily understand how their daily interactions support or hinder the firm’s progress.

The future of brokerages in California is frighteningly simple.

FF        =          (CM x CE) x CB


FF = future of the firm, CM= competency of management, CE = competency of employees, CB = congruency of operating beliefs and strategy, DU = degree of uncertainty and RC = lack of resilience to the competition

Using a scale of 10 (high) to one (low), if you were to give your management a seven (better than most of your peers), your employees a seven, and concur that the operating beliefs of your management and employees were largely supportive of your growth strategy, say a seven, the degree of uncertainty in your firm perhaps a four and its’ lack of resilience to the competition a five, then your firm’s future would look like this

FF        =          (7 x 7) x 7                    = 17.15

4 x 5


If you were now to score your competitors what would they look like? What bold actions could you take in your business to dramatically increase your numbers, not merely improve by two or four points? What is on the horizon (further changes to ACA, private healthcare exchanges, consolidators) that might impact your firm’s future resilience to the competition?

When I talk to owners and executives of brokerages and consulting firms in California and elsewhere they find this a rather salutary process. It is a qualitative not a quantitative assessment but nonetheless it forces them to think where they are today, where they need to be in future and what changes to their business will hasten the speed and trajectory towards their desired future.  In the overwhelming majority of cases, most executives and entrepreneurs are prone to overstating the scores given to their management, employees and the prevailing culture while understating the degree of uncertainty and the firm’s lack of resilience to the competition.


My point here is the factors on the top line are function of each other.  Yes, technology is important but it is only a contributory factor to the competency levels of a firm’s management and employees. Hence when your millennials stress the importance of building your presence on social media or HR suggests investing in a new employee evaluation tool, ask yourself how does it impact the four variables? Is the benefit instantly clear, and positive? You would be wise to be cynical about ambiguous answers before deploying scarce capital and resources.

What you will observe is that the competency of your management will inform the quality of your employees and the prevailing culture. When I think about the history of the California brokerage industry over the last four decades, it is by exception that I can find firms with high competency of management and low competency of employees. In most cases, it is the reverse. Equally there are very few firms with a high congruency of operating beliefs and strategy and a low competency of management. Firm’s with impressive cultures are typically staffed by great managers, who excel at exemplifying the right values and holding their subordinates to account.

There is a lot of nonsense spoken about culture. I am referring to the operating beliefs that govern management and employees’ behaviour and attitudes. What I observe is that if it is left unchecked there is an increasing probability for management and employees to share divergent operating beliefs that conflict with the strategy implementation process. It is easy to slip into lazy generalisations about the intransigent old guard when it comes to succession planning. However, I have just as frequently seen the culture of firms distorted by younger managers, whose past is less well rounded or informed by the early days when the firm’s future was more precarious and a focus on superior service or client acquisition was critical to its’ survival.

The maximum a firm could score is a 1,000 and the minimum is one, on my suggested formula. The closer your firm is to 1,000 the more robust and healthier its’ future. Equally, the closer to 0, or even the higher the negative number, the greater your concern should be about the firm’s future and its’ well-being.


Here are some rough guidelines:

  • Green Light: 50 is an acceptable grade. If you can maintain or exceed that score, the odds are you on track to succeed with your strategy
  • Amber Light: 25 is a borderline grade. You might be operating reasonably well (winning new accounts) but the likelihood of achieving your strategic goals is questionable
  • Red, Flashing Light: Under 25, action is required immediately. Four-fifths of the equation is in management’s control if management is minded to act. (Most businesses cannot do much about the competition but you sure can influence the other areas).


A warning note, just because you have a high score don’t automatically assume that you have a better business than a competitor down the road. There are brokerages that consciously focus on employee demographics, client relationships and benefits products and services that will have a higher degree of uncertainty and less resilience to current and future competition. For example, firms whose clients are predominantly employers and employees with a greater propensity to seek or a need to procure healthcare insurance through a public or private healthcare exchange (low-skilled, hourly, health issues).


Most brokerages in the state with the possible exception of national firms, Marsh, AON or Willis are able to apply few if any levers to increase their firm’s resilience to the competition. Undoubtedly, keeping abreast of market changes and applying that knowledge to find new ways to attract new customers, create stronger value propositions and apply smarter approaches to create and promote their expertise will help. The other three variables are directly impacted by management’s ability to implement their strategy.

The key learning point is this: the rigour and discipline management bring to bear on the process of implementing their firm’s growth strategy will determine their success or failure. The future is in their hands, not in luck or a fairy godmother waving a magic wand.  My formula is here to help you, it is not fool proof and you may have a more appropriate approach. What you should walk away with is a stronger understanding of your firm’s relative ability to stay on the right track and make wise decisions along the way.

James Berkeley is an expert in helping owners and managers profitably grow and expand, create new destinies for their firm and minimise the risks. He has worked in and consulted to in excess of 50 businesses from large global brokers to boutique brokers, in the US and over 17 countries. He is known for his Profitable Growth Regime. He can be reached at james@elliceconsulting.com Web: www.elliceconsulting.com Market Leading Growth Blog: www.jamesberkeley.com


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