Creating trust within the business, automating processes, serving a broad range of requirements – and climbing Mount Everest. See how one CIO has tackled his professional and personal goals.
As the CIO of CNA Insurance, the seventh-largest commercial insurance company in the United States, John Golden is a naturally driven goal-setter. Since coming over to CNA from Ameritech in 2001, he has shouldered responsibilities in both the business-processing and technology areas, making effective decisions on how technology investments will contribute to corporate profitability. During a recent interview, he discussed the challenges of his role as CIO — and how he faced his biggest challenge within himself.
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1. Jeff: You mentioned last fall that one of the areas you were concerned about was a lack of marketing. How has that become a bigger focus for you this year?
John: When I look at my personal and organizational objectives, one of the areas where I’ve been able to use marketing is in building credibility and trust within the business. Establishing credibility is a critical factor in things like attracting and retaining talent, maintaining rapport with your vendors, and strengthening internal relationships with the board and your business peers.
At the same time, it’s important to avoid taking false credit or taking credit in advance of its credibility. What I mean by that is sometimes IT organizations take credit for success when it occurs internally, without waiting for the business to be able to recognize and appreciate the benefits. You’ll get a less favorable response if you market your credibility before the effects have been fully realized.
Particularly with some of the changes in the company, including a new CEO coming in, our internal marketing has become very important. The technology group had a lot of credibility in the bank with our previous CEO, and we had to start over to some degree in rebuilding that confidence. So that was a significant focus of mine in the last six to nine months, being able to appropriately market our capabilities.
There were also a lot of things we needed to do to move ourselves forward that weren’t going to be done without senior-level support. We were very expense-focused, and there were different levels of risk-taking profiles among people who were driving decisions. We realized with a new CEO coming in there might be an opportunity to readdress the backlog of ideas and transform our IT organization. At the same time, we knew we had zero credibility. We just hadn’t built any credibility yet to push an agenda, and this new CEO was not technology-focused. He was growth-focused. So we asked ourselves how we could use technology to move the business forward.
To start with, I gave him an initial outline of what I wanted to do. Then I brought in an external company, McKinsey, which was something we hadn’t done in eight years. I said we would open the kimono and have them evaluate us, tell us the good and bad, and what we can do to make things better. When they presented their report, it was similar to what we had concluded internally, and that gave us credibility. We took a chance, and McKinsey confirmed our assessment, which showed a great deal of transparency and our willingness to make ourselves vulnerable.
2. Jeff: So the key factor for you was having a credible third party support the goals you were proposing?
John: Right, and this was a list of things like managed services and outsourcing key functions. That type of movement wasn’t very popular here. If I had just moved forward with it, there would have been resistance from some of my peers about the risk, and that would have been the first feedback to reach the new CEO. So instead I said, “Here’s what I’ve proposed initially and there’s some interest in what this could do for us, but we should commission someone from the outside to really evaluate what I’m suggesting.” McKinsey comes in, integrates my peers into the process, and outlines what everyone else is doing that we should probably be considering. That additional credibility with my peers paved the way for the discussion with the CEO. It became not my discussion but our discussion with McKinsey.
3. Jeff: Can you describe a couple of the things that McKinsey confirmed for you?
John: One of the important things was to get good benchmarks from the external analysis in terms of capability, user experience, and a cost perspective compared to our competitors, rather than just getting better than we had been. As a result of this industry comparison, we were able to make some significant governance changes within the company, which was something I had personally been driving. Number two, we were able to create cost savings by setting up a different efficiency model. The pendulum of compliance and regulation that essentially adds a tax to everything had swung way over toward compliance at a substantial cost to the business. Our position was that we would do everything possible to ensure that there was no way anyone could ever say we were not compliant. Now we’ve balanced that by doing what is necessary to fully meet the standard in the most cost-effective manner.
4. Jeff: A couple of years ago, you started an “operational platform transformation” initiative, which has directly saved CNA in the neighborhood of $30 million and reduced other expenses by about $250 million. What were the biggest areas you were able to transform to get this kind of return?
John: The $30 million savings is in the IT space, and the other $250 million is in terms of the business. I have responsibility for both the IT team and the back-office operations with CNA. One of the areas we went after was cash flow, such as in our receivables and bad debt. We also went after a large number of specific processes that were very small with the objective of automating. By applying automated systems, people are now touching about 30% of what was being managed manually before. We put in a completely new small-business platform that gave us one system of record and greatly simplified the financial management language through the use of Oracle’s PeopleSoft financial tools. That improved everything from our customer experience to our ability to bill and book premiums.
5. Jeff: How do you track the impact of added technology value for the end-user?
John: This is one reason we wanted to get to a greater level of enterprise governance and transparency in the IT organization. I’ve been a big proponent of measuring the business value of our projects. We do the net present value, return on investment, and cost-benefit analysis on our projects, but I would say as a company we need to be more successful with the tracking mechanisms to ensure that those things always happen on the large scale.
For example, we know that a project is going to get us from x-premium to y-premium and create a certain amount of profitability. We can generally track that, but we haven’t been able to get the operational metrics that would tell us specifically what to expect and to establish controls. For instance, premiums may be going up because rates went up or they could go down because the economy is soft and not as a direct result of this new capability. We haven’t been successful in getting the level of detail we need yet. Now that we’ve gotten the transformational initiative for governance and transparency underway, we will be measuring that on every single scorecard.
6. Jeff: How does your customer-interaction experience in telecoms at Ameritech translate to the insurance business?
John: The main advantage for me has been in the area of operational efficiency. I say that because the majority of the interaction for us as a commercial property and casualty carrier is with our independent agents. Our relationship with these agents is a different customer model than I had at Ameritech, where we managed mass consumer or medium- to large-customer segment. These CNA customers are looking first for the best service, then price, and then they are looking to drive efficiency in their operations. We are extremely focused on customer service, and the challenge is that there are literally thousands of these independent agents with differing needs for technology. We know our relationship with our agents is our leverage point for growing our business. We need to serve the small independent agents in small town USA with two producers and limited technology resources just as well as we serve a corporate broker with a thousand producers and a full technology staff, so the range of requirements is very broad.
7. Jeff: Where have new developments in technology affected your work most?
John: The things that have helped us most are mobility technologies, imaging, document retention, and manipulation tools, like the e-doc applications. Our agents need to be able to take our products and put their branding on it. We’ve improved our capabilities in remote access and mobility hugely over the last couple years. Agents can be discussing products with a client and go to our resources electronically and pull up a policy quickly. It needs to have their name and agency on it at that point rather than just ours, and they have immediate access to the materials while being able to co-brand it on the fly.
8. Jeff: You emphasize the importance of credibility for CIOs. Are there some things a CIO can do to establish credibility more quickly or does it just take time to build a history of success?
John: I’m having to take my own medicine here. One of the principles I champion and need to make sure I’m following myself is to be aggressive rather than passive. Sometimes I find myself being cautious, but at the end of the day I still take an aggressive approach overall. Before you can do that, make sure you bring whatever agenda you’re pursuing into the context of what the other person is thinking. Don’t presume to know what someone is thinking or depend on what has historically been there. We should do more than seek change; we need to enable the change we’re seeking. Know what change the leadership is interested in and be a leader in enabling, driving, and adopting it. I want to make sure my CEO knows that I’m behind what he wants to do and I’m not going to wait for him to suggest a technology project. I’m going to engage the business aggressively to achieve those goals.
Second, if you want to build your credibility with the business, you’ve got to talk like the business. Just like learning a new language, if you just memorize vocabulary you’re not going to be successful. You’ve got to reach the point where you begin to think in that language, and in this case you have to think like the business to be able to talk and execute like the business. The leadership wants to know that you are not just translating the language, but that you’re thinking in the language of the business.
9. Jeff: How much does the change in the federal administration and the overall business-government relationship play a part in your industry?
John: We are watching that. There’s certainly going to be a profound impact in healthcare, and also in the disclosure and transparency of investments. We’re also looking at the potential for changes in national insurance regulation. Today, insurance companies are regulated at the state level, so we have 50 regulators. There’s been a proposal for a federal charter for insurance companies, which may mean we have 51 or possibly that we would now have one. We would like to see one, but not one more.
10. Jeff: In your spare time over the last year or so, you’ve taken up some serious mountain climbing as part of your own personal recovery plan. After the “Golden Expedition” to the Himalayas this spring, was your recent Mt. Rainier trip any less thrilling for you?
John: To give you the setting, I was told by my orthopedic surgeon in 2004 after 23 knee surgeries that I wasn’t going to be able to walk much longer. My left knee had degenerated to a point where it was no longer repairable. Not comfortable with that analysis and being 37 years old at the time, I decided there had to be another alternative. I went around the country getting information on various experimental procedures for knees and narrowed it down to a doctor here in Chicago and a transplant process where they actually take bone and soft tissue from another person who is deceased or soon to be deceased. After some tests to determine whether I would be a good candidate, I went forward with the operation in May of 2005. Afterward, there was extensive rehabilitation to relearn to use that leg both as a result of the surgery and the fact that I had not been very mobile for years prior to that.
I am very goal-oriented, and as part of the rehab, I decided I needed a goal for myself. The doctor told me, “No running, no jumping,” and so on, and I asked about climbing mountains. He said that could work, but he will tell you to this day he thought I meant something like a bluff in Wisconsin. So I talked with Ed Viesturs, who is one of the premier climbers in the United States, and told him I had never done this before but I wanted to know if he thought I could do it. I told him, “I’ve got one shot. I want to make this a good mountain, one that I can be proud of. What would that be?” He suggested Rainier and pointed me to a guide company there. That conversation was in June of 2007. I started training and in September, I successfully climbed to the summit of Mount Rainier, which was a big deal for me — very emotional. I had gone from being fairly disabled to being able to climb Mount Rainier.
To make that climb, I went from about 250 pounds to about 185 pounds. I was grateful to be able to take advantage of this second chance and the gift I’d been given. Beyond that I also wanted to be able to give back to other people, so when I got back I asked my doctor what else I could do. His answer was that there was a need for greater awareness around taking better care of orthopedic health and investment in orthopedic research, so I’ve now started the LiveActive Foundation for orthopedic issues. In thinking about how I could create the greatest awareness and fundraising, I came up with this idea of climbing Mount Everest. I called up the guide who had gone up Rainier with me, and he hung up on me.
I called him back and said I wanted to know what it would legitimately require mentally, physically, skills, training, everything. So we went through it and we created an in-depth plan, and over the next year, I climbed 14 mountains. I had to learn the skills technically, expedition-style living, rock-climbing, ice-climbing, and how to use the tools. I had to further aggressively transform my body, as well as get the approval of the board of directors, my leadership team to take over for me, and get my family involved. After each mountain there was a checkpoint, and I had to ask whether I was making the necessary progress and be ready to stop at any time. I was finally ready to do the Everest climb this spring. The Discovery Channel filmed the entire trip, which will air in November, and we were able to raise a good deal of money for the foundation.
Now to bring it up to the present, one of the fundraising items I did last year was to auction spots for another Rainier climb. We had 11 people bid on that, so I took all 11 up on this last trip to the top of Mount Rainier. You can see the highlights of that trip on our Web site. For me, the pleasure has not been so much in summiting the mountains as in the impact this whole thing has had on my life and on other people’s lives.
To sum up my story, I’d like to say that as CIOs, we have an important window of opportunity right now. We have to stop talking about IT vs. the business and be business leaders. I’m always concerned and sometimes bothered by the way we pigeonhole ourselves as IT leaders and technology leaders. The ways we present and define ourselves are the only limits to the impact we can have on the business. So to frame it positively: Expand your role, expand your thoughts and capabilities and you will have a bigger impact. That’s not a political play or an organizational play. It’s about having influence and being able to change and drive the business. When I hear a new CIO talking about having a seat at the table, I just want to say that getting an invite to the table in itself really means nothing. The question is whether you’re going to be a witness or a participant. Ask yourself what it’s going to take to be an active participant.
- John Golden’s LinkedIn profile: http://www.linkedin.com/in/goldenjohn
- Link to LiveActive and John’s Climb Journal: http://www.goldenexpedition.org
Follow Jeff Cerny on twitter @jeffcerny