Since 1982, technology—data processing, increased dependence onelectronic systems and greater use of analytics—has become thegorilla in the room. That gorilla goes anywhere it wants to, andthat's the problem our industry faces today. Leaders around theworld have been trying to push the gorilla in a direction they wantit to go, but the technology gorilla has a mind of its own. Chasingthe advances while trying to predict the future has provendifficult at best, impossible for some, and all are paying theprice for misjudgments. About the time they think they have a goodplan, something totally unforeseen pops up.

Look what happened with Facebook, LinkedIn and Twitter. No onein the industry foresaw the impact social media would have, frombeing a simple sharing platform for students and friends to aplatform that has facilitated the collapse of countries and theirleaders. Facebook now has 500 million members; within a few yearsit will be 1 billion. That is one-sixth the world'spopulation.

What does this have to do with Allstate's decision to purchase Esurance? It suggestsseveral things:

1. Allstate believes past decisions like the use of Encompass didnot work.
2. Allstate's current delivery system is inadequate and poorlymanaged.
3. Technology-based data relationship analytics does not producethe results that were promised by professional consultants.
4. Allstate has too much “academic” leadership.
5. A high percentage of agents have become caretakers of aprice-based system.
6. Allstate leadership and agents exerted too much influence oncorporate policy for rate wars when the delivery system wasunderperforming even with great rates.

Someone in the Allstate organization realizes most of this, sothat brings about the decision to add another “touch point” forcustomers their current system does not seem to reach.

So why is the Allstate/Esurance deal “almost” right?

Allstate has made a big step in the right direction, but Ibelieve it might under perform just like Encompass unless more isdone.

To really succeed, our industry should study the GM model, alsoknown as the “Sloan strategy.” Alfred Sloan was the long-time CEOand president of GM who is credited with developing the “plannedobsolescence” and “follow the person buying” strategies.

Years ago, GM leadership had an epiphany that led to GM becomingthe largest corporation in the world (their later failure happenedfor other reasons). This marketing and production epiphany was sooncopied by Ford and other companies. Quite simply, GM realizedthat as young auto buyers age, they still want to feel like theydid when they were 24 and bought their first Impala 409, Camaro orGTO. This led to demographic-based design progressions, in whichthe Impala 409 became an Impala family car, then an Impala stationwagon. Customers identified with the car name, so the carchanged and aged with the customer. The Pontiac GTO ownerbecame a loyal Pontiac owner, so Pontiac offered the loyal customer“that Pontiac feeling” as they aged. GM did not have toresell the customer on Pontiac; they just had to offer the customerthe right car at the right age and still have the name associatedwith it. This was called “a car for every purse or stage of adriver's journey.”

This program was called “staging.”

• Stage I buyers were single and wanted performance andlooks.
• Stage II buyers were young marrieds who wanted sporty sedans orcoupes.
• Stage III buyers were families that wanted larger four-doorsedans, station wagons or minivans.
• Stage IV buyers, older with some money, wanted luxuryupgrades.
• Stage V, midlife buyers, wanted cars with sportyperformance.
• Stage VI buyers, on a retirement budget, wanted somethingsensible and smaller.

That is what Allstate needs to do with its delivery system.Esurance is perfect for the 24-year-old who has no great need foran agent, but that young buyer will soon be older, and his or herinsurance needs will change. These buyers will always be ableto use technology, but that alone will not suffice forever. There is and always will be a place for agents, but agents need tostep up,work the system better, be the leaders of their agenciesnot absentee owners.

In a recent article from ThinkAnalytics, the authormade this statement: “CRM (customer relationship analytics) is anenterprise business strategy encompassing a broad range ofprocesses and functions…sales force automation, e-commerce,etc.”

The gist of the article was that companies are “missing thevalue generated by analyzing new and existing customerinformation,” as if simply having the information is going to causeunderperformers to suddenly produce greater results. Giving aperson a dictionary does not make them a great speaker, but the bigmoney consultants selling “data analytics” are doing exactlythat.

If agents don't want to be “sales force automized,” they need tomake significant changes to their business models.

Senior leadership has become overly dependent on datacontrolling their decisions; people still lead people, but expectautomaton results.

With its purchase of Esurance, I believe Allstate has made ahuge step in satisfying the GM model. Now it is up to the companyand agents to produce the quality product the customer will want tokeep as they age.