Leadership Secrets of the World's Most Successful CEOs ~ Azaa's Weblog

Chapter 61: Sy Sternberg, Chairman and CEO

Overview

New York Life

Don’t outsource your strategic thinking.

“Simply put, we don’t outsource our strategic thinking,” states New York Life’s CEO, Sy Sternberg. “This might sound strange, but you would be surprised at how many companies have become dependent on external advisors, consultants, and researchers for much of their strategic decision making.

“Consultation and research can help you test your hunches and sharpen your thinking, but you can’t let those tools serve as a proxy for leadership.

“I encourage everyone on our team to think independently and to resist becoming intellectually captive to the pronouncements of ‘ experts’ or to the latest trends within the industry. In our business, it seems as though there is always someone eager to convince you that you must abandon your business model and adopt theirs. During the dot-com days, the experts were telling us that selling life insurance through agents was a thing of the past, and soon, all transactions would take place online.

“Had we listened to this advice, the results would have been disastrous. The fact is, we are not that easily blown off course. We have a strong culture. We have a clear understanding of our unique strengths. And most important of all, we know that leadership means doing your own thinking and going your own way.

“There have been several instances, in recent years, where New York Life has distinguished itself by not following the herd.

“In the late ’90s, during the height of the bull market, many insurance companies rushed to demutualize. Like New York Life, these mutual companies were not publicly traded and had no shareholders. In mutual companies, policyholders, not stockowners, vote for board members and receive all dividends.

“Our newly demutualized competitors were able to structure stock deals to acquire other publicly owned insurance companies. But, in 1998, when we looked at New York Life’s strong cash flow and our ample surplus, we concluded we had no need to issue stock to fund future growth.

“In a recent report on New York Life, the AM Best rating agency concurred: ‘Sy Sternberg and his board found that their company already had what other companies coveted and hoped to achieve through demutualization: a powerful brand, a productive distribution system, strong capitalization and revenues.’

“But the bigger issue was my personal belief that there is an inherent-conflict between managing a company for the needs of your policyholders versus the demands of shareholders. Investors tend to judge performance by how much you can maximize profits quarter-over-quarter or year-over-year. Policyholders, on the other hand, are looking for long-term security and stability 20 or 30 or 40 years into the future.

“The decision, for me, was absolutely clear: Our most important obligation is to serve the needs and respect the priorities of our policyholders.

“In the end, we gained some significant competitive advantages by maintaining our commitment to mutuality. We can still offer our customers participating (dividend-eligible) whole life, a product that continues to grow in popularity. More importantly, our mutuality lends us an important distinction: People know us as an insurance company whose every action is uniquely aligned with the interests of its policyholders.

“I also took what some might call a contrarian view on another recent trend in the industry: the move toward financial services consolidation. A few years ago, many of our competitors were busy reinventing themselves as financial services supermarkets, diversifying into banking and brokerages.

“All of the consultants and the brand experts were trying to tell me that our company was too narrowly focused. They even suggested we give some serious thought to changing the New York Life name, a move they claimed was necessary if we hoped to sell other, noninsurance products.

“My instinctive judgment said, ‘Our name is our most powerful asset. Why would I jeopardize that?’ Additionally, I had to conclude that, even in a mature market, there were enormous opportunities for growth in the life insurance business. First-year premiums for policies sold in the U.S. exceeded $11 billion annually. However, no single company had more than a 6 percent share of the U.S. life insurance market. In a fragmented market such as this, market share gains of just 2 or 3 percent will have an enormous impact on a company’s sales revenues.

“This is exactly what took place at New York Life. At the end of 2000, New York Life’s market share was about 4 percent. By 2002, we had doubled our sales by capturing another 3.4 percent of the market. When you couple this performance with our strong growth in emerging international markets, such as China and India, it is apparent that our narrow focus on life insurance is actually a strategy for rapid, robust growth.

“Certainly, we will continue to seek opportunities to market other financial products that are a good fit with our brand and our strengths. But rather than tinker with our identity, I think it would be far wiser to persuade consumers that the brand attributes of our life insurance business—financial strength, integrity, and humanity—are an integral part of everything else that we do.

“You move towards real leadership by becoming less dependent on others to do your strategic thinking for you. You move towards real leadership by demonstrating originality, independence, and confidence.

“How do you become a leader? The answer is simple: Learn to trust your own judgment. Learn to stand on your own two feet.”

Conclusion

The Top 15 Leadership Strategies of the World’s Most Successful Ceos

Have a clear vision, a specific direction, and a goal for your organization
Focus on the two or three things most important to your vision and goals. Don’t spread your attention too thin
Communicate your vision, strategy, goals, and mission to everyone involved—senior management, employees, suppliers, vendors, customers, shareholders, and other stakeholders
Listen to what others tell you. Be willing to accept and act upon criticism and suggestions
Surround yourself with the right people, a strong team
Treat your employees exceedingly well. Help them become successful in their careers and their lives
Apply the Golden Rule: Do unto others as you would have others do unto you
Be in a business you love and are passionate about.
Constantly innovate to gain and sustain competitive advantage and serve your customers better
Plan everything. Leave nothing to chance
Be a leader and actually lead. Take responsibility. Make tough decisions
Lead by example. Don’t expect your people to do what you won’t or don’t do yourself
Listen to the people who are closest to the customers and the marketplace. They will give you your best advice and input
Set performance goals and establish metrics by which you can measure your performance and results
Be service-oriented. How can you make the lives of your employees and customers better, easier, and more rewarding?