Ed Zore Reconciles Prudence and Opportunism in Northwestern Mutual's Technology Investment
Northwestern MutuaL CEO Ed Zore relates an anecdote that illustrates his belief that the acid test of technology innovation is its relevance to the business: Early in the dot-com era, he says, Milwaukee-based Northwestern Mutual was trying to evaluate the potential of the Internet and brought in a consultant firm to explore the possibilities and make some recommendations. "One recommendation was that we connect Merrill Lynch to our Web site so that when people came in wanting to talk about investments, we could divert them over there," Zore recalls.
"Why on earth would I want to do that?" Zore asked them. "You do realize that they are a competitor of ours not only in investments but insurance?" He then added, "If it's not lowering costs, increasing actual sales or improving customer service, I don't think it makes any sense."
In response, Zore relates, the young consultant said to him, "'Ed, you just don't get it; you have to talk to my boss.' ... [He] tried to convince me I was in the Stone Age, and I told him the same thing: 'If it doesn't do one of those three things, it doesn't make sense.'" At the time of the conversation, Zore adds, the consultant's stock was trading at $60. "A year later it was going for a buck."
With 2007 revenues of about $21 billion and profit of about $6 billion, Northwestern Mutual's corporate performance has trended in the opposite direction. Technology for technology's sake is anathema to good business principles, but the century-and-a-half-old company's successful evolution would have been unimaginable without opportunistic investment in technology, in Zore's view.
He recalls that when he joined the company's investment department in 1969, the carrier had about $6 billion in assets, approximately 1.3 million policy owners, a couple of simple products and about 2,000 employees. Today, according to Zore, its assets exceed $156 billion and it has about 5 million policies outstanding, a large portfolio of products and services, about 5,000 employees, and greatly increased support and interaction with its distributors and customers.
"If somebody tells me that technology doesn't improve productivity, I'd tell them to look here: If we were doing things the same old way, there wouldn't be enough office space in Milwaukee to handle the number of people I would have to have employed," Zore comments. "Technology permeates every part of our business to make us much more effective and efficient."
Nowhere is that more the case than in its support of the carrier's relationship-sales distribution model. Northwestern Mutual historically has been ahead of the technology curve, providing electronic connectivity to its distribution partners for a quarter century. In 2003 it implemented a customer management system based on a Siebel (now part of Redwood City, Calif.-based Oracle) CRM solution for its entire distribution network and delivered a major upgrade in 2006. The system gives representatives the ability to track all client activity and incorporates state-of-the-art functionality, such as the ability to share case information with other representatives when clients require specialized expertise, Zore explains.
In support of its promise of financial security to its clients, Northwestern also has provided its field force with sophisticated long-term planning tools. "The platform is very robust and allows financial representatives to do a broad set of planning for their clients, based on their areas of need and interests," comments Northwestern Mutual CIO Tim Schaefer, who notes that the platform is based on Emerging Information Systems' (Winnipeg) NaviPlan solution.
The carrier also has aggressively explored Web 2.0 technologies to enhance its field force's relationship with its clients. For example, the carrier created templates for representatives to build their own Facebook Web pages within company policy and regulatory compliance guidelines. The pages "basically talk about who they are and link back to us," Zore says. "It helps them market themselves professionally within their territory to their clients and prospects."
Northwestern Mutual even investigated the use of the online virtual world Second Life, though Zore acknowledges that the company hasn't yet leveraged it to interact with policyholders. "We don't have an Ed Zore avatar," he jests.
Zore says he personally advocated internal blogging against the resistance of some of his colleagues when a proposal to use the technology was brought to the senior leadership. "There's a lot of interaction below the surface [among Northwestern Mutual employees]," he says he argued at the time. "Why don't we find out what the heck is on their minds in order to help the business?"
Whether defusing internal tensions through open interaction, enhancing collaboration for problem solving, improving back-office capabilities, or supporting distributors and clients, technology is an indispensable tool for the information-based business of insurance, Zore believes. "At some point, I hope we [in the industry] stop referring to IT as something separate from the business -- it's just part of the business," he says. "Technology has to be integrated in the business in all aspects, including strategically."
Commitment From the Top
Northwestern Mutual's commitment to that ideal is demonstrated by its recent appointments of its top two technology officers -- CIO Tim Schaefer and chief technology architect Karl Gouverneur -- as executive officers (see related article, page 52). In addition to his reliance on his technology team, Zore says, he seeks to incorporate insights on the potential of technology from outside the industry and from the carrier's internationally oriented partners, including Wipro Technologies (Bangalore) and Infosys (Bangalore).
"They're able to see applications of technology around the world, ... and they continually help us," Zore says. "Whether it's a matter of cost-effectiveness or interfacing with customers in a certain way, we have to be at the highest standard."
Edward J. Zore
Northwestern Mutual
Career: Trained as an economist, Zore joined Northwestern Mutual's investment department in 1969 and held various investment positions over the past 29 years. He served as chief investment officer from 1990 to 1998 and CFO from 1995 to 1998. In 1998 Zore moved from the investment area to lead the company's life and disability income insurance operations. He was named CEO June 1, 2001.
Personal Interests: An avid fisherman and hunter, Zore prefers the woods to indoor environments, but he also loves gadgets. "I have a lot of technology toys," he says. "My wife thinks I'm a techno-geek."
To hear more from the 2008 Tech-Savvy CEOs.
 |
 |
 |
 |
 |
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio
Tweet This