A Financial Times interview with Pat Gallagher made me long for the summer break and the chance to read and digest a book I have been recommended.
In the article, Pat espoused the idea that the days of the small generalist broker are numbered.
He also recounted the well-worn Gallagher model of consolidating baby boomer mom-and-pop US brokers needing liquidity to fund retirement.
Who would argue with Pat? He and many others have made a fabulous success of integrating hundreds of small acquisitions into their potent US platforms over the years.
But then the broking leader said that small generalists had better learn a specialism or they would face extinction. Now there’s nothing at all strange about this – it makes perfect sense and normally wouldn’t raise an eyebrow.
If you are small it is usually a good idea to get very good at something specific. Conventional wisdom would dictate that it’s better not to try to be a jack of all trades because, on the vanilla stuff, you just can’t compete with the large-scale platforms.
But this statement made me think about my holiday read.
It is a book called Range by a guy called David Epstein. What really makes me want to read it is that it was recommended to me by Adrian Jones, deputy CEO of P&C Partners at Scor, who is one of the smartest people around.
The tome’s strapline is Why Generalists Triumph in a Specialized World.
This sounds intriguing and counter-intuitive. After all, the last Malcolm Gladwell book I read on this subject theorised exactly the opposite, pushing the idea that top performers have to make time to really focus (at least 10,000 hours to be precise) on getting exceptionally good at something. According to Gladwell, this 10,000-hour rule was what united The Beatles, Mozart and Bill Gates in their exceptional success.
From what I have gleaned from reviews, Epstein’s thesis is that while the 10,000-hour method does produce rock star specialists, it does so best in controlled environments – whereas in today’s increasingly haphazard, unpredictable and wild world it is well-rounded generalists who have the greatest chance of success.
To illustrate this, Epstein uses a comparison of Tiger Woods, putting and chipping as soon as he could walk, with all-time tennis master Roger Federer.
Incredibly, Sunday’s 38-year-old losing Wimbledon finalist was an all-round sportsman who didn’t really get into serious tennis until his teens – well behind his hot-housed peers.
Golf is all about getting really good at doing one thing well: hitting a stationary ball down a course. Yes, courses and conditions vary a little but they are generically similar – and it’s always you against the static unchanging obstacle. Here, practice really makes perfect.
Meanwhile, tennis is unpredictable and requires players to adapt to opponents and change strategy on the fly. It rewards originality and creativity.
In such a world, Epstein says the late-developing and well-rounded Federer has an advantage.
So a general idea that we as insurance folk might take away from this thesis is this: when an industry puts a big premium on specialism and doesn’t value generalism enough, it will get very good at doing what it does, but can become terrible at adapting to new phenomena.
Sound familiar? Insurance is full of domain experts with incredibly specialist knowledge yet we all know that it is almost universally dreadful at adopting new technologies.
The implication is clear: in order to stay relevant and rise to the challenges of the 21st century, we probably need to hire different types of people and train them in different ways to how we have been doing to date.
Now where does this leave Pat Gallagher’s little generalist brokers and their supposed slow and inexorable march to oblivion?
Perhaps there is a brighter future for them than we would give them credit for?
Maybe their everyman dabbling qualities will stand them in good stead as the tech revolution takes hold and enables them to find nimble ways to duck and weave around the big monolithic platform-builders?
There is a lot to think about. I shall have to go and have a relaxing read, a long think in the sun and report back in the second half of August…