Birkshire Hathaway Case!

Huge Profits From One Team

Abstract: How a brilliant Individual Contributor took on a challenge to assemble a global team, solve a very significant problem and transform his industry.

Angelo, a Chief Underwriter for General Reinsurance Company in the EU, had been a solid performer for 25 years when he was chosen to attend a leadership conference featuring the “Phases of Performance and Contribution” as a tool to help professionals develop and contribute more to their business. He admitted he was “insecure and discouraged” about all this “increase your contribution by leading others in a Phase 3 way”, talk. Since the conference was filled with tenured non-management professionals just like him he was not alone in his initial anxiety. He said nothing publically during the entire conference, often left classroom sessions early and returned late after scheduled breaks. A very quiet man, he kept to himself most days, even at the celebration party the last evening of the conference.

 

During the final class session where all were invited to stand, say farewell and share their goals to add more value by completing their “Phase 3 project plan” when they returned in 6 months, Angelo amazed everybody by committing to his peers that he had the “perfect Phase 3 project” in mind. It would be complex and require him to form an International team of players whom he barely knew, the risk was high (potentially, dealing in multi-millions of Euros), but success would be highly valuable and visible throughout the organization.

 

With regular Phase-Coaching from Next Phase Leadership coaches and loads of encouragement by phone in the 6-month interim, the entire group reassembled 6 months later for more leadership skills practice and progress reports on their Phase 3 projects.

 

Sometimes Phase 3 projects are so complex, difficult to manage and ambiguous in scope that 6 months is a minimum when trying to get results. Angelo was chagrined to report “very little progress”. He could not “find a sponsor” for his project—someone in a key position that would put their stamp of approval on it. He felt embarrassed that he could not have done more. Not all was lost.

 

After his report to the rest of his colleagues he was far less aloof than he had been before and seemed to enjoy the company of his peers. He asked them lots of questions. He learned they were all struggling together to add value by making the transition to Phase 3, so he was in good company and got a lot of good ideas. A peer committed to help him complete his team and project by helping to secure a “sponsor,” the EVP at HQ in Stamford Connecticut.

 

Long story short, Angelo reported his Phase 3 project results 9 months later at an all hands meeting in Paris. He said, in his typical humble way, how thankful he was for a good team of people who made it all happen. He had assembled a small group from 4 different continents, crossing 10 time zones, including a mega-database expert in the UK whom he had never met except over the phone and Skype.

 

In their “spare time” they found a way to accurately assess and then update an antiquated database used by all their EU underwriters to set premium pricing. They discovered that the old database was not only out dated but also contained several minor and major inaccuracies. With all the bad data, they had been (to borrow a phrase) selling a Euro for 50 cents and no one saw it coming…except Angelo.

 

Nearly 18 months of data gathering, actuarial interpretation, changing and simplifying access configurations and updating and creating innovative data sets, resulted in a “new and improved” premium-pricing database resulting in an increase net net profit of 70,000,000 Euros in the first quarter alone. Years later, the project continues to produce sizable profits as it’s being used by all of the Company’s underwriters in the EU and is now updated regularly.

 

I’ve kept in touch with Angelo to track his long-term progress. Though he has not continued all his Phase 3 leadership efforts, he remains a solid and highly valued underwriter. I asked him recently about profits associated with his Phase 3 project and he told me he was “not at liberty” to give me an actual amount but that it was substantially larger than in the first three months.

 

Moreover, Warren Buffett owns the Company that Angelo works for. Warren never heard of this quiet man in Milan…he knows about him now! More importantly, Angelo’s boss knows that Warren Buffett knows of Angelo’s incredible Phase 3 contribution.

 

 

Lessons in Becoming Phase 3: Phase 3 is most often best achieved through projects/assignments that “force” the project leader to; (a.) abandon his/her typical Phase 2 narrow technical approach, (b) assemble a team, (c) sell the project to stakeholders, (d) plan, prioritize and scope out the assignment—dividing the pieces into appropriate activities for each person’s expertise/development, (e) persist in the face of adversity and lack of vision from others, (f) find a powerful sponsor to “back you up”, and (g) metric/and report on bottom line leveraged results. Angelo could never have made that kind of leveraged contribution working independently at his desk. Much of what Angelo does is still Phase 2 underwriting, but when the opportunity presents itself he can rise to the occasion and lead!

  

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