The End of Leadership as We Know It

5Freeing Your People with Purpose‐Driven Simple Rules

It was a bold move, but the times called for it. Peter Harmer became CEO of Insurance Australia Group in 2015. The insurance industry was in turmoil following the devastating earthquake in Christchurch, New Zealand, in 2011, and the year‐over‐year increase in severe bushfires and droughts throughout Australia. The industry kept revisiting actuarial models, premiums, and coverage.

IAG was one of Australia's largest general insurers facing this challenge. After experiencing the devastation, Harmer and his colleagues decided to redefine their organization's purpose. It went from “Helping people manage risk and recover from the hardship of unanticipated loss” to “We make your world a safer place.”

As they shared their new aspiration with stakeholders (investors, employees, and customers), many initially pushed back. Investors worried about reduced profitability, employees feared for their jobs, and customers doubted the company could deliver on their bold promise. Harmer and other leaders, however, remained committed, and the new purpose became the lens through which they analyzed and made all decisions.

Guided by the new purpose, frontline staff members changed how they worked as well. Employees were encouraged to bring IAG's new purpose to life in their own context. A host of new initiatives emerged, from crafting policies to meet the specific needs of different customer segments, and working with local governments to create ...