Back clear analysis with determined action to create commercial success

Margaret Smith explains how going against the conventional wisdom can pay dividends, but warns against prioritising cost considerations when you assess proposals

In this series on IT strategy, leading IT directors and chief information officers share what they consider to be their best and worst IT management decisions, and draw out the underlying principles and lessons which can be used to generate positive outcomes.

Margaret Smith explains how going against the conventional wisdom can pay dividends, but warns against prioritising cost considerations when you assess proposals.


In late 1997 and into 1998, I was charged with establishing Legal & General’s overall strategy for

For the two years prior to that, I had been responsible for developing Legal & General’s website, but taking charge of e-business effectively handed me a far broader remit to shape the group’s electronic strategy for years to come.

Getting that strategy right was absolutely crucial, so I began by putting together a strong team which undertook more than three months of research into the e-business landscape, such as it was in 1998.

At that time, the prevailing consensus was that business-to-consumer was the best e-business model to adopt for a firm like Legal & General.

But our research – which looked at everything from the technical environment to human behaviours around electronic interactions – reached an altogether different conclusion: it told us that business-to-business was the right way to go.

When I first declared our intentions I came in for plenty of scorn, but I was sure that B2B was the right approach and stuck to my guns, though it was certainly a tough fight.

One thing that was in my favour was the logic of the fit with Legal & General. Even if B2B went against all the prevailing opinion, it was already Legal & General’s basic strategy, which was based around its relationships with independent financial advisers, business partners and financial consultants.

I think that fact helped to convince the group’s board, even if there was plenty of scepticism flying around.

But that is not to say that it was an easy sell internally. The fact is, I had no particular power base at Legal & General, as I had been concentrating on the website for two years. This means you have to go out and sell the idea from the ground up. It was a risky business, and one that required a fair amount of political nous to convince all the stakeholders involved.

Ultimately, of course, I got the agreement I needed – and Legal & General’s B2B e-strategy became a reality with the creation of an extranet for independent financial advisers and agents to do business with us electronically.

The success of the approach became apparent very quickly. It not only set Legal & General apart from its competitors, but the platform itself worked well and, crucially, got support from the independent financial adviser marketplace.

It also had not taken that long to develop the platform, which meant that within a year of embarking on the project it was not only firmly in place, but winning hearts and minds across the business community.

With the success, Legal & General’s status as a market leader in e-commerce was confirmed, and even the analyst community wanted to hear what I had to say; so many of them, in fact, that I remember we had to arrange lots of separate sessions to fit them all in.

What is more, those sessions went down extremely well and really boosted Legal & General’s standing and share price.

Some time afterwards, I remember the CEO of one of Legal & General’s competitors asking me how I had spotted that B2B was the way to go. I said then, just as I have said again now, that it was not just a gut feeling that I went with, but the culmination of a lot of analysis and hard work.

Of course, I did not know absolutely that it would pay off – all new projects carry risk, and this one was no different – but we had certainly done our homework first. It was just really satisfying when everything came together.

Worst decision

My worst decision also dates back to the 1990s, which was an exciting time to be involved in IT. It was late 1996, and electronic communications and the internet for business were just getting going.

Up until that point, most business websites were flat and generally no more than brochures, but things were starting to change.

At Legal & General, it was two years since we had launched our Direct operation, for which I was responsible, and we had already developed some innovative product offerings.

Among these was a flexible reserve mortgage. We were about a year ahead of anyone else in the market with the account, but some pretty weak marketing meant we had not really made the most of that advantage.

The account was sold and managed over the phone, and by late 1996 we had not yet settled on a plan for using the internet channel.

At this time, the head of business architecture came to me with a plan to create the first interactive internet transaction. He proposed that flexible mortgage customers be given the facility to manage their accounts online – from making extra payments, to borrowing against any built-up surplus or taking a payment holiday.

One clever touch of the plan was that not much security was required, since customers would only be able to move sums between the mortgage and their own bank account.

I must say I was intrigued, and gave the plan a lot of thought, but I took the decision that it was still just a novelty – and one that my budget could not stretch to.

From my perspective, it was difficult to make the cost case as there was no clear-cut return on investment. I rejected the proposal. But all too soon it was a decision I came to regret.

When I turned it down I was basing my judgement on the wrong set of measures. My rejection was premised on the fact that offering the facility would not save money in the operation and cost a substantial sum to build.

As I quickly came to understand, what I should have realised was that that kind of online facility could act as a strong marketing and public relations tool for the organisation, and really raise its profile.

How was I able to see that mistake so quickly? Because despite my scepticism, those who had pitched me the idea were not disheartened, and within three months they had sold the plan to directors elsewhere in the company with a lot more success.

So it came back around to me early the following year and I eventually became the project’s key sponsor – and most vocal advocate – when it launched successfully in late 1997.

Looking back, two things strike me about those events. The first is that business cases can stifle innovation, because when everything is rationalised on the basis of cost, no one is willing to have a punt. I think this is more of a problem today than ever before.

The second point, which comes out of the first, is that you must not overlook the more intangible benefits when weighing up any proposal. You really need to look at issues from every angle.

My advice, then, is this: make sure you are open to leftfield ideas and true innovation – but still tread warily and do not be afraid to say no.

CV: Margaret Smith

Margaret Smith has a wide experience of working with industry bodies and advising business and government on IT and skills issues.

Formerly chief executive of CIO Connect, the National Computing Centre’s network organisation for top IT executives, she was also chief information officer at Legal & General, where she implemented major e-commerce B2B initiatives and business change projects.

Smith has also been a non-executive director of insurance industry standards body Origo Services and sat on the Cabinet Office Portal Board.

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