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10/7/2020
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Northwestern Mutual CIO: Riding Out the Pandemic

As the head of technology at a mutual company, Northwestern Mutual's CIO said his IT organization was largely insulated from the roller coaster budget changes and cash conservation brought by COVID-19

While the year 2020 may have felt like a bit of a roller coaster for most of us, including those IT workers who helped their companies equip a work-from-home workforce in just a day or two, there are some other organizations out there that have experienced a much smoother ride.

For example, if you worked for Northwestern Mutual, it probably felt a bit more like a ride in a luxury bus where even the big bumps wouldn't cause you to spill your drink. That's because while so many companies are subjected to the fortunes and whims of the uncertain market, a mutual company's structure is designed to make long and relatively comfortable journeys across uncertain terrain into the future.

Image: Kirill_Gorlov - stock.adobe.com
Image: Kirill_Gorlov - stock.adobe.com

That's because mutual insurance companies are owned by their policy holders, a structure that provides greater stability of funding for the internal operations of the organization, unlike companies that rise and fall according to their stock prices on the open market.

It's in this structure that Northwestern Mutual CIO Neal Sample has operated his technology organization with priorities unimpeded during 2020, even as other companies had to reset their plans.

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Sure, his organization did have to make that 48-hour move of its workforce from offices to home offices. Plus, some other initiatives have received a little more attention than they might have in non-pandemic times. But ultimately, the structure of the mutual company has enabled Sample to continue to focus on the organization's long-term priorities. That's been a refreshing change for Sample. He has previously worked as chief operating officer for Express Scripts (acquired by Cigna), group president at American Express, and CTO and VP of architecture at eBay.

"At Express Scripts we were always thinking about quarterly budgets and annual cycles," Sample said. "Occasionally, if we had a very long-term program, we would look at it for, say, 3 years out, because that's the farthest anybody had an incentive. We had a very short windows of thinking."

It's different at a mutual company where the team is looking at a return-on-investment period of 10 years, 20 years, or 30 years, Sample said.

"We don't have shareholders to answer to. We don't have the Street. We only have to generate value for our policy holders," he said. "And all the value we generate goes back to the policy holder. What that meant was, we didn't have a short-term cash crunch, which meant we had different planning horizons and different opportunities available to us."

That meant that when the pandemic hit the executive team at Northwestern Mutual, they did have to make some short-term operational changes in terms of setting up the work-from-home model and adding some more capacity to the VPN. But overall, the company's longer-term strategy wasn't impacted. Priority projects could remain priority projects, Sample said. That's a stark contrast to many other organizations that were looking to preserve cash at the beginning of the COVID-19 crisis.

"We're going through that long-term strategy practice almost just like it's any other year," he said of the company, which had assets of about $290 billion and revenue of $30 billion for the year ended Dec 31, 2019. "We're not going to completely disrupt our road map to build up a nest egg or build up a buffer to meet some sort of short-term revenue challenges because we don't have those."

The upside of not having to react to these market forces is that the company is always rethinking its strategy, Sample said.

One of the company's longer term investment priorities is in data, data analytics, artificial intelligence and machine learning. While this focus is not driven by the COVID-19 crisis, it does offer some unexpected benefits in the current environment of operating an organization during a pandemic.

For instance, automated underwriting, a data-driven process for creating policies, is useful to have in place during a pandemic when physical locations may be closed. Northwestern Mutual has added a few additional tools to its arsenal, too, such as one for electronic signatures.

"The smaller things like that are really important, too," Sample said. "They didn't really change our strategy, but they are little accelerators or productivity pieces."

Like everyone else, Northwestern Mutual has paid more attention to collaboration tools as well as security and privacy technologies. Cyber security has become a greater focus for the company in terms of education, too, as the organization puts in place training for employees unaccustomed to working from a home environment.

For the longer term, Northwestern Mutual is examining how it might make use of health data from wearables that its policy holders use.

"The idea is ultimately to get a better outcome. For us that is a better mortality rate," Sample said. "If you can't change behavior, the data is not that important. Adding data really doesn't change the game a whole heck of a lot unless you can."

Jessica Davis has spent a career covering the intersection of business and technology at titles including IDG's Infoworld, Ziff Davis Enterprise's eWeek and Channel Insider, and Penton Technology's MSPmentor. She's passionate about the practical use of business intelligence, ... View Full Bio

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