Dean Connor, Sun Life’s CEO for 10 years now, says the path CEOs will need to traverse in the future will be very different than the course past and current CEOs have taken to guide their companies.
Retiring in August, Connor says future CEOs will thrive if they strive to learn rather than know-it-all. They will need to be absolutely purpose-driven, will need to have a worldview, even if their business is predominantly in Canada, and CEOs will need to double-down on their understanding about all things related to their company’s technology.
“Understanding the tech stack, the cloud, understanding digital data and analytics, the power of data and the responsibility of data governance – finding the line between creepy and cool in treating client data properly. That’s a whole set of skills that I didn’t have, frankly, 10 years ago, that I’ve been working on and investing in.” Going forward, he says understanding platforms and digital ecosystems will be one area CEOs will need to develop expertise. “The second one is climate change,” he adds. “I can’t think of a single business that won’t be touched, in some cases profoundly, by climate change.”
In two wide-ranging discussions about everything from the level of risk-taking in Canada to the challenges of doing business abroad, current drivers of demand, and company purpose, Connor addressed industry stakeholders during a pair of webcast presentations conducted in June by S&P Global Ratings and the Canadian Club Toronto.
He adds that a certain amount of humility is also needed to effectively lead organizations. In modelling pandemic risks, for example, he says “we probably got the stress, the severity of the mortality stress roughly right, but never in a million years did we model that governments, without exception, around the world would step in an shut down economies and then turn around and float economies,” he says. “It’s reminder that there’s a bit of humility here. You just need to be prepared. You’ve got to have a ton of capital, great risk management and be ready,” he told those gathered for the life insurance CEO’s panel at the 37th annual Insurance Conference hosted by S&P Global Ratings.
In a follow up discussion with BlackRock country head, Marcia Moffat, at the Canadian Club Toronto, he said that the global financial crisis was a great reminder that nothing is linear. “Your models can be way off,” he says. “That hurt many insurance companies at that time.”
Finally, he points out that future CEOs will also need to contend with very different investor engagement discussions than have been the norm in the past. “There’s been an absolute sea change during my time as CEO,” he says referring to the conversations he is having with investors about the company’s commitments to diversity, equity and inclusion. “The same on climate change,” he adds. “I think it’s still early days in terms of setting goals, particularly goals for 2025 and 2030 in terms of greenhouse gas emissions reduction in our portfolios, but I know there are investors who want to talk about that.” (He adds that the company, with the help of some carbon offsets that it intends to phase out over time, is on track to being carbon-neutral in its operations this year. The company’s sustainable investments, meanwhile, total $60-billion today, a number that the company has committed to increasing to $80-billion in the next five years.)
“Shareholder capitalism is alive and well and I think you’re going to see a lot of votes withheld, and a lot of votes to support and nudge companies in these directions. I think Kevin Strain, who is taking over for me in August, he and other CEOs are going to have a very different path than the one I’ve had in the last 10 years. I think that’s a great thing. I think the dialogue is just going to get better.”
A storied history
Connor says when he first stepped into the role back in 2011, he inherited a very strong business with a strong balance sheet, a global footprint, a storied history and an amazing group of people. He also had extensive experience to draw on, having served as both chief operating officer of Sun Life, as president of Sun Life Financial, and as president for the Americas at Mercer.
Since taking over the top c-suite role at Sun Life, Connor has received a number of accolades, including being named Canada’s Outstanding CEO of the Year in 2017, the Ivey Business Leader of the Year in 2018 and one of the top 100 best performing CEOs of 2019 by the Harvard Business Review.
In his discussion about that history, Connor shares a number of lessons learned – both from the company’s successes and from the deals that didn’t work out quite as hoped. He also discussed the current state of affairs for his company and for the country that are presently shaping the future that future leaders will need to contend with.
Successes and lessons from the past
The elements that Conner says has contributed to his success and the company’s success in the past 10 years include having a clear operating strategy, customer-centric policies and having a clear and distinct purpose.
“We have an amazing purpose as an industry,” he says. “Bringing the whole company back to the purpose, through stories, I think that was an important ingredient.”
He is also a proponent of setting goals that are ambitious but achievable. Just putting a goal out there, he says, creates accountability and a sense of urgency, “because then we had to run like heck to achieve it. But it creates this alignment and this sense of shared accountability.”
Similar to sticking tightly to, and regularly returning to the company’s bigger purpose, Connor says having the company’s very clear, four pillar strategy also helped tremendously to narrow his and the company’s focus while also aligning its staff to the cause.
“We got out of some businesses in the U.S., we sold some businesses, and we doubled down on others. We doubled down on Asia as one of the four pillars and we committed again to Canada, which has been our biggest business forever. We also focused and doubled down on group benefits in the United States and then we focused on asset management as our fourth pillar. Just the clarity of that strategy helped create alignment around the company.”
He says the company also changed its focus to make clients more central in the company’s decision making. “We weren’t as client-obsessed as we needed to be. It meant changing not one or two things, but actually everything about how we run the company and how we compensate people.” He adds that today, 25 per cent of the company’s annual bonus pool is tied to client scores.
A similar epiphany occurred for the CEO when he realized the company had a huge pool of prospective clients to serve, if only the industry would think of group plan members as their end client. “We have viewed the employer as the client, sometimes the intermediary or the broker consultant as a client, but not the end plan member. It was an epiphany for me. Here we had, in Canada, six million members of a Sun Life benefit or pension plan, that if we thought about them differently, were clients. That launched a whole new business (for us) called Client Solutions, which goes (sells) direct to plan members. That’s been a great, great success.”
As for lessons learned the hard way, he agrees that not every project or acquisition has worked out the way the company hoped, “but the good news is the bigger ones did, and the ones that didn’t work out, we learned something from them.”
In one example, he says the company once created a partnership with a state-owned enterprise in Asia. “Notwithstanding all the due diligence we could possibly do, it turned out to be the wrong fit for us. After 24 months, we had to part ways.” In the U.S. group benefits market between 2010 and 2012, meanwhile, he says the company got caught up in a very competitive pricing race. “That created some real pricing gaps. We took our lumps. We vowed that would never happen again and we fought back.”
Observations about Canada today
In discussing the business in Canada, Connor says he is very bullish about the company’s growth prospects. “Many people look at Sun Life Canada and think, well, it’s kind of a mature business,” he says. “But I’ll tell you, I’m excited about the growth opportunities.”
He adds that 65 per cent of the company’s business is outside of Canada but adds that it is very difficult to be successful outside of the country without a strong in-country base.
Industry-wide, he says there is still a long way to go, as well. “It’s still too hard to buy some of our products,” he says. “In some cases, we still draw blood for underwriting and life insurance. We’ve reduced that a lot. I think during the COVID-19 pandemic 85 per cent of our applications (went) through just using technology and artificial intelligence models. But for the 15 per cent where we still send a nurse out to their home to collect blood, it’s not a great process.”
There are several things about Canada, meanwhile, which clearly benefit the business. He points out that Canada is a country where people value protection. It is also a country of savers with a strong retirement income system. More, he says regulatory oversight by the Office of the Superintendent of Financial Institutions (OSFI) is generally seen as an advantage when the company shows up around the world to make partnerships or acquisitions. “It’s a very well-respected regulator around the world,” he says. “It’s not that they give us an easy pass, but it’s a good starting point. When we show up to acquire a business in a country, the fact that we’re from Canada is viewed as an attribute.”
If Canada had any drawbacks, it might be there is a certain lack of urgency for those who haven’t worked in places where the “clock speed” is faster. “The pace and risk-taking in Canada is too slow, as a country. The best thing I did in my career, in a way, is that I moved to New York. It was relatively short, I was only there two years, but I lived and worked in New York. The pace, the decision making and the risk-taking is so different. It just works at a different RPM. The same is true in Asia. The clock speed in Asia is incredibly fast.”
To address this discrepancy, and perhaps also to be seen as an attractive place to work, Sun Life has a history of sending its employees to work on assignment in other countries. “I think one of the biggest advantages of sending people, particularly from Canada to Asia and back and from Canada to the U.S. and back, is that you come back with a different clock sped. Your sense of urgency is higher. It doesn’t mean you work harder, but your risk-taking and your sense of urgency is dialled up.”
He adds that Canada as a country should also try harder to get more young people to work outside of Canada and come back. “We should find ways to boost that.”
