Editors’ Note

Mark Watson joined the Board of Directors of Argo Group’s predecessor company, Argonaut Group, in 1999 and has served as President and CEO since 2000. Prior to joining Argonaut, he was one of two founding partners of Aquila Capital Partners, a Texas-based venture capital firm focused on technology and life science-related companies. Before founding Aquila, Watson was an Executive Vice President and member of the Board of Directors of Titan Holding Inc., a NYSE-listed property and casualty insurance group, from 1992 until its acquisition in 1997 by USF&G Corporation. From 1989 to 1991, he was an Associate Attorney with Kroll & Tract, a New York law firm focusing on international financial services clientele. In 1989, Watson was a Legislative Aide to Texas State Senator Donald Henderson, where he helped draft legislation creating the first college savings bond program in the state, as well as the first mandatory alternative fuels bill, both of which were enacted into law. Watson graduated with a B.B.A. from Southern Methodist University and a J.D. from the University of Texas School of Law. Watson is an avid climber and yachtsman who has climbed in several continents and won several major regattas in the United States.

How do you define Argo’s brand?

In my opinion, our brand is really the net impression Argo leaves on any one of our particular audiences. That impression can change day to day, depending on the quality of our interactions with prospects, customers, investors, employees, partners, and communities. All of us at Argo take that very seriously, and we have since we were founded in 1948. All those interactions add up to relationships, so I really do define our brand as the combined strength of the relationships we enjoy.

Has your business changed over time?

In some ways, completely, but then we’ve been underwriting risk since 1948. Headquartered in San Francisco, our original focus was workers’ compensation. In our first year, we distinguished ourselves by promoting workers’ safety as central to our offering. Most of our clients were in construction, while some were in date farming, so we became experts in safety for both of those disciplines. In the past 70 years, our products, services, and markets have changed radically many times, but I’m proud to say that our habit of knowing our clients’ businesses inside out has not.

What is your strategy for growth?

We have a vision of becoming and remaining a leading global specialty underwriter. Ten years ago, that goal was aspirational. Right now, it’s happening. The key here is specialty. This is an area where the risks vary widely from region to region, discipline to discipline, client to client. It takes a huge investment of time and energy to be able to understand the peculiarities of any specialty business – whether it is running a city, making wine, moving cargo by sea, or digging coal out of the ground. That need for specific expertise sets us apart and allows us to create value for our clients and get paid for it. And we happen to be really good at selecting specialty-insurance risk.

What’s affecting your strategy most?

Digitization is the one environmental factor now affecting every aspect of our business. The transformative, disruptive force of the convergence of the computing and communications industries in the past 30 years has changed everything. For over a decade, I’ve been warning that our industry has lagged behind the rest of the business community in the process of digitization, but all that is changing now. Our competitors are pressing ahead with online offerings, non-traditional players are now eyeing the insurance market as a great place to invest capital in new ways, and the entire insurance value chain is being reshuffled as digital capability makes disintermediation – the movement of players in the value chain – possible and, to some, attractive. The rate of acceleration in digital business has been surprising. In 2014, ten start-ups using nothing but software to interact with their customers entered the financial-services sector. Valued at over $1 billion each, these so-called fintech unicorns moved in with the sole purpose of disrupting legacy financial services such as insurance, mortgages, mobile payments, and investments. The following year, the number of start-ups shot from 10 to 83 (of which 46 were unicorns), all of them dedicated to business that is 100 percent digital. That’s why I insist that all of us at Argo think of the next phase in our development as one big software upgrade.

Does the strength of the Argo brand change the way you recruit?

As a specialty insurer with an entrepreneurial spirit, flat communication, and an eye on growth, we know we can outperform our competitors, but only if we stay on our toes. To do that, we have to exhibit four competitive attitudes. We try to find people with those attitudes.

They have to be smart. We intend to win in the marketplace through superior customer service in selected specialty markets. We’re smart enough to know our size makes it impossible for us to compete on price, as some others do; we just don’t have the scale. So we intend to beat our competitors by out-servicing niche markets in which we have a specialist’s edge – that deep domain expertise we pride ourselves on.

They have to be fast. We get things done quickly, and we’re getting faster all the time. With company-wide improvements we’re making to processes, we’ll be even faster, because eliminating waste by cutting unnecessary steps out of any process saves time. And we’re also getting much faster at innovation.

They have to be eager. Staying eager is part of our culture. It’s amazing to think that in a company as small as ours we have such diversity of nationality, language, and roles. With so much cultural diversity, it’s outstanding that we can and do rally under one banner, that we uphold the same core values, and that we exhibit a common eagerness to excel at our work.

They have to be bold. We’re ready to innovate in ways that lead our whole industry forward. We have impressive, creative talent in every corner of the company, and we listen when people tell us they’ve found a way to do things better. But we all have to be bold to make that happen.

What are the keys to being an effective leader today?

Leadership is nothing more than the art of directing attention. Great leaders don’t just see and hear, they watch and listen. Attentive to the changing conditions around them, they use their experience to home in on the areas in which they can make an immediate difference. Then they sort out problems so the team can get on with its job.

There isn’t a single management role at Argo that doesn’t require some sort of leadership. Every manager at Argo is a leader, and every leader has full responsibility for making sure everybody understands what we’re trying to accomplish and, most important, why. Leaders must set out the goals and objectives necessary to accomplish Argo’s strategy, and then make those goals and objectives clear to everyone. All leaders in the company have a duty to communicate our strategy widely among the teams that report to them.

After communicating vision, leaders must make sure their teams have all of the strategic resources in place to make our people successful as they work to accomplish what we need them to do. That’s why I refer to my CEO role at Argo as the purveyor of strategic resources. It’s ultimately my responsibility to make sure all the people at Argo are in all the right roles, and that people are adequately trained and developed to succeed in those roles. As long as that happens, our brand will stay strong.•