Protective Life CEO Tells Strategy Students “Cheap is not a Strategy”

protectiveJohnny Johns, Chairman, President and CEO of Protective Life Corporation, told the combined MBA and undergraduate capstone class “Strategic leadership through the eyes of the C-Suite” on November 27, 2012 that simply being more efficient is not going to be a winning strategy.  Johns said, “Cheap is not a strategy.” Mr. Johns hosted the class at the company’s headquarters in Birmingham.

According to Johns and chief operating officer Carolyn Johnson, who also spoke with students, a company must instead find a product or service that customers will buy even if a competitor has a similar product for sale at a lower price (think iPad). Johns and Johnson admitted that finding such a product can be difficult for an insurance company, but also noted that their products are genuinely needed by most consumers, particularly young families.

Protective2Mr. Johns said that the company has tried to identify the barriers that stand between consumers and the company’s products that they admit they need. For example, consumers told Protective that life insurance products are typically so complicated that they avoid thinking about them altogether. In response, the company has simplified its explanation of how much insurance a young family head might need on his or her own life. Protective’s advertising and related materials now break these needs down into understandable segments such as eliminating mortgage debt and paying for college educations, rather than using a lump sum amount which can sound too large and unmanageable.

A group of students who had studied the strategy of Protective Life in depth made a presentation to Mr. Johns and Ms. Johnson and made several recommendations, one of which was that the company bundle its products around life events such as the birth of a child. Mr. Johns and Ms. Johnson agreed, and noted that the company is testing a new product called the “Grand Plan,” in which grandparents would purchase insurance on the lives of the parents of their grandchildren.

Protective Life is one of the oldest companies in Birmingham, having been established over 100 years ago, and its market capitalization has consistently placed it among Alabama’s top ten publicly-held companies in recent years. The company has over 2.300 employees, about one-half at its headquarters on Highway 280 in Birmingham.

Protective Life has provided many work internship opportunities for School of Business students, including two students in this strategy class, Jay Knight and Jayne Ivy (who was also among the students who presented to Mr. Johns and Ms. Johnson). A UAB School of Business alumna, Melanie McNary (Human Resources Management), manages Protective’s summer internship program and attended the class session.

“Strategic leadership through the eyes of the C-Suite” is taught by School of Business professor Stephen Yoder and UAB Vice Provost for Administration and Quality Improvement Harlan Sands, and features visits with CEOs of public or other large complex organizations who discuss their organizations’ strategies and how they are developed and implemented.