Message-ID: <20891642.1075843942939.JavaMail.evans@thyme> Date: Fri, 16 Mar 2001 11:04:00 -0800 (PST) From: per.sekse@enron.com To: mike.mcconnell@enron.com Subject: GRM Marketing & Origination Cc: jeffrey.shankman@enron.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: jeffrey.shankman@enron.com X-From: Per Sekse X-To: Mike McConnell X-cc: Jeffrey A Shankman X-bcc: X-Folder: \Mark_McConnell_June2001\Notes Folders\Discussion threads X-Origin: MCCONNELL-M X-FileName: mmcconn.nsf I've pulled together some general ideas on marketing within ENE and how it would ideally be structured for GRM. Marketing & Origination Model For GRM, our success is entirely dependent on a developing a team of dedicated marketers who specialize in delivering insurance risk management solutions to clients. The business model is a risk aggregation play (gathering first loss and co-share pieces of insurable risks we understand). We risk impairing our ability to create a portfolio of risks that can be managed, repackaged and placed in the capital or insurance markets at large if we don't have direct influence over the deal flow being generated. To accomplish this my ideal marketing/origination model working with other Enron business units would be: Client Originator: Centralized in a long term origination team in ENA, EGM, EIM (as opposed to midmarket function) with industry specific expertise, e.g. oil & gas, power, coal, forest products, etc. The CO would be responsible for maximizing client profitability for Enron in an investment banking capacity, making sure we have an inside track to the client's strategic initiatives/business opportunities and making sure we package complete solutions using all ENE product areas. The CO also needs a financial incentive (see below) to take responsibility for making sure each individual product area is servicing the client where possible, particularly when a package solution is not viable, e.g like outsourcing. The CO should be involved with all product marketing calls if possible, but would not act as gate keeper, rather act more as a control valve creating a steady flow of ideas, products and services to the client. Product Marketer: Centralized in a product marketing team, with industry knowledge and product specific expertise. While the PM will call on clients for independent origination of new business opportunities, ideally the bulk of the opportunities should be marketing to clients identified by the CM to have a need for GRM's products or services. The marketing is done in partnership with the CO, but the driver of the transaction would be the PM. Execution would be handle by the PM's business unit with a portion of revenues devoted to the CO for their origination of the opportunity. However, if a particular group or CO does not play ball or does not generate any business leads, the PM would still be free to originate business independently. Shared Resources Centralized in a group like Fundamentals, Research, Weather Desk, etc. Especially useful in upstream where the deals require extensive engineering work and technical support. We currently use Walt Hamilton, Senior Reserve Engineer who works for Craig Fox in Enron Capital Resources, not full-time but nearly full time. Once we have a few deals booked, an engineer will also need to maintain the position by reviewing the reserves on a regular basis. I would envision having Walt on our payroll, working for us but remaining part of a resource pool that could be shared depending on deal flow and priorities set by Craig. Shared P&L Tough to implement, but unless there is a real financial incentive, CO's will naturally focus on deals they originate and the earnings stay in their group. I've worked with splits ranging from 80/20 if we do all the work and it is a simple referral, to 50/50 if the transaction opportunity is further developed by the time we get involved, typically as part of a structured package solution. This is best case, but in case you're wondering, I haven't lost my senses. Enron is not currently the ideal company to take this approach and I don't believe GRM is the ideal guinea pig to make the change. Some hybrid solution is probably better for us, tailoring the effort based on the particular group we work with. In the case of EGM business units, I think this is the way to go since we can influence our own people. In the case of ENA or other Enron companies, we need to be more selective, with the worst case being we go it alone and duplicate efforts. This is the path we're on today with ECR's upstream business, however it is not how we are proceeding with EIM where we are trying to build bridges with forest products and steel, or ENA's power desk, where we have the double trigger product for them to market. Soap Box A little background and my general view of marketing at Enron after nearly 3 years here. In my banking career I've worked both as a relationship manager, marketing all the bank's product areas to a targeted client base, as well as a product specialist working with a relationship manager to service that client base and execute product specific business. Our competitors, whether investment banks or commercial banks, seemed to have a similar setup, although they varied in design from broad geographical marketing assignments to industry specific assignments. For me, this type of marketing and origination setup was easy to leverage, meaning my product specialist teams could hire the best and remain small and efficient. Enron is the first company I've worked for that doesn't have a coordinated origination and marketing approach to clients. Instead, the culture here is clearly based on free access to all clients, i.e. no gate keepers, no ownership of the client and hence no one individual accountable for maximizing the profitability of business closed with a client. Several different product/trading areas can all call on the same client with little or no coordination and have no game plan to maximize profitability. A clear benefit of not having relationship managers is speed to market with new products and new ideas combined with specialist knowledge about the product or service being sold. (In fact, I believe this has been a direct contributor to our ranking as the most innovative company in America.) A clear drawback is duplication of effort and weak implementation of cross-selling.....given lip-service by most marketing and origination teams I have worked with. Nevertheless, given Enron's successful track record, it appears the benefits outweigh the drawbacks and it is a system I've comfortably adjusted to. Enough of the soap box. Just wanted to share my general Enron marketing thoughts and a little of my bias. I don't know if this was specific enough for you so let me know if you need more detail. Consider this part of a dialogue. New Name? I'm also exploring alternative names for the group that identify our role more readily. What do you think of the name Insurance Risk Management Group or Insurance Risk Management Solutions? The latter ties into Enron's new way of describing its business activities...Logistical Solutions. I met with Dennis Vegas to discuss branding and general marketing of our activities and he said Logistical Solutions will be in our annual report and a major theme going forward. Hope you had a nice holiday. Speak to you next week. Per