Insurers: the innovation race isn't really a race after all!

In this series of articles I have described and explained at a high-level the threats posed by the pace of change and the pace of consumer expectations. These are real threats, real needs and they’re happening all around us. Again, however, it is clear that there will be two types of companies will survive and thrive in this new environment:

1. Those who push our industry into new areas via innovative products and services and business processes, largely fueled and enabled by innovative technology investments;
2. Those who successfully respond to these innovations, the pace of change and the pace of consumer expectations, by being ready, willing, and able. If you’re not on the leading edge of the changes and innovation, that’s ok. There’s a whole lot of business out there, as long as companies are able to respond however we need to and whenever we need to. 

So, how can a company know if it is ready to respond to the pace of change and the pace of consumer expectations? A company needs to assess its readiness in 3 key areas:

1. Management and culture;
2. Technology;
3. Business processes.

Each company must decide for themselves how best to keep pace and stay competitive, and which of these areas will best serve the needs that are unique to that company. Likely, it’s more than one and in many companies all three.

Individually, they’re each very important. But in every company, they interact in different ways. It is important to recognize these interactions and where the responsiveness barriers lie.

Because readiness may mean different things to different companies, standard measures are hard to define. 

You may be tempted to rely on empirical observations and metrics, but watch out: the measures and metrics and observations you can pull out of your business reports tell you about the past, not the future! Looking into a rearview mirror is no way to know what’s coming up ahead, or the changes going on around you.

The best way to assess readiness is to ask questions that indicate and inform on the ways the organization will be tested or on the ways a company wants to be competitive. Technology. Business processes. Management and culture. Understanding the agility and future-ready state of each of these will be key in your efforts to know and to strengthen where necessary. Here are questions to ask yourself, your management, and your teams. The list is not exhaustive but is a good representation of what you’re trying to assess as you work to determine where you’re ready and where you may need to make adjustments:

Management and Culture: Looking Outside-In

1. Who are our customers, and what do they really need (or want)? Today? Tomorrow? This is a tricky question because many companies believe they’re satisfying customer needs now, especially with insurance products. But look around. Consumer expectations continue to push on-demand needs. The “capacity / sharing economy” (think Uber, Airbnb, etc) continues to grow and expand into other aspects of everyday life. Ask these questions with wide peripheral vision and an open mind…
2. Who are our customers’ customers, and what do they really need (or want)? Today? Tomorrow. For insurers who sell through agents, now there are two sets of stakeholders to keep in mind…and they’re influenced by the outside-of-insurance world, too.
3. What trends and/or advances are affecting our industry?
4. What trends and/or advances are affecting OTHER industries that may find their ways to insurance? Robotics? Internet of Things? Artificial Intelligence? Customer self-service? Etc.

Management and Culture: Looking Inside

1. Where are our cow paths: the legacy thinking and practices that could be holding us back? Nearly every company has them: what parts of the organization are most rooted in “this is how we do it”?
2. How willing are we to make decisions in the face of ambiguity? How good are we at this? Where do we draw the line? This is important because either the pace or nature of certain changes will compel us to understand – and possibly act – before their real impact shows up in our normal data analysis (such as ISO loss cost data). Are we ready, willing, and able to act before the data tells you to? In some cases, the data will come too late.
3. What would an outsider do? Role play with this one: act as if you’re coming in to your organization for the first time. Look around. Assess. Ask questions. All from the view of the outside. What would you find?
4. Are our organization structures and expectations and authorities aligned with our stated strategy(ies)? 

If your strategy is white-glove customer service, do your customer service and other customer-facing teams have the tools, processes, and empowerment they need to delight customers? 

If a strategy is “innovation”, do people have the freedom to think about – and test – new things, or take chances? 

If collaboration is a key strategy in your company, are there walls or disparate processes (or beliefs) that inhibit communication or collaboration?

5. Are all of the managers in the company aligned with the mission and strategy(ies)? Do they all represent and align to these in the same ways? Before all of the company staff can be on the same page, the management must be.

6. Is it ok to fail? Trying new things means that some won’t succeed. Learning from failures makes your company stronger. But having an atmosphere where people are afraid to fail for fear of negative consequences is a gravity that no business process or technology can overcome.

Business Processes

1. Do we have activity-based analytics on operational data? What percent and which activities are profitable? Further, automating the low-complexities can have big ROI…especially if they’re the profitable ones! 
2. Are our business processes aligned with our strategies? See item #4 in the section “Management and Culture: Looking Inside” (above).
3. Does everyone understand the value and can they explain why we do [insert your business process(es) here] the way that we do? If not, why not?
4. Do our customers understand the value of why you do [insert your business process(es) here] the way that we do?
5. When we interact with customers (including agents), who are they comparing us with, and who influences their expectations? Is it our insurance competitors? Maybe. More likely, their expectations are set by their interactions with companies outside the insurance industry. Think Amazon, Ally, Zappos, Starbucks, Virgin Airlines, Warby Parker

Technology

1.  Are our technologies futurized? That is, are they agile, easy, scalable, visible and transparent? How do we know?

2.  Does business and user adoption drive IT, or vice versa?

3.  Do we have all the necessary skills and resources to deliver on business needs? Today? In the future?

4.  Is our organization an adept architect and orchestrator of diverse technologies, ecosystems, and data? Think: on-premise + cloud + 3rd party vendors + external data + … For many, the future will be built this way.

5.  Can we and do we actively coach our business peers in order to help them help us deliver the best business value? Are we an advisor of what’s possible in each of their silos? Do we have a seat at their decision-making table?

6.  Do we have an IT culture that fosters and invites curiosity, learning, innovation, and thoughtful risk-taking?

7.  Is it ok to fail? Failure is even more likely in disciplines where change is constant, and nothing describes technology and IT better than this. As such, the only IT organizations that will effectively serve a business’ need to respond to the pace of change and pace of consumer expectations are the ones where the culture is ready to embrace changes. See item #6 in “Management and Culture: Looking Inside” (above).

Remember Mr. Darwin who famously quoted, "It is not the strongest of the insurers that survives, nor is it the most intelligent. It is the one that is most adaptable to change."

We cannot predict many of the changes that will influence our industry, but we can position ourselves and our teams and our companies to be adaptable and ready. The innovation race isn't really a race - it is an unending journey; and for those who become adaptable and ready, it will be a fruitful one.