Part 3: A platform enables cost reductions and add value

There will always be a discussion on cost levels, but a success is dependent on the ratio between added value and cost. In a “blue ocean” market, the value is different from the competition and cost can therefore be a secondary focus. Even so, any new platform for any industry must use the best possible methods and processes to keep costs at suitable levels.

Automation is a given part of all enhancements of processes, and especially if a new platform is developed it is a perfect opportunity to aim at “extreme automation”. But if traditional processes are not challenged the automation will only redo the same steps but faster, without adding much value and limit the possibility of significant cost reductions.?

When we talk about value and cost – that can also mean different things for one industry to another, and for one participant from another one on a future platform. It can be pure money but also include other measures like UN Sustainable Development Goals. Any future platform must consider this fully and enable transparency of metrics to all stakeholders so they for example can calculate CO2 emission, and energy consumption.

There are also indications that purpose driven organizations (that focus on the purpose more than pure money) are more profitable over time partly driven by higher retention ratio, and some of these only want to do business with like-minded businesses. A new platform supports establishment of new relationships by providing suitable transparency between participants, but it can also provide a place for new carriers with specific business models to start and develop to satisfy clients with similar needs (e.g. takaful re-/insurance companies).?

Therefore, independently if you think the future reinsurance industry should be seen as a commodity of risk capital (pure money) or including a lot of softer values like a purpose, UN Sustainable Development Goals or relationships. A disrupting platform will be able to manage these requests and guide users in the decision processes.?

To summarise, a new disrupting platform enables significant cost reductions when processes are challenged, only the vital are kept and automated as much as possible. In the other weighing pan it brings values with transparency and new connections.

Is extreme automation only a way to reduce staff, or can it enable employees focus on purpose and development?

Welcome to add comments and questions!

Transparency, transparency, transparency – next post will discuss extreme transparency.