Can Insurance Harness Cross Industry Trends for Innovation?
By now it is fairly well accepted across industries that business models of 'old' must give way to new designs. Nowhere else is this truer than in Insurance, where a recent survey revealed that more than 50% of executives expect significant changes in just the next 12 months.
The drivers for the fourth industrial revolution as some pundits will say, are also well understood. Mobile, big data, automation, artificial intelligence, and cloud technologies matched with the Internet of Things are beginning to alter established price and capability tradeoffs, and is spawning a renaissance of InsTech start-ups. Amazon and Facebook are making digital natives out of consumers across age groups, and they expect more from their insurance carriers.
For insurers, the coming Cambrian explosion of innovation spells challenge and opportunity. Capturing value will be both about incrementally expanding their existing business model, and just as important re-imagining the fundamental sources of value that insurers are providing their consumer and business customers.
Designing a new insurance experience will involve adapting ideas and concepts from other industries. We have witnessed this in marketing for some time, where insurers such as Geico and Nationwide have followed in the footsteps of marketing giants such as Coke and P&G to reinforce their brand promise. We are witnessing sophisticated agency and consumer portals that have been developed on the learnings from the retail and banking industries, and insurers are applying ideas from telecom and financial services to manage an on-going dialogue with customers.
What we are finding is that 'outside' ideas serve as important capability enablers and idea generators. They also help pave the way for conservative insurers who are more comfortable applying concepts that have already been proven. However, innovation in insurance requires careful contextualization and finding the right problem to solve before applying new ideas indiscriminately. This is particularly true when taking into account new capabilities that can fundamentally alter the make-up of an insurance product (such as telematics and usage-based insurance), change insurance operations (applying workflow, automation and artificial intelligence to amplify the human experience and significantly reduce costs and improve turnaround time) or transform the dynamics of how carriers interact with their customers (through contextualized insights gathered from customers and 360-degree views from agents, by creating a meaningful on-going dialogue).
What's an insurance executive to do in a world that promises a lot of hype but precious few answers? In our experience, the challenge in insurance and all other industries is creating and enforcing the ability to innovate within structures that historically have not promoted a culture of innovation. The new world requires the capability to experiment, work quickly across boundaries in a multi-competency team, and promote a culture of curiosity, experimentation and agility. Most importantly, an ethos of embedding customer empathy into everything we do. Fortunately, we can rely on Design Thinking techniques that have been developed over the past 15 years in the start-up community and that are now increasingly being adapted across industries as proven tools to help large legacy enterprises become nimble and foster a culture of innovation.
Innovation, by its mere definition, is about finding new problems to solve. With a host of new capabilities now available to us that can shape how we deliver value to our customers, Design Thinking focuses on both problem finding as well as problem solving under the guise of speed, agility and rapid customer-focused prototyping and empathy. We have found a three-point agenda for action to be a useful mental frame: First, take inflight projects as an opportunity to model a new way of working, and re-imagine the customer and agent experience. Second, promote cultural change across the organization to build confidence and collaborative capabilities. Third, embed a new way of solving problems at scale by providing comprehensive training for employees and master workshops for leadership.
Thus the time is right for insurers to harness the winds of innovation around, for consumer expectation is changing and insurers have the opportunity to capitalize on cross industry changes.