and Insurance: Far Reaching Implications research report has
struck such a chord in the industry. It provides a glimpse into the
challenges and opportunities that lie ahead for the industry, why
as an industry we need to rethink our business before someone
else does it for us, and why embracing innovation and reimagining the future is paramount to having a future in the industry.
Vision, Journey, and Network of Relationships
Forward-thinking insurers, whether new entrants or legacy
players, are creating a clear vision of their future destination.
They are defining what they will look like in five to 10 years,
from the business model to products and services, infrastructure, and the customers they serve. They are plotting the path
they will take to get there—it will be paved with innovation,
ideation, collaboration and transformation. And they are cultivating the relationships that will inspire and fuel their journey.
To awaken, enlighten, and inspire the possible (and the
impossible), forward-thinking insurers must look both in and
around the organization using ideation and crowdsourcing.
Ideation is the creative process for forming, developing, and
communicating new ideas, typically involving individuals and
small groups. Crowdsourcing extends idea generation and problem solving. One or more tasks can be expanded to a network of
individuals—internal and/or external—providing a diverse group
of thinkers and problem solvers with outside-in thinking.
Look at the success of the iPhone and the third-party apps created by an ecosystem of innovation. Or companies like P&G that
have embraced the concept of innovation networks and expanded
them to co-creation, with their customers engaging in the ideation.
And then consider the impact and value of these networks
to the brand. With the engagement of a network including
customers, consider the impact of their sharing of ideas through
their social networks, creating a social buzz around a brand,
what they offer, how they engage, and what may be coming.
Without a doubt, the outside-in network and ecosystem
connects people with diversity of thought. Their knowledge and experience are infinitely valuable in breaking legacy assumptions and
proactively engaging in today’s hyper-competitive environment.
Taking the First Steps Forward
So what should insurers do? How do they define their future?
There are four actions that are vital to the innovation journey.
First, insurers must define their vision as next-gen insurers,
reimagining the fundamentals of insurance that will create new
levels of agility, flexibility, creativity, and competitiveness. These
K Customer – Understand and capitalize on customer
demographic shifts, adapt to new and changing customer
expectations, address new needs and serve new segments,
and support all channels the customer wants to use.
K Products and services – Customize and personalize
offerings for each customer, promote product innovation
to meet new and emerging needs, digitalize the insurance
process, bundle offerings to drive deeper value and loyalty,
create dynamic and precise rating, and capitalize on data for
K Infrastructure – Exploit next-gen and emerging technologies; expand computing power, flexibility, and elasticity;
develop agile architectures; and design scalable operations
with innovative and flexible sourcing options.
K Business model – Adopt a nimble and fluid organizational
structure, adaptable business processes, flexible operational
models, and new revenue modes that leverage data insights
and analysis to manage risk and drive growth and innovation.
Second, insurers must understand and have a comprehensive
view of the influencers, both within and outside the insurance industry, and their impact on the transformation that is underway.
Understanding these influencers and trends, prioritizing those of
greatest impact, and developing business scenarios based on the
implications—including how to respond over the next three to
five years—is critical to growth and possibly survival.
Third, insurers must establish a culture of innovation. For
insurers with a legacy culture, legacy systems, and a legacy
operational environment, their ability to innovate and possibly
even execute their vision of the future will be more challenging
and profound. It is reassuring that innovation in the insurance
industry has experienced a breakthrough. SMA’s 2013 Innovation in Insurance: From Strategy to Execution research report
revealed that 87 percent of insurers have some form of innovation underway, with 20 percent indicating they have a strong
innovation culture in place.
And fourth, insurers must create and participate in an
ecosystem of outside experts and resources to capture potential,
inspire leadership, and enable their journey of change, transfor-
mation, and innovation. A business can no longer be an island,
regardless of its size, and expect to completely realize all of the
promise that is waiting in the future. Those who embrace inno-
vation ecosystems can capture potential, change legacy cultures,
and operationalize new ideas and technologies within their
companies, creating their own version of Next Gen Insurer.
The innovation journey toward rethinking, reimagining,
and reinventing the business of insurance has started, whether
you have stepped onto the path or not. Leaders and next-gen
insurers are creating a culture of innovation, developing the
longer-term vision, and mobilizing an ecosystem of resources,
internally and externally, to advance their innovation journeys.
Are you reimagining your business in five years? Have you
started your innovation journey? Jobs said it best, “Innovation
distinguishes between leaders and followers.” Are you leading or
are you following? Will you be a winner or a loser? ITA
(Denise Garth, a partner and chief digital officer at SMA,
leads the firm’s Innovation Practice and heads up the
industry’s first Innovation Communities, an avenue for
fostering and facilitating innovation across the insurance