an organization’s innovation maturity level. The framework,
the SMA Innovation Maturity Model, is influenced by SMA
research and emerging best practices from insurance industry
leaders and leaders from other industries.
The SMA Innovation Maturity Model helps insurers to
assess their level of maturity and see the gap between where
they are and where they want or need to be. The model has two
critical dimensions: the first defines the maturity level and the
second defines each of the elements necessary to make innovation a critical business capability that becomes ingrained into
the organization’s culture and makeup. These defining elements
include strategy/next-gen vision; organization/sponsorship;
tracking and assessing trends inside and outside the industry;
open innovation and ecosystem; scenario planning; idea and
go-to-market funnel; and results and funding growth. Based
on where an insurer is positioned within these seven areas,
an insurer’s level of maturity and competitive position can be
assessed—as a laggard, mainstreamer, mover, or market leader.
Insurance Industry Innovation Maturity
Based on SMA research, only 13 percent of insurers have a
strong innovation culture, 35 percent have a formal innovation
team, 26 percent have formal innovation processes, and 36 percent are using collaboration tools. The diversity and lower-level
engagement in these four critical areas suggests that only about
a quarter of insurers would likely have the necessary innovation
foundation in place to achieve mover or market leader status,
leaving the majority of insurers at the laggard or mainstreamer
levels and less likely to compete and succeed in this rapidly
Insurers appear to be significantly behind, especially when
compared to industry challengers that are moving at a high
level with new innovations and capabilities emerging regularly
through their own development, acquisitions, or partnerships.
The new challengers are reshaping, redefining, disrupting, and
transforming other industries.
The insurance industry is being threatened, both directly
and indirectly. Think about retail with Amazon, taxi service
with Uber, banking with Lending Club, venture capital funding
with Kickstarter, automotive with Google, and now insurance
with Google, CoverHound, Metromile, or Friendsurance.
They all illustrate ways that innovative capabilities are being
introduced and industry boundaries are being eliminated. And
what lies at the heart of these challengers’ growth and success?
The commitment to innovation as a core, strategic business
What should insurers do? Insurers must embrace inno-
vation, not as an initiative with a start and end date, but as a
strategic, critical core-business capability that must be brought
home, built, nurtured, and strengthened with the goal to com-
pete and lead in today’s constantly changing world. Innovation
must be sponsored and supported from the top. A commitment
to innovation should be viewed no differently than the organi-
zational and financial commitments needed for any strategic
initiative, new market entry, or new business. And it should be
given the same management considerations as program man-
agement or financial management.
Creating Market Leaders and Winners
SMA sees an alarming divide emerging between market
leaders and laggards that is growing daily based on a company’s commitment and ability (or inability) to transform and
innovative. Market leaders are strategically focused, with sustainable, robust, and well-managed innovation processes that
provide a foundation for lasting business growth and success.
Innovation is helping insurers achieve competitive advantage, enabling long-term financial viability and prosperity for
the company and shareholders. But innovation is ultimately
helping customers by improving all aspects of the customer
experience and relationship. We see how innovation has done
this with the companies on Fast Company’s 50 Most Innovative Companies list. And we are beginning to see it with new
entrants and existing insurers.
Those who embrace the inevitable nature of the seismic
shifts that will impact almost every line of business and every
product within an insurance company’s portfolio will be well
positioned to lead their organization’s innovation initiatives
well beyond the traditional comfort zones. They will determine
strategies and plans to establish innovation as a core business
capability that will help them succeed and win in today’s world.
Those that embrace innovation and capitalize on the disruption
and influencers stand to make the biggest gains, but those that
hesitate will fall short in both competitive position and financial
Many insurers are on the innovation journey. Some have
started by rethinking, re-inventing, and re-imagining while others are retooling products, services, and processes. In all cases,
insurers must assess their current innovation maturity level,
define the desired maturity, and formulate a plan to accelerate
their ability to assess, develop, test, and operationalize innovation capabilities, and to embrace new ideas, enable change, and
Make a choice. Embrace innovation as a strategic business
capability. Aggressively transform into a Next-Gen Insurer
market leader that is determined to capture the future and all
its opportunities. Or, maintain the business status quo, focus
primarily on today’s annual budgets and projects, become a
laggard, risk the future, and turn into a casualty in tomorrow’s
competitive business landscape.
Innovation is defining today’s and tomorrow’s future winners. Will you be one of them? ITA
Contact Denise Garth at dgarth@strategymeetsaction.
com if you’d like to learn how SMA can help you on the
innovation journey and discover new opportunities for the