market impact, bringing the vision into sharper focus. This energizes
and fuels the acceleration stage. Collaboration, internally through
ideation and externally through crowdsourcing, injects outside-in
thinking, energy, and creativity, helping to solidify innovation as a
crucial element of the organization’s DNA, where initiatives converge
and bring the vision of a Next-Gen Insurer to life.
Modernize, Optimize, and Innovate
The innovation journey is far more challenging, complicated, and
involved than just moving from vision to execution and implementation. The pace of change, complexity, and interconnectivity
of influencers demands that companies evaluate and select their
priorities based on business value and competitive differentiation. SMA’s Business Value Maturity Matrix model characterizes
the innovation journey from replacing through modernizing,
optimizing, and innovating, and highlights the achievement of
greater business value and market leadership position based on
how far insurers have progressed in the journey.
For too many insurers, their innovation journey stops at
the modernization level, thinking that replacing core systems
is the answer to future success and competitive differentiation.
Replacement and modernization of core systems is but the first
step on the innovation journey. Modernization of core systems
enables insurers to do business more efficiently with some levels
of effectiveness, but more importantly it provides the foundation
for achieving greater business value and differentiation through
optimization and innovation. Insurers can leverage and extend a
modern core system with new or emerging technologies that can
be even more powerful and transformative for the business and
enable continuing innovation.
Put simply, with modernization we can do things differently,
such as improving workflows, automation, straight-through processing from the quote, and new business through policy service
and claims. But with optimization and innovation we can begin
to do entirely different things, such as the integration of real-time
weather data within a policy to provide service alerts and claims
prevention; the development of new products to reach new
markets; the development of usage-based insurance leveraging
telematics and the Internet of things; or a new, integrated digital
platform to engage customers from portals, social, mobile, and
more to strengthen the customer experience.
The future waits for no one and neither does innovation. Major
forces are converging that are fundamentally changing the
entire paradigm of insurance and demanding the innovation
that will create the Next-Gen Insurer. Major players, both large
and small, are becoming more aggressive in the pursuit of a
competitive edge. Insurers must either embrace the innovation
journey and move forward, or fall behind and die a slow death.
There will be no middle ground.
We see the innovation journey taking hold at carriers of every
size, evolving from a vision or idea to becoming central to their
business strategy, culture, and transformation plans. The level of
transformation and progress made on the innovation journey is
determined by a combination of leadership insight and strategies
that cultivate, activate, and accelerate innovation, coupled with
business and technology capabilities that are created and enabled
through modernization, optimization, and innovation.
But collaboration, ideation, and crowdsourcing are also fueling
the journey. Insurers must create and participate in an ecosystem
that brings together inside and outside industry experts to inspire,
identify, and capture the potential for innovation. Leading companies in other industries have embraced collaboration, ideation, and
crowdsourcing through building ecosystems of inside and outside
relationships—with customers, suppliers, partners, industry leaders, academia, technologists, and others. Examples of companies
outside the insurance industry that have successfully leveraged ecosystems include Proctor & Gamble, Ford, Google, Apple, Netflix,
and Groupon (and there are many more).
With so many examples of success outside the industry to
look to, and the indications of what failure to innovate can mean,
what can insurers learn? The coming years hold an unparalleled
promise of opportunities to increase customer value, engagement, and loyalty for insurers. Those that embrace innovation
and capitalize on the disruption and influencers are positioned to
make the biggest gains. Those that hesitate will fall short in both
competitive position and financial stability.
SMA and the Innovation Journey
To help insurers capture the potential and promise, SMA is
focused on helping insurers on their innovation journeys,
wherever they have started from or may be at any point in time.
This is highlighted at our annual SMA Summit, with topics
and speakers from within, across, and outside the industry that
will elaborate on the innovation journey. It is represented in
the winners of the SMA Innovation in Action awards that are
demonstrating the business value and power of innovation. And
it is displayed in the Next-Gen Innovation Communities and
Ecosystem that bring together outside-in experts and a community of industry leaders and creative thinkers to collaborate,
discuss, and crowdsource ideas around relevant topics influencing the Next-Gen Insurer. Why? Because we believe innovation
and collaboration within and outside the industry will be the
defining factors of those future leaders and winners.
Remember, no business can expect to harness the future and
all its conceivable possibilities on its own. It’s a journey of possibilities and promise. We are on the journey with many others,
fueling it with new thinking, new approaches, and new ideas. Are
you coming along? ITA
(Denise Garth, a partner and Chief Digital Officer at
SMA, leads the firm’s Innovation Practice, and heads the
industry’s first Innovation Communities, an avenue for
fostering and facilitating innovation across the insurance