Research shows only a small portion of insurers feel ready.
Across a great variety of industries, incumbents have become more vulnerable. Take, for example, the average lifespan of business in the Standard & Poor’s (S&P) 500 Index. A recent report by Innosight shows that in 1965 those companies could expect to last 33 years, on average. By 1990 the survival rate had dropped to 20 years. And at the anticipated churn rate, the report predicts that more than half of S&P 500 companies will be replaced over the next 10 years.
We all know that more disruption is coming to the business world and will affect virtually all industries, but this is not necessarily bad news. For many companies, it will offer the opportunity to outdistance competitors. Others, though, will simply not be ready for it.
Accenture, which works with clients on a variety of strategic issues, decided to put numbers to its observations by surveying more than 500 chief strategy officers (CSOs) in companies exceeding $1 billion in revenues to ascertain their preparedness for disruption. They represent 10 industries and 11 markets. What we found confirmed our assessment:
- Change has happened. About 84% of insurance CSOs and 80% of global CSOs agreed that new technologies had changed their industry over the past five years.
- Change will happen. About 94% in insurance and 93% globally agreed that new technologies will rapidly change their industry over the next five years.
- Real confidence is limited. Only 18% of insurance CSOs and 20% of global CSOs believe their companies are prepared to a large extent for sudden industry disruption.
- But some are somewhat prepared. Among insurance CSOs, 43% felt prepared to a significant extent – 40% for the global group,
- And some are vulnerable to industry disruptions. About 36% of CSOs reported their organizations had made only limited preparations.
Focusing on the CSOs who are very prepared, we’ve noticed they are all more intensely involved with partnerships and collaboration around a range business activities and that these partnerships are most likely to have advanced during the past five years. They also work with a range of different partners.
Investing in platforms that connect customers and business partners also proved to be a marker of companies ready for disruption. In fact, 89% of CSOs in the group prepared for disruption reported their companies had done just that.
Since partnerships are a big factor in successfully dealing with disruption – and sometimes wolves – my next blog will discuss what goes into making a successful, disruption-resistant partnership.
- Read, “Thriving on Disruption: How to become fearless in the face of devastating innovation.” Accenture (plus cover image of Thriving on disruption: How to become fearless in the face of devastating innovation)