One of the central messages implicit in the rise of the big-bang disruption is the speed at which it happens. But this should not cause one to think of the lumbering galleons of the Spanish Armada being outfought by the nimble, small British ships of Sir Francis Drake. Big companies can, and do, produce these types of innovation—only look at the Microsoft Kinect example cited in a previous blog.

And, as I’ve also argued, big resources are still needed when the disruptor is not a recombination of existing technology components, but is designed from the bottom up, like a driverless car or wearable technology. In such cases, many of the characteristics of the big-bang disruption remain valid, but big resources are also needed to do the work and pull together all the various players. Insurance companies have those resources—they just need the vision to reinvent their business models to place themselves at the center of new business ecosystems.

This kind of fundamental flexibility is necessary in a world in which fundamental industry dynamics can change over short periods of time.

Data offers insurance companies another possible avenue for reinventing themselves. They are the natural generators and recipients of increasingly large volumes of customer data. This constitutes a distinct asset which could be monetized in a number of ways, rather as telecommunications companies are doing. It’s a strategy that could be called “cannibalizing,” but it might be the smart thing to do if, for example, the industry has suffered a disruption that has put the company at risk.

In such an instance, in fact, the insurer might find that the smart solution would be rethink its business entirely.

An example makes the point best. Texas Instruments overcame the sudden decline in its home computer business by shutting down its consumer electronics division. Amazingly, a single part in a single component was the spark of its resurrection: the digital signal processor inside Speak & Spell, a children’s toy, proved to be flexible enough to translate analog to digital signals in everything from weather systems to smartphones. A comfortable and profitable niche for a company in trouble—thanks to a business model turned on its head.

Innovation needn’t be devastating, provided insurers understand the broader concepts and are able to overturn preconceptions and look beyond “business as usual.” It could take them to some very unexpected places.

Submit a Comment

Your email address will not be published. Required fields are marked *