Insurers must join the dots by taking both revenue and efficiency into account when they think about digital transformation.
Last week, I looked at what—in my opinion—are two common mistakes in approaching digital transformation: appointing a chief digital officer who has insufficient power, and carefully crafting a digital strategy, whereas there should be only one strategy for the firm. This week, I’d like to consider the dangers of looking at only one side of digital.
Here’s what I mean: it seems to me that the trap into which many insurers (and companies in other industries, for that matter) fall is to look at digital transformation through one of two lenses. The first lens is the use of digital technologies to improve processes, and thus to serve the customer more efficiently and at lower cost. Sounds good, and I suppose it is. But if all this efficiency is doing is getting out-of-date products and services to customers, the benefits of digitization will be shortlived.
In other words, it’s not enough just be more efficient—you have to be more efficient at the right things. It’s vital we look at digital transformation through the lens of growth as well.
However, and I suppose that is a reason why this single-lens approach is so common, it’s still good enough to ensure an executive survives for at least the next couple of years!
All of this is, of course, just another way of contrasting digitization with digitalization (see my previous blog for a fuller discussion of the difference between the two. Of course, digitizing existing processes is an obvious and important element of any strategy and clearly a good thing to do: change does not take place overnight. But the danger is that insurers fail to appreciate the full extent of the changes that digital technologies are already enabling, and will continue to enable—and risk continuing to live in what will turn out to be a fool’s paradise.
Next time, I’d like to look at some of the far-reaching changes that are already threatening the sunny Island of Business as Usual.