It’s important to ensure that any new initiative gets off to a good start—and digital transformation is no exception.
I’ve been involved in the publication of two important pieces of research in recent months (and many more in the past). They have prompted me to think more broadly about digital transformation in the insurance industry.
The first piece of research is an attempt to make digital transformation more concrete for insurers by identifying the individual levers of digital value, and then quantifying each one’s financial impact. The starting point is the recognition that digital leaders within the insurance firm often find it hard to make a convincing business case for digital transformation—by providing detailed insight into what the financial impacts could be, we hope to overcome the challenge.
This research is published as Double the profits: How high-performance insurers can create business value from digital transformation.
The second research piece is the Digital Innovation Survey, which aims to uncover the state of the (digital) nation across the insurance industry. It’s another major piece of research that shows exactly what insurers’ digital plans and value expectations are. It will shortly be published and I will provide the link in one of the future blogs in this series.
Having reviewed all this data and the conclusions to be drawn from it, I am struck by the fact that it is extremely difficult for an insurer to embark on a digital transformation. Virtually every insurer accepts that digital technology is a game-changer, and they are investing in it—but they admit that their digital investments and activities remain “exploratory” (a finding of the Digital Innovation Survey).
In other words, they are undertaking small, incremental projects that typically focus on digitizing existing channels and processes while shying away from transformation that is more fundamental (digitalization), and looks at new business and operating models that have the potential to disrupt the industry—thus leaving the field open for players from outside the industry.
There are two potential symptoms and/ or causes of this “failure to launch”: the appointment of a chief digital officer and the creation of a digital strategy. Both of these are common actions by companies that are serious about digital, so what do I mean?
Creating a new chief digital officer position is not a bad idea as such—what is problematic is the depressing fact that these executives usually do not have the necessary power or influence to sponsor far-reaching change. Many of them report in to the CIO or CMO, and thus find it hard to set their own agendas. Digital is the future of insurance, so the new chief digital officer should be an equal member of the C-suite. Ideally, he or she might even become the new leader of a digitally transformed organization in the future.
To the next issue: I believe quite strongly that creating a digital strategy is a fundamentally flawed approach. Strategy is strategy, and the digital elements must be aligned to the overall strategy. Seeing strategy within silos is fatal, especially when such an important area is involved.
Next time, another important thing to get right when tackling digital transformation.