In this final blog post exploring the implications of Accenture’s recent research on innovation, I’d like to share the five characteristics of a successful, effective innovation process.
- Run innovation as an end-to-end value chain emphasizing speed and flexibility. Product life cycles are shrinking as customers become more demanding—a challenge insurers very much face.
- Move from product to business innovation—innovation that generates substantial new revenue integrates product with service, technology and personalization. A new product with great features is not enough—it needs to be backed up by a business model that provides a personalized customer experience and service that maintains the customer relationship (and revenue stream).
- Tailor risk management to innovation and use it. If you’re going to create disruptive innovation, you need better ways to identify, measure and manage risk.
- Use analytics and big data to make sure customer preferences shape your innovation process. As the business digitizes, insurers have unprecedented insight into consumer trends and preferences—in real-time. I’m happy to say that 41 percent of insurers are investing in social media to improve innovation (the average is only 31 percent), but it’s still too low.
- Pursue frugal innovation to capture middle-class consumers in emerging economies, and also to disrupt developed markets. I have mixed feelings about the use of frugal innovation to break into developing markets. I think there is more to it than just “dumbed-down” products—especially in insurance, it’s a mistake to think an American product with no frills is what China or Nigeria wants. However, I do think that such an approach can work well in other developed markets as a way to introduce something good really quickly.
Innovation is something I feel very strongly about, as you can see, and it’s something that is vital for success in today’s highly competitive and fluid insurance markets. Understanding it will pay big dividends, of that I am sure.