Other parts of this series:
Carriers must align their operating models with their digital business strategies.
Insurers that are eager to become digital disruptors, and provide consumers with innovative connected services, often see their plans stall. Their traditional operating models can’t provide the speed and flexibility these companies need to succeed in a fast-moving digital environment.
It’s essential for insurers to align their operating models with their digital business strategies. We found that only 25 percent of companies, across all industries, have an operating model they can adapt to consistently support their business strategies and drive new value-adding activities. Just 31 percent of CEOs strongly agree that their company’s operating model is correctly aligned to fuel strategic growth initiatives.
Just 31 percent of CEOs strongly agree that their company’s operating model is correctly aligned to fuel strategic growth initiatives.
To close the gap between their operating model and business strategy, insurers need to overhaul some important parts of their organizations. Organizational structures and incentives for executives and key workers, as I discussed in my previous blog post, must support the business’s digital objectives. There are two other crucial parts of the organization that are likely to need a shake-up:
Culture: An effective operating model, designed to support an organization’s digital business strategy, must be underpinned by the correct corporate culture. Such a culture should encourage communication, innovation, risk-taking and collaboration. What’s more, it must always promote the interests of customers. A company’s culture is no longer limited to its employees. The spread of social media platforms and digital ecosystems has stretched it beyond the bounds of the organization to include customers, freelance workers, start-ups and business partners. Changing such an extended culture is not easy. It requires common objectives and frequent interaction between key people driving the company’s digital goals.
Capabilities: Carriers need to ensure that three important capabilities within their operating models are aligned with their digital business strategies:
- Talent. Extensive changes to the way work is performed in the digital environment require insurers to adopt new ways to find, lead and retain staff. Liquid workforces, which draw upon on-demand skills outside the organization, could greatly increase the flexibility and speed of many insurers.
- Ecosystem partnerships. Strategic ecosystem partnerships enable insurers to quickly and efficiently extend the reach of their digital products and services. The first wave of digital ecosystem alliances tended to be traditional business development partnerships. However, many companies are now forming closer relationships that use application programmable interfaces (APIs) to share information across their digital ecosystems. These API partnerships are more scalable, faster and less complex to implement. They allow insurers to quickly make changes to their ecosystems to support shifts in their digital business strategies.
- Intelligent automation. Most digital disruptors recognize the importance of fully automating their operating models. Industry incumbents, including traditional insurance providers, have been much slower to make this move. Intelligent automation, which includes robotics systems, cognitive computing and machine-learning technology, can help insurers curb costs and improve efficiency. More importantly, it can empower their workers to make quicker and smarter decisions.
In my next blog post, I’ll discuss the key steps that will enable insurers to create flexible and adaptive operating models. Meantime, have a look at these links. I think you’ll find them helpful.