Perhaps I am fooling myself, but the logic of what I’ve been saying seems to be something that any insurer would buy into—at least in theory. Who wouldn’t want to protect themselves against disintermediation, and who wouldn’t want to retain control of the vital customer relationship?
Trouble is, turning this theory into practice isn’t so easy, especially in an industry so innately conservative, and so focused on managing and avoiding risk. New product ideas are one thing, but a totally new business model requires far-reaching changes.
Perhaps we all need to remember that mitigating risk is itself risky, and temper our native cautiousness with the realization that avoiding change can itself be risky. Perhaps it’s also true that without risk, there’s also no fun!
Based on Accenture’s corporate experience, the following seem to me some of the main success factors for building a culture of innovation:
- As with so much else in business life, having board-level buy-in and active executive sponsorship is vital. This top-down approach is essential because one is essentially trying to take a strategic rather an operational approach.
- A related point is that adequate resources need to be committed to innovation. Part of this commitment is an independent R&D unit with a dedicated, senior leader—a chief innovation officer, if you will. I have yet to find one in an insurance company.
- Look at companies in other industries to see what they are doing that could be adapted to insurance. As a sideline, explore where insurance products and services could be offered to augment what they are doing—though only to reach new markets. Remember, the customer relationship is the launch pad of success.
- Tap into your employees for ideas—and make sure there is a process for transferring those ideas to the R&D unit.
- Partner with academic institutions, innovation coaches, researchers and even humble consultants like Accenture. A third party can bring rigor and a fresh eye to projects—and it always helps to have somebody around who has done this kind of thing before.
- Put the customer (and not the product) at the center. Really, these blogs have been an exercise in saying this in different ways and it’s an insight that underlies all these success factors. Don’t underestimate the profundity of this change. One example, key performance indicators must look beyond revenue over a certain period to assess new metrics like “share of customer,” “increased loyalty” or even “future sales potential.” Reset, rethink is the name of the game. It won’t be easy, but it could be the safest path to survival.
One way for insurers to become customer-centric is to start widening their conceptions of what insurance actually is. One of my colleagues intrigued me by arguing that insurers should, in fact, start seeing themselves as publishers of advice for preventing accidents, finding assistance and general tips for finding new services to complement traditional insurance products. This radical idea is aimed at increasing the frequency of customer interactions and touch points to build the all-important customer relationship that is the foundation of an insurer’s long-term success.
For more information on these success factors, and building a culture of innovation in general, please read Innovation: The opportunity for insurers. In my next series of blogs, I will continue to explore the notion of customer-centricity and how it underlies the quest to become a digital insurer.