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Last time, I used my blog to showcase the way innovative startups are reinventing core areas of the Life, Pensions & Investments (LP&I) market. These venture-funded fintechs and insurtechs all have one thing in common: they’re totally tuned in to the desires of the all-important next wave of customers.

Their products and services are engaging, responsive, accessible, personalised and relevant. Long story short: they get it. They understand what the customer of the future wants from financial services. They put that understanding right at the heart of everything they do. As a result, even if they’ve yet to make major inroads into market share, they’re decisively raising the bar for the rest of the industry and setting themselves up for exponential growth.

With these new ideas coming thick and fast, traditional players urgently need to up their own game. That’s going to be very challenging. Most LP&I firms are still rooted in the old ways of doing things. Instead of being second nature, innovation’s still something they struggle to embed enterprise-wide.

Contrast this with the world’s most innovative organisations and you see the stark contrast. Take Amazon as an example (recently voted 3^rd most innovative company across the globe by the Forbes 2017 Innovation Survey).  Innovation is the lifeblood of the organisation, to the extreme that in new joiner interviews, a key characteristic it looks for is a ‘builders culture’ – by this Amazon means hiring people who possess in the very core of their DNA a need to continuously invent.

This emphasis on hiring those with an innovative mindset is important. However, your current workforce will evolve into an innovative workforce if given the opportunity, framework and encouragement.  Learning from other companies will provide many insights, with everything from Google’s 20% time, hackathons, ideation sessions, incubators, office layout and cross-team ‘show and tell’ workshops all providing small steps to creating a culture that nurtures systemic innovation.

So, what does that mean for traditional LP&I providers?  Unfortunately, there is not one blueprint for creating an innovation utopia. But very simply, it’s time for a reboot. Fortunately, there’s never been a better time to get started. For one thing, there’s no shortage of great ideas or innovative companies to provide inspiration. And for another, incumbent firms have some major advantages over incoming disrupters: their brands are well established, they’re trusted as known quantities, and they already have plenty of customers.

So where (and how) do we recommend getting started on this essential innovation journey? First and foremost, remember this doesn’t have to be an all-or-nothing transformation. It’s absolutely fine – advisable, even – to start small: try a few standalone initiatives, build buy-in, show what’s possible and scale from there.

At a broader level, here are some general principles:

• Watch closely: There’s a lot going on in the fintech/insurtech space. Make sure you’re on top of developments, develop strategies for partnering, and consider well-targeted acquisitions to jumpstart innovation in key areas. In addition, study how established innovative companies in other industries have structured themselves and learn from their journeys.
• Create a framework: An overarching innovation architecture is vital. Agile methodologies are integral to that, so are labs for testing new ideas, learning from them, applying them and continuously optimising them based on feedback from customers. Ideas may start broad and generality is a good thing; however, your framework should facilitate idea enhancement to refine these into focused innovation. Representatives from right across the business need to get involved so innovation doesn’t happen in pockets (collaboration and transparency are a must).
• Innovate on the inside too: None of this will be sustainable if a firm is struggling to attract the brightest and best young talent. To appeal, they must engage early and showcase an exciting career path. Fortunately, innovation and excitement go hand in hand. In addition, firms must upgrade the workplace. Centennials (or the Gen Z) don’t want to work on Lotus Notes or Office ‘03. That means replacing legacy with connected technologies that allow people to collaborate without friction. Ensure they’re digitally empowered and test new ideas on centennial talent. This will provide a rich source of insights that will develop innovation even further.

At a more granular level, remember that innovation won’t just happen. To get it right, it’s imperative to spend time on the strategy. That has three main elements. First, identifying the vision. Where do you want to innovate? Why? What benefits will it bring? Once that’s decided, define the future operating model you’ll need to make it work. And then articulate the roadmap for putting that model in place.

I’ve already stressed how important it is to start small and scale. For example, artificial intelligence doesn’t have to be big and scary. Set up a self-contained chatbot in one area of the business. Let people get used to it, buy into it and accept it. Then build out from there.

There are some other tricks of the trade where innovation is concerned. To foster an innovative culture enterprise-wide you must publicise success. Celebrate and reward new ideas and the people who make them work. In parallel, create a culture that includes the freedom to fail. Allow individuals to become “innovation champions” within the business, so people know what’s happening and are inspired to do the same. Importantly, create a platform that encourages and incentivises innovative ideas and thinking.

Crucially too, ensure there’s no obstacle to collaboration across multiple parts of the business and the wider ecosystem. The innovative mentality needs to permeate every aspect of the organization if it’s going to take root and succeed. Encourage people to think and act in new ways. Unfamiliar methods and approaches will facilitate these new kinds of behaviour.

One word of advice. LP&I firms are, understandably, highly focused on getting direct returns from their investments. But for innovation to flourish, a new longer-term mindset is needed: returns from innovation investments take a while to flow through and may initially be hard to quantify.

Bottom line? Innovation isn’t necessarily about direct ROI and there isn’t one blueprint for creating an innovation utopia. It’s part of a bigger play of unlocking new value and needs to be grown organically, with frameworks helping to accelerate and focus that growth.

In my third and final edition in this series, watch out as my blog is taken over by Accenture’s very own LP&I customers of the future, David Mansi and Lucy Watson. They have some bold ideas about propositions and working practices that really resonate with them, so stay tuned.

I’d be delighted to discuss any of these ideas with you, so drop me a line. And thanks for reading.