Amid the chaos of innovation, there’s a question that keeps coming up: Does the dog wag the tail or the tail wag the dog?

Twenty-five years ago, the insurance industry adopted technologies that provided efficiency and savings by automating the processes that were being done manually.  Today, we are adopting new organizational structures and rules to work efficiently with the technologies and partnerships of our mobile, digital, collaborative, analytic, connected and innovative world.

Today, business and technology play leapfrog and the trick is to keep everything moving in the same direction toward the same goal, knowing that some disruptive force—perhaps the next wave of digital or technological innovation—may change the goal, requiring them to shift processes and workforce capabilities to another direction.

Spending for technology and infrastructure will vary from organization to organization, but AIG, CNA and Erie all told shareholders at their second-quarter conference calls of their plans to spend on technology and infrastructure, while Allstate announced it would retire legacy technology platforms, according to a recent story in Insurance Networking.

The focus of IT spending continues to shift from reducing costs to developing new capabilities.  By now, insurers have realized most of the economies of simply automating traditional processes. Now, insurers are finding their biggest benefits will come from spending on innovative technology to help them differentiate themselves from competitors.

We are seeing a series of advancements in telematics with products like AXA’s DriveCoach, a new application for the Apple Watch to analyze driving behavior for motorists in France and the UK and advise them how to drive more safely.

Business longevity in and of itself is not much of an advantage anymore—as the Oldsmobiles, A&Ps and Pan American airlines can attest to.  In fact, the number of established practices and infrastructure in a long-standing organization is often a disadvantage that prevents the rapid change needed to compete with more nimble organizations.  On the other hand, technology developments that have no use in a competitive business application are usually poor investments for a company.

Getting back to my original question, the dog and its tail need to wag together.

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