Other parts of this series:
- Insurers are grasping the need for ecosystem partners in the new sharing economy
- Insurers must re-examine all their business operations to capitalize on the power of digital ecosystems
- Insurers must move now to secure a presence in digital ecosystems and be ready to seize new opportunities
- Insurers must balance the needs of their traditional businesses with the demands of new digital ecosystems
- Insurers can learn a lot from how Google is balancing the demands of its traditional and emerging businesses
- Insurers need to be alert to the role of the Internet of Things in the rise of digital ecosystems
- Insurers must be ready to compete in markets that will be increasingly disrupted by digital technology
- Insurers must change from being providers of products to digital ecosystem orchestrators
Changing big businesses that have performed well over many years is not easy. Systems, processes and procedures at these organisations are often deeply entrenched. So too are their corporate structures, operating models and cultures.
It requires strong, visionary leadership to guide corporations from well established markets and revenue streams into new and often uncertain business environments. This is just what big insurers need as they look to migrate to new digital ecosystems. These digital environments are not only potentially lucrative. They may be essential to the long-term survival of many big carriers. Without a strong presence in the digital economy a lot of them will be locked out of new business opportunities.
In my previous blog post I stressed that insurers need to start moving their businesses onto digital ecosystems immediately. This will give them the option to quickly seize new opportunities or secure key partnerships as soon as they emerge. Furthermore, I emphasized the importance of gaining first-mover advantage. By moving swiftly into new digital environments innovative insurers can secure an early, and often long-lasting, advantage over their competitors.
Our work with major organizations currently migrating to digital ecosystems has revealed some other key steps that are vital for a successful transition.
Leverage core assets but build new partnerships – Well-established insurers need to balance the strengths of their core assets with the need for rapid innovation. They don’t want to lose the intellectual property, customers and revenue streams accumulated by their traditional businesses. Yet, they need new insights, technology and skills to capitalize on the big potential of digital ecosystems and secure additional markets. Insurance providers must decide whether to create in-house teams, usually staffed with new hires, to drive their ecosystem strategies. Alternatively, they could opt to buy technology start-ups or team up with strategic partners. Whatever the choice, speed is essential. Smart insurers are quickly snapping up the best skills, start-ups and partners.
Keep ecosystem operations separate – Whichever route is chosen – start-up acquisition, partnership or in-house business unit – it’s essential to resource and manage ecosystem operations separately. And not combine them with the core business. This retains the focus of the ecosystem operation and ensures it has the flexibility to quickly seize opportunities and avert threats to the emerging business. A multi-speed operating model allows for such agility without disrupting the traditional core operations of the enterprise. It’s important that the people and processes in the ecosystem operation are aligned to the dynamic demands of the new sharing economy. If they’re too tied to legacy operations they’ll lack the necessary agility and flexibility.
Relentless customer focus – The customer drives the business in the digital world. Constant customer focus is vital to ensure products and services are tailored to meet their often changing demands. Business decisions must be based on reliable data, gathered from key touchpoints, and insights generated by analytics systems, that provide an essential understanding of consumer behavior and needs. Successful ecosystem companies are built on good data and supported by effective technology. This enables them to quickly identify and satisfy consumer needs and leverage customer relationships for new business.
In my next post I’ll discuss how Google has managed to preserve the strengths of its core business while aggressively seeking new business opportunities. For now, if you’d like to see what Forrester has to say about insurers and ecosystems, take a look at this link.