Other parts of this series:
- Smart insurers are adopting new business strategies to ensure they thrive on rising disruption
- Strong partnerships provide insurers with the best protection against growing industry disruption
- Platform businesses give insurers a strong bulwark against rising disruption
- Mindset shift helps insurers unlock the value of their platform businesses
By focusing on key market activities, instead of their traditional industry roles, insurers can increase substantially the value their platform businesses generate.
In my previous blog post I discussed the value of investing in or partnering with a platform business. However, many insurers are ploughing big money into platform businesses without achieving the full value these digital innovations can deliver.
To unlock greater value, carriers need to rethink how they conduct business. They should consider focusing less on their traditional industry roles and instead concentrate more on their key market activities. Such a shift will enable insurers to increase the effectiveness of their platform businesses. It will also allow them to better manage growing disruption in their industry.
We surveyed 67 insurers, as part of a global cross-industry survey of digital readiness, and found that around 50 of them (75 percent) had made significant investments in platform businesses. However, only four (8 percent) of these companies were close to attaining the full value of these platforms. These “highest value achievers” are obtaining at least five of the six major benefits of platform businesses. Such benefits, outlined in my previous blog post, include providing greater value to customers; using network effects to grow the business; enhancing sustainability; improving focus on core activities; attracting new customers from outside traditional markets; and greater sharing of risk with partners.
By focusing more on market activities rather than industry roles, insurers can readily look beyond their traditional business boundaries and identify broader ecosystem opportunities. This can increase substantially the value created by their platform businesses. The main differences between industry roles and market activities are shown below.
Our research shows that organizations that derive the greatest value from their platform businesses tend to concentrate their resources and expertise on strengthening their market activities. They achieve this in the following ways:
- Branching out beyond their primary industry. Highest-value achievers are unlocking value from their platform partnerships by divesting from their core operations and redirecting funds into initiatives outside their primary business. They’re moving away from traditional industry roles and positioning themselves around critical areas of expertise within expansive digital ecosystems. Most high-value achievers that are insurance providers are applying their specialized expertise to new areas of business.
- Adopting business models that best leverage digital platforms. Successful platform investors are using their digital platforms to connect their core business offerings with those of their partners to create comprehensive end-to-end customer solutions. Many leading platform operators in the insurance industry are using acquisitions to obtain the technology and expertise they require for such integration.
- Building openness and collaboration into their operations. Companies that are unlocking the most value from their platform businesses are refining their operations to ensure that collaboration with partners, customers and even competitors is simple, effective and routine. Top performing insurers, for example, are changing their processes and systems, as well as their organizational culture, to accelerate decision-making and increase business flexibility.
For more information about thriving in an increasingly disrupted business environment have a look at these links. I’m sure you’ll find them useful.