Other parts of this series:
Six core characteristics needed to release trapped value within your LP&I company
In this series to date, we’ve explored innovations that are hurtling ahead in the financial services industry, what LP&I companies can do to ignite innovation and what customers and employees of the future actually want.
We’ve had great feedback and interest in the issues we’ve covered to date. One key theme has been the innovation opportunities arising from insurtech disruptors and, more importantly, the core characteristics and framework needed to innovate successfully. In other words: what’s the ‘secret sauce’ of innovation? And that’s what I’m going to cover in this blog.
Everything starts with the customer, whether that person is a consumer or an intermediary. As insurers look at their current value chain and assess specific areas for innovation, keeping an unwavering focus on the customer is critical. Truly understanding the nuances of both your current and target customer base is essential. That means working with real data and committing resources to developing a clear customer strategy.
Modern customers’ needs and expectations go well beyond today’s standard product offerings and engagement strategies. So how can insurers meet them? One route is to establish an open ecosystem model (for instance, partnering with insurtechs) that provides each customer with a customised mix of services. Another is to consider how your products could embody a new underlying philosophy such as how to prevent instead of protect i.e. focusing on what you can do to help a customer avoid the need to make a claim in the first place. Don’t shy away from collaborating and co-creating both internally and with partners in order to create relevant solutions.
But regardless what the specific solution is, it must, at its core, treat customers as true individuals. AI can help with achieving that degree of personalisation, opening up the potential to enable highly-tailored conversations and/or improving the quality of service available from a human representative.
In parallel, insurers need to establish a clear brand that complements these personalised customer propositions and engagement strategies. This starts with a simple question: what do you want to be known for? And a strategy to ensure the brand is successful in the target market will come from the answer to that question. (Brand is a subject that we’re going to look at in more detail in a forthcoming blog series).
Six characteristics of innovation
For now, though, I think I’ve kept you waiting long enough to read about the ‘secret sauce’ of innovation. In our Fearless Innovation report, we’ve identified six core characteristics of innovation from a survey of 1,440 C-level executives across multiple industries. These characteristics represent what’s needed to release trapped value and are extremely applicable and achievable within your LP&I business. Leading businesses that harness innovation are:
1. Hyper-relevant – they know how to be and stay relevant to customers by constantly sensing and addressing their changing needs (e.g. affordability, social connectedness, experience quality).
2. Network powered – they harness the power of a carefully managed ecosystem of partners to bring the best innovations to their customers.
3. Technology- and data-propelled – they master leading-edge technologies and data manipulation to enable business innovation, and do it at an unprecedented level and scale.
4. Asset-smart – they optimise asset positions to enable a faster shift to new business models, by making bold and timely changes (often at the balance sheet level).
5. Hyper-lean – they adopt intelligent operations (automation and digitalisation of manufacturing, supply chains and functions) to optimise cost structures and free-up capacity for innovation.
6. Agile workforce champions – they create new, modern forms of workforces (specialised, flexible, augmented and adaptive) required to gain a competitive advantage in existing and new markets.
Of course, becoming an innovative organisation that embodies these characteristics does not happen overnight. Getting there requires a journey that transforms and grows the core business to release investment capacity that can scale relevant new businesses. With the new and core business co-existing, balance is critical to ensure a wise pivot to the new.
Innovation at the scale required to thrive in a new era is daunting. Making incremental change requires thought and money, whereas genuine innovation also requires courage and vision. But insurers need not fear the future. That’s because as innovators they can build that future themselves. The keys to success? Balance speed with discipline, have a clear strategy and drive it from the C-suite while empowering the whole workforce. Don’t feel threatened by insurtechs, whose cultures or working practices may seem radically different from your own. But draw inspiration and learn from them. Most importantly, keep the individuality of the customer at the forefront of everything you do.