Other parts of this series:
- Insurance hasn't changed much-but everything around it has
- Core transformation is non-negotiable if insurers want to innovate
- $3 Billion worth of lessons learned from home improvement stores
- Digital opportunities that insurers must get right
- Legacy systems don't have to inhibit innovation
- The wise pivot: Four stages to become the insurer of the future
To meet disruption head-on, insurers must forge a path to become a digitally enabled, agile and innovative organization. Here's a four-phase approach to get there-fearlessly.
Insurance hasn’t changed much in 200 years, but everything around it has. I hope I’ve convinced you over the course of this blog series that insurers cannot be complacent. Disruption may not have hit the industry en masse, but it is coming—and insurers need to consider how they will make the journey from the business they are today, to the business they need to be in the future. In other words, how will insurers rotate to the new?
Rotating to the new requires strong and continual action. It is not a transformation with a set end date; rather, it’s a continual process of getting better through the twin initiatives of core transformation and innovation.
There are four key phases to help insurers rotate to the new
- Transform the core business to release investment capacity. Insurers should apply digital technologies to make the core lower cost, more efficient and more competitive—which, in turn, creates flexibility and frees investment capital for innovation.
- Drive incremental growth in the core business. This is commonly overlooked, but essential for the journey. Some of the investment capacity must be directed at digital Brilliant Basics: initiatives to get closer to the customer and drive growth in the mature, core business. These investments also support the stable foundation that is required to enable agility.
- Scale the new. This is the hard part, and requires an innovation architecture to lift the organization from a perpetual cycle of pilots to identify the winning innovations that will provide the business with future revenue streams. This may involve partnering with start-ups or other partners to determine how to get to mass-market and industrial scale. Notably, this is also a crucial preparatory step before making the shift from the mature business to the new one.
- Pivot wisely. By optimizing investment dollars and capital over time, insurers can align S-curves to enable a transition from the old business to the new one. Timing is critical to identifying when the new initiatives start to become business as usual, and when to shift to the new business. This is a difficult task to pull off—but it is necessary.
In other words, rotating to the new is about nesting two S-curves, and then shifting from one to the other. Insurers today are sitting on the lower, established S-curve. They must start looking at the bottom of the new S-curve with technologies like automation, AI, big data and analytics, and to look at opportunities to engage customers outside the insurance transaction. The wise pivot is not easy—but done properly, can help insurers not just fend off disruption, but become an agile, innovative organization that can compete for the long term.
The future is fearless
Insurance hasn’t changed much in 200 years, but everything around it has. The industry has an opportunity to leverage its deep experience in data, distribution and innovation to meet disruption head-on. The path ahead lies in digital transformation: transforming the core, placing bets for innovation and overcoming legacy systems. Is it intimidating? Of course. But today’s emerging risk can be tomorrow’s best new product. Today’s industry leader can be tomorrow’s innovation champion. We’re here to help you make bold decisions and face the future—fearlessly.
Thanks to my colleagues Omar Abbosh and Roy Jubraj for their work on this topic. To discuss how Accenture can help you plan for the wise pivot, please get in touch.