As most of you are by now aware, the essence of many of my blog posts is how insurance should respond to societal and technological changes—to transition from Industrial Age purveyors of products to a more human-centric approach—acting as trusted advisors on the complex needs of people living in a complex world.
The Industrial Age created a new type of organism with its own survival mechanism: the “Enterprise” (alternatively, the Corporation, the Company, the Firm, or what have you). The circle of life for enterprises may have them at the top of the food chain, and “consumers” toward the bottom, with the enterprise optimizing the means of production and process to gain scale. The goal? To sell more stuff that perhaps people don’t really need.
The Enterprise survives at the expense of the individual. The rise of corporate social responsibility agendas is a signal that the Enterprise is a system that knows it is being “found out” and needs to try and make amends before being entirely overturned. This threat to the Enterprise emerges as technology advancements shift the power back from the Enterprise to the individual or human being.
To succeed in this new economic stage, we in the insurance industry must not think of our customers as “consumers” to be manipulated into buying products and services from us, but must empathize with them, sit on the same side of the table with them, anticipate their needs and solve their problems.
Economist Claus Otto Scharmer describes this process as moving from an “egosystem” to an “ecosystem.” In a 2010 lecture on the “Blind Spot of Leadership,” he discusses how the emerging transformation of business in society is an important historic shift that eclipses even the fall of the Berlin Wall, the collapse of apartheid in South Africa, the rise of the East Asian economy, and the tech revolution.
Scharmer states that the decaying business “egosystem” is characterized by power concentrated in the hands of a few strong players and special interest groups. Evidence that this time is passing is seen when an NGO nails a global brand because of its child labor practices, he says.
In contrast, the emerging economic “ecosystem” centers on the common interest, on collaborative intelligence and on innovation. It is a system where all stakeholders can empathize with each other and collaborate toward a common good. Businesses that adopt this collaborative approach will endure as human beings are put back in the center by means of technology and social norms. These business will deliver new products and services that people really want and need, not simply generate demand for existing products.
To succeed in this new environment, insurance leaders must master the skill of listening through social technology and open their minds, hearts and wills to truly hear what customers need, Scharmer says.
In the five years since Scharmer presented this view, the need for businesses to transform themselves into ecosystems has become even more urgent. The old ways of doing business are becoming less relevant as non-traditional players and the sharing economy begin to dominate public awareness.
All evidence points to the fact that insurance and its corporate customers cannot stand on the sidelines and continue to conduct business as usual. This is a risk to many “egosystem” firms’ business models which insurers are supporting today. To be a true risk manager on behalf of its corporate customers, insurers need to help them understand and address this risk while also addressing it for themselves.
Over the next several weeks, I’ll be examining some critical areas where insurance can begin creating that ecosystem and transitioning back to “we the people.”
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