Other parts of this series:
In 2019, some Accenture research looked at the relationship between enterprise IT strategy and revenue growth across thousands of major businesses. The findings were interesting: businesses identified as tech Leaders based on the strategic agility and scalability of their IT systems were growing twice as fast as businesses with the weakest enterprise IT systems.
But one of the many things the pandemic changed is tech investment strategy. COVID-19 revealed how indispensable technology has become to business success in insurance and beyond.
Which made us wonder: what would happen if we ran the study again?
A growing digital gap
The second round of this study used economic modelling, case study research, and a survey of 4,300 executives, including 215 from insurance businesses, to reveal the pandemic’s impact on tech strategy and performance.
The headline finding is that the gap we found in 2019 is widening. Tech Leaders are now growing at five times the rate of tech Laggards. This suggests that a “winner take all” dynamic could emerge in the digital revolution. Ten percent of companies analyzed were classed as Leaders, while 25% were labeled Laggards.
But another key finding of the research—the most interesting part of the whole study, in my opinion—suggests that this might not happen.
The research found that tech Leaders aren’t the only organizations who made strides in the headwinds caused by COVID-19. We found that 13% of insurers in the sample have been growing at four times the rate of Laggards between 2018 to 2020. We call these companies “Leapfroggers,” and their success provides a roadmap for the industry.
What makes a Leapfrogger?
The revenue growth of Leapfroggers is mostly driven by two factors.
First, they have a baseline level of systems strength—enterprise IT systems that give them strategic agility and digital momentum. This comes from adopting advanced and emerging technologies and making an organizational change to take advantage of them. A growing number of insurers are in this position today.
Less common is the second factor driving the revenue growth of Leapfroggers: “flipping” IT budgets.
From a high level, most businesses break their IT budgets into innovation and operations. Generally, about two-thirds of the budget goes to operations and the rest to innovation.
But we found that Leapfroggers flipped the script on this in 2018 and began spending around 60% of their IT budget on innovation.
These findings are linked to a measure called “Flip Size” that Accenture Research has been tracking since 2017. As you might suspect, Leaders were the first to “flip” their budgets. Now Leapfroggers are following suit.
Unleash your inner frog in three steps
Our research also identified three steps Leapfroggers took to unleash their impressive growth and close the digital gap with Leaders.
The first is to re-platform—specifically, to prioritize the cloud. Leapfroggers recognize that the cloud is about more than tech. It provides an opportunity to find efficiencies across the whole business.
The second is to reframe. Leapfroggers don’t think about growth and innovation like their peers; they set significantly more aggressive goals in both areas. Their top priority in the pandemic was to scale new innovation. Eighty-nine percent are building partnerships across their ecosystem.
The final step is to reach every part of the business with this outlook. Leapfroggers target twice as many business processes for digital transformation as others. They fund employee well-being and equality programs at higher rates than their peers, and they accelerate agile training and building a collaborative culture.
Making the leap and taking the lead
The research is clear that for insurers that haven’t made the digital leap, maintaining the status quo with tech investments will see the performance gap with their peers widen.
But it’s also clear that this gap, while growing, is not impossible to cross—yet. Leapfroggers demonstrate a path to tech success for businesses that are not yet digital leaders.
We’ll explore making this leap in different parts of the insurance industry in future blog posts, but if you’d like to kickstart your journey right now, I would love to hear from you.