Bruce Sahd, Founder Case Johnson
Insurers struggle to digitise
New and different is risky. No surprise then that insurers worldwide remain the digital laggards. Where do we start? Who will guide us? What if it goes wrong? The pure digital startups fare a lot better when it comes to insurance innovation. These new entrants threaten to leave the incumbents behind. Insurers seem stuck.
This ‘stuck situation’ is not because CEO’s are not aware of the possible strategies available to them. It is because there is no clear roadmap to get from where they are now – to where they want to be. Do we have the capabilities in-house? Do we need help? Complex questions.
Not even the starting point is clear, let alone the destination. The solution lies in adopting the right execution strategy – but execution is notoriously difficult.
Execution is difficult
If it wasn’t difficult then every insurer would be digitised already! Strategic digitisation is a journey, a process. A process of developing and executing the strategy. A journey rather than a destination. Learn by doing, and adapt along the way, because the destination can change.
So the challenge insurers face is not only the question of ‘what strategy’. It is again and again the question of ‘how to execute’. A good execution philosophy starts by accepting that the destination can change. A change in one area can require a change in another area, it has to be seen as a dynamic whole. Digitisation affects every area – it has to be executed ‘holistically’.
Digitisation is Holistic Execution
Digitisation is executed best with a holistic approach. This is because digitisation opportunities bring together the functional silos into a new whole. Technological disruption impacts all the business functions, not just IT or sales or customer service. Holistic means managing technology, pricing, risk, distribution, branding – all simultaneously. Holistic execution means combining the thinking piece – and the doing piece – all at the same time.
Digital is a dynamic new technological disruption that cuts across all areas. Executing all the pieces together requires an understanding of each piece in the overall value chain. Holistic execution therefore means finding the right multi-disciplinary skillset. Execution must be managed by the right jockey.
The Jockey must manage
The ‘digitisation horse’ needs to be ridden by the right jockey. A jockey with a multi-disciplinary skillset to manage holistic execution across all functional silos. Knowledge in product design, pricing, data-mining, IT, accounting, marketing, social media is critical.
For example a change in distribution strategy can change data-warehousing requirements.
This can in turn change product pricing, which changes financial breakeven targets. This then changes the technological specs, which changes vendor costs etc etc. And so on and so forth. Where do we find this person? In-house? Or from outside? Insurers don’t always want to bring in heavy-duty expensive consultants. But they also don’t want to lose another year. The CEO must appoint the right jockey early in the process. The CEO must be seen to lead the digitisation effort.
The CEO must lead
Digitisation starts and ends with the leadership and boldness of the CEO. Most CEO’s accept the need to digitise, but are usually too busy with core business priorities. Lip-service to digitisation is not the same as digitisation. Digital transformation is too strategic to be hands-off and delegate downwards. CEO must lead but not manage, the jockey must manage
The CEO must always be seen to be leading the project. Humility is the greatest strength – accept that I cannot know everything. And even if I do, I cannot do everything myself, and I don’t want to lose another year! Humility helps to save time, and it’s easy to measure the money value of lost time. How do I make clear measurable progress, in a way that can be seen by all stakeholders? Digitisation requires organisational change in order to succeed.
Change will not happen without strong leadership from the top. Foot-dragging, problem-finding and ‘boss-pleasing’ only wastes time and drains energy. The CEO must lead and commit to the journey.
Commit to the journey
CEO’s must commit to the digitisation journey, even if the destination is not clear. Which area do I want to digitise? Distribution? Underwriting? Back office? Service (chatbots)?
And why? Lower costs? Reach new segments? Grow customer base? Up/cross sell? Beat the competition? Build the brand? Simplify the offering? Make it easier for customers? What else is out there? is this the right strategy for my business? Do i have the complete picture? And even if I am sure about the strategy, who will implement it? And even if I have the right people, who can guide or advise or train them? So many questions. The best way to answer them is to commit to the journey. Appoint a jockey, start with a helicopter view. Scan the external environment, do an honest audit of internal capabilities. But start – start small and start soon.
Start small but start soon
Make a humble start but do it sooner rather than later. Don’t procrastinate, the timing will never be perfect. There is no need to spend a lot of money to get started. Start small, follow a roadmap, and hold the jockey accountable. Spend small initially, at each stage invest a little more as unknowns become knowns. Losing time is the most expensive thing an insurer can do. There is no finish line – but get onto the digitisation horse and start the ride