- Where Insurance & Technology Meet

Searching for Innovation in All the Wrong Places?

We all agree that innovation is the word of the decade (so far). But today’s version of innovation may require some humbling tradeoffs. Are you ready for this?

Tell me if you’ve been here …

It’s planning time and the executives have been spirited away to a 3 day retreat to finalize ‘The Plan’.

The first half of the first day has an outside consultant facilitating a discussion on ‘Innovation.’ The consultant is good, has a number of examples of companies that have innovated, and their results.

Everyone is motivated and the consultant leads a brain storming session. Everyone is challenged to bring forward ideas for innovative products, processes, and administration. There are at least 15 good ones that will be vetted in the afternoon.

Lunch happens. The consultant leaves, and things start to change. All but three of the good ideas are dismissed due to cost, or do-ability, or risk. The CEO appoints the CMO, CRO, and CIO as the Innovation Committee to come up with a plan for each of the survivors.

By the end of Q2 of the following year, the Innovation Committee has surveyed peer companies, visited a local accelerator, and talked to their tech vendors, who provided proposals. The committee determines that they don’t have the resources to flesh out the plans as there are too many projects underway already.  And the proposals were much bigger than expected.

But the committee promise to give an update at the following planning session.

The Corporate Innovation Theatre

Not a great result, but It could be worse. The committee could have engaged a few start-up companies for ad hoc projects. After a few months, the company would be surprised to learn that several of these start ups quietly went out of business and the others were fully engaged by competitors and are not returning calls.

Without a dedicated team, and a leader, these programs simply drifted into uncharted territory and returned with little real innovation and an overdose of real frustration.

This scenario was recently reviewed by the cheeky (but right-more-often-than-wrong) CB Insights in Corporate Innovation Theatre In 8 Acts, recommendations for corporations which only want to ‘look innovative.’ These include:

  • ‘Adopt the Jargon- Talk a lot about Failing Fast and Disruption and Embracing Innovation’
  • ‘Invent New Titles – You need an “Innovation Sherpa” or A “Digital Prophet” ASAP’
  • And (my favourite) ‘Hire a Chef – This is what made Google Great, Right?’

CB Insights have an alternative recommendation which hinges on one fundamental question: Who is responsible for driving the relationship between the supplier and the customer?

Who’s the boss?

In the ‘normal’ world of technology acquisition, insurers would expect that suppliers would come to the buyer to offer technology that would meet the insurer’s specific needs.

But this world is not normal. It is disruptive.

In a presentation on startups and corporate innovation, CB Insights says “the end state of most startups is failure.” That said, ”the ones that survive become the problem”; referring to the monster successes which dominate a space. Think Amazon.

On this basis, the insurer needs to take responsibility, starting by becoming conversant with the technology and the startups that are likely to impact areas of specialty.

In other words… You go to them. And you start by learning what they do and how they do it. And you carefully pick those that align with your needs. And stay very close to them and their balance sheets.

Then you help them learn what you do and what you need from them. Be prepared for them telling you how archaic you are.  It’s humbling, but very important.

This approach can springboard into other activities. Actively invest and manage portfolios. Form joint ventures. Become fast followers (after you learn what to follow).

Whatever you do, do not dismiss startups “It is intellectually lazy,” CB Insight says. And not particularly effective.

Want to see examples?

At the 2016 Executive Forum, on 30 August 2016, we will have case studies from Canadian insurers which have active InsureTech projects. We will also have analysts and consultants who have been working in this new world. If you have questions, they might well have answers.

Hope to see you there.