"Providers of disruptive products or services such as the PC, or more recently Netflix, can gain a foothold at the bottom end of the market because established players tend to focus on sustaining innovations, such as incremental improvements to their core products or services.
While it’s natural to want to keep paying customers happy, “the risk with this blinkered approach, however, is that you could be neglecting an overlooked area of the market that could actually be a key growth driver,” says Huw Owen, a regional head at software company Couchbase."
Duncan Jefferies Raconteur July 25th 2019
Jefferies explains that "Providers of disruptive products or services such as the PC, or more recently Netflix, can gain a foothold at the bottom end of the market because established players tend to focus on sustaining innovations, such as incremental improvements to their core products or services."
Many reports on the insurance market point out how Amazon may well be following that strategy with insurance products and possibly a price comparison service. Will Amazon climb higher up the value chain?
Then there are the full-stack innovators such as Lemonade and Slice. Will they expand from being single product insurers to multiple perils and global coverage?
The other potential hazard for insurers is the gradual move from cure to prevention. The connected world of people, vehicles, homes, highways and cities potentially prevents risk than cover it. The move to autonomous autos and trucks and away from private ownership turns the world upside down if not straight away.
Insurers plan to be solution providers with prevention using sensors, the IoT and planned & preventative maintenance to prevent breakdowns, illness, accidents and even mitigate CAT events.
The big BUT: this requires integration of hardware and software from multiple vendors and sources and this moves away from insurers core strengths. The answer is said to be ecosystems and choosing the right partners. But some of those partners may well decide they are better placed to innovate and deliver preventative solutions including insurance.
This sets a high bar for effective innovation by insurers.
Over time constant incremental innovation can deliver significant competitive advantage but only if leaders set ambitious goals. A rule of thumb is that innovation and transformation projects should deliver a TEN TIMES DIFFERENCE.
No mere 20% ROI but a major change. Not just inventing a faster horse but introducing the internal combustion engine, affordable vehicles and a road network.
With the right vision, strategy, leadership, culture, resources and ability to execute disruptive innovation is possible. Without it you may just about deliver incremental improvement. In that case you are always vulnerable to a competitor that pivots and suddenly leaves you behind.
"Fail fast and fail often" is a mantra for iterative development and innovation. Black Box encapsulates that tactic. But it is shared by both disrupters and incremental improvers.
The missing piece in the innovation jigsaw is a laser focus on the customer. "In fact, Ramyani Basu, digital transformation partner at AT Kearney, believes that when innovation hits, business turnaround is nigh-on impossible if you’re not truly customer-centric. “History has shown time and time again that those who survived disruption were those who listened to their customers’ pain points,” she says."
Jefferies states "Netflix didn’t kill Blockbuster, ridiculous late fees did. And it’s the same for Uber, Amazon and Airbnb – the technology itself isn’t the disruptor, being customer-centric is.”
So- track your competitors, track new tech entrants to the market, and be sensitive to trends and customer pain points to drive your innovation efforts.
Chose a technology partner that can deliver the competitive advantage you need to establish this year and next AND also lets you integrate the benefits of AI across the enterprise. Access, join and make AI ready all the unstructured data silos across every insurer.
Choose a technology partner that does let you adopt a fail fast and fail often iterative approach to execute strategies and projects effectively. That means No Code platforms meaning the business can configure and create any workflow and modify any process from the desktop/laptop in days or even hours in plain English (or Spanish, German, French, Chinese etc).
Don’t be hostage to the core systems of record that hold you back from effective innovation. Leverage their back-office capabilities and at the same time leverage the front-end customer capabilities of digital insurance platforms. With PAYG and Subscription licensing you will not suffer the upfront costs of old nor have to maintain yet more technology stacks as they are hosted – typically on AWS.
Nothing lets you escape from the need for vision, strategy, resources and execution skills but with these modern digital platforms are the basis of effective and disruptive innovation.
PS- I declare my bias in the insurance claims field with 360Globalnet and its 360Siteview No Code Digital Claims Platform
The smartest organisations also think of themselves as collaborators and partners in an innovation ecosystem that includes startup communities, universities and other organisations beyond their own sector. “Organisations that are able to collaborate, to partner, to acquire without killing off the acquisition – they are the ones more likely to thrive in the new disruptive landscape,” says Ms Harrison-Mirauer. Finally, as Nick Parminter, chief executive of consultancy Class35, says: “In general, it is good practice to ask yourself whether your business model would still stand if you were starting your business today. If the answer is no, then beware of disruption.”
unknownx500
