Virtually no one in insurance thinks of innovation as just an industry buzzword anymore. It has gone way beyond being merely industry buzz and has become a reality for insurance companies' present and future success, and in some cases, survival. Innovation is real; it is happening; there is activity, and the momentum is increasing. A recent SMA survey, Innovation and Next Generation Technologies in Insurance, revealed that 87% of insurers, across all lines of business, say that innovation is occurring at their companies, and 20% say that they have a strong innovation culture in place. It is becoming more and more apparent that no one thinks that the need to innovate does not apply to them; on the contrary, the desire to transform and differentiate through innovative strategies is taking on a sense of urgency that has energized the industry in a way that has rarely been seen before.
[SMA's Deb Smallwood urges Don't be Dull: 3 Elements of Innovative Insurers]
Innovation is so much more than finding or doing something new or different. Not only does it involve changes on many levels and in many areas, it requires a new way of thinking and a dedication to persevere and follow-through. SMA defines innovation in the insurance industry as the continual rethinking, reinventing, reimagining, and/or retooling of products, services, and processes for the purpose of transforming customer and employee experiences and/or achieving game-changing results. Innovation comes from a desire and a commitment to constantly improve, to think differently, and to envision and enact change. It is motivated by the desire to take full advantage of next-generation technologies, to thrive and lead in an exceptionally competitive marketplace, and to give customers the best possible experiences and appropriate products and services.
Innovation will look different to different organizations. For some companies the changes will be small, or at least start small. For others, the changes, although they might start small, will be large in size and scope. The vast majority of the insurers responding to the survey say innovation may mean either large or small changes. Over half say that innovation is bringing about a cultural change that is impacting the entire organization.
Not only does innovation look different among companies and various lines of business; it is also happening in different places within individual insurance businesses. Half of the survey respondents indicate that innovations are occurring at the departmental level, but a significant number of insurers report that innovation is also increasingly occurring across departments. Large-scale, enterprise-wide innovations are taking place at about one-quarter of the citing insurance companies. Innovation is definitely increasing and touching many, if not all parts of the business in some way and by some degree.
The experience of stepping across the innovation threshold will be different for each individual company. Influencing factors include how a company's investment levels line up with budget allocations, strategic priorities, and many other considerations. But there is one common element necessary for success. It is imperative to start with a vision and then channel all aspirations into achieving that vision. Know where you are going and work together toward that common goal. Begin the process to energize, transform, and differentiate.
Energize. Start anywhere -- from the ground up or from the top down, but instill a sense of excitement and energy for innovation in every department and at every level, and then work together toward the common goal.
Transform. Use the energy to develop the vision and then gain consensus on a business and IT roadmap designed to unleash the power of innovation and next-gen technologies. This requires a culture for innovation and a leadership commitment to stay the course through the entire journey.
Differentiate. Leverage the outcomes of transformation to define capabilities that are different than what the competitors currently offer, or create new capabilities that they are unable to deliver. Make the innovations work to set the company apart in a whole new way.
Innovation is a new driving force behind industry change. Don't be left behind. It's clear that many of your competitors already have innovation initiatives underway and are seeing real benefits. It is not too late to begin your journey to energize, transform, and differentiate your company.
To experience innovation in action, come to Boston on Sept. 16 to participate in the SMA Summit: Innovate for Advantage. SMA and representatives from your industry will share their first-hand innovation experiences -- focusing on five key dimensions of the business: customer, product, distribution, underwriting, and core systems. You'll have a chance to participate in interactive sessions to discuss the opportunities and challenges related to innovation. And SMA will be unveiling more insights in an upcoming research brief, Innovation in Insurance: Energize. Transform. Differentiate. Don't miss this opportunity to catch the vision and be a part of the innovation transformation.
Deb Smallwood, founder of SMA, is recognized for her expertise in investing in technology to influence competitive advantage in the insurance industry. Exclusively serving the insurance industry, Strategy Meets Action blends unbiased research findings with expertise and experience to deliver business and technology insights, research, and advice to insurers and IT solution providers.