Other parts of this series:
This is the final blog in this mini-series. In my preceding blogs, I’ve been looking at change. What needs to change? Why is change essential? Where are insurers targeting their change investments?
These are all urgent questions for an industry that’s increasingly challenged by new competition, accelerating technology developments, fast-changing customer expectations, stringent regulation and, inevitably, shareholders, who demand payback to change investments in a short (18-month) timeframe.
This time I’m going to focus on what change leaders in the insurance industry are doing. At a time when Irish insurers are under immense pressure to shift to a whole new way of operating, the prioritisation of objectives (and investments) can seem like a massive challenge. By looking at what change leaders do, they can start to move in the same direction. And enjoy the same rewards.
Thanks to Accenture’s Insurance Change Survey 2017, we know that change leaders are significantly more likely than their peers to report success (including better commercial benefits) to their change programmes. All change leaders agreed their organisation had benefited, compared to less than three-quarters of other insurers.
Change leaders are also more likely than other insurers to achieve better performance in priority areas like cost reduction and efficiency programmes (87 percent report better performance vs 69 percent) and regulatory change (100 percent vs 61 percent).
These firms are obviously doing something right. What sets them apart? We identify three key traits: they have a strong vision and leaders with a clear digital strategy, they put people first, and they excel in change execution. Bottom line? They understand the dynamics and challenges of making change happen and they develop strategies, allocate budgets, and structure resources accordingly.
Underpinning these strategies, whatever they are, we believe there’s a common imperative: insurers need to optimise and transform existing business models while actively exploring new models better suited to a digital marketplace. It makes sound sense. Having reduced costs in the core business, they can use the funds they’ve released to invest in new business models and digital ventures. Over time, as these new ventures mature, the organisation can shift away to the core and scale up ‘the new’.
The success of this journey hinges on insurers’ change capabilities. We’ve identified seven areas to focus on. Examined in greater depth in the survey report, these are:
- Lead change with vision – ensure the organisation understands what change is required, develop a flexible roadmap for it to follow, and build leadership commitment. A two-speed approach to change should help to sort out legacy systems and data, with APIs enabling a rapid pivot to digital.
- Prioritise investments in ‘the new’ – continually rebalance the change portfolio to allocate investments to the core and ‘the new’. This is a priority for leadership. So is ensuring that ‘change the business’ activities don’t just take place at the margins of existing business models, but actually create robust new value streams.
- Innovate and scale for value – undertake innovation for the right reasons. Experimentation and scaling thrive in the right culture, with the right funding, talent and infrastructure. It’s vital to be able to execute PoCs and pilots quickly. If they fail, learn and move on.
- Make change more human – make sure that change is a participative, human, ongoing process. Agile change and new technologies create opportunities to engage people in change early on. Design thinking, prototyping and customer experience design all build buy-in.
- Be open to change to outside – understand what role the firm plays in the industry ecosystem. Decide where to focus key strengths and build relationships that make this happen. The upsurge in InsurTech and ecosystems has made insurers more open to change to outside. Now it’s time to take advantage of these developments.
- Build true agility – balance pace and stability, with adaptability and speed of reaction on one hand and effective decision-making and strong disciplines on the other. Organisations that do this are twice as likely to achieve superior financial performance.
- Prioritise and develop a professional change capability – understand what change capabilities (internal teams, methods, tools, governance and external partners) will be needed to achieve the future vision, then ensure key operating model decisions are taken to put these capabilities in place.
Irish insurers have an outstanding opportunity to create change-ready businesses that will thrive to now on. Simply focusing on simplification and cost reduction won’t be enough. Now’s the time to select a destiny and build towards it. I hope these blogs have provided some inspiration. If you’d like to discuss any of this further, I’d be delighted to hear to you.