While the insurance industry is hearing a lot of messages these days about the importance of experimenting with new digital technologies — i.e. witness the increased use of terms such as “agility,” “nimble,” “pivoting,” and “failing fast” — a business strategy should guide the digital innovation, industry execs say.
Brian Falchuk, managing partner of Insurance Evolution Partners, raised the issue of the so-called “shiny object syndrome” Tuesday at the Reuters webinar, Insurance 2021: The Customer Behaviour Changes that will Stay. He was paraphrasing a question from an audience member, who was concerned that constantly trying to pivot to new technologies might lead to an inconsistent experience for the consumer.
“When architecting your solution so you can pivot easily, does that lead to [whiplash]?” Falchuk said, paraphrasing the question. “You keep changing things and ‘trying around.’ What’s the impact on the customers? Are there things you can do to be careful that we don’t end up with shiny object syndrome, where we’re saying, ‘Ooh, let’s do this instead,’ and maybe our customers become victims of that inconsistency?”
Economical chief information officer Tatjana Lalkovic used the expression “architecting your solutions” earlier in her presentation, when she asked: “Are you architecting your solutions and ways of working in such a way that you can pivot and move with agility, leveraging all of the good things like cloud, automation, and platform consolidation, simplified technology, and integration patterns?
“It’s going to be very important,” she continued. “A lot of emphasis is [placed] on emerging technologies and researching and finding use cases for that. It’s equally important to set yourself up so you can adopt them and adapt to changing customer expectations that will be driven by those emerging technologies and trends.”
Answering the question from the audience, Lalkovic agreed there needs to be a structure, “an architecture,” underpinning the digital experimentation.
“You still have to have a strategy, a road map, or a direction,” she replied. “The fact that you have this strategy…allows you to make trade-offs and really meaningful assessments about whether you pivot or not. Architecture for flexibility is…preventing you from creating a mess that gets you into trouble later.”
In other words, the strategy guides the digital discovery process by laying out the principles that should not be compromised during the process of experimentation. Otherwise, if principles are compromised along the way, a company could be left with a complex, digital white elephant that costs a lot of money and meets neither the company objectives, nor consumer expectations.
“You still have to have a direction…so you can stare down, ‘What are the trade-offs?’” said Lalkovic. “Not understanding the implications of the changes that you are making would get you into trouble.”
Nathan LaFayette, chief insurance officer for CAA, framed the issue by saying strategy defines what the new digital technology is intended to do. It is then left to operations managers and their staff to come up with how the digital strategy is to be done. At this point, the experimentation begins.
“Strategically, I think it’s important for leadership to say, ‘What is going to happen?’” LaFayette said. “What are we going to do? Communicate it, repeat it. Make sure that the entire organization is clear on what is intended.
“I think the empowerment of people making the decisions, the people operating the business on a day-to-day basis, those who are on the front lines, that’s the ‘How?’ That’s where I think the flexibility comes in and possibly the experimentation.
“As long as you are aligned on the what…there can be flexibility [with the how],” LaFayette said. “It’s not that you’re chasing shiny things on the how. What you are doing is figuring out the optimal way to execute the strategic goal. I think great organizations execute on strategies. The secret isn’t in the strategies, the secret is in the execution. That’s how good organizations separate themselves from average organizations, is in the how.”