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July 5, 2014

A Report From MIT on the Next Revolution

Summary:

Sadly, few insurance executives attended the MIT symposium. This stresses the challenge we have as an industry to recognize the disruption that is underway.

Inspired. Extraordinary. Insightful. Transformative. Innovative. These are the words describing what I heard, saw and experienced at the recent MIT Sloan CIO Symposium, titled “Lead Your Digital Enterprise Forward:  Are you Ready for the Next Digital Revolution?” The symposium had more than 700 business and IT leaders, from  a wide range of industries, converging to discuss what was expressed by many panelists: We are at the forefront of witnessing the greatest disruption of every industry, the likes of which has never before been seen – the digital enterprise!

MIT leaders stated that the top issue expressed by executive boards and executive committees is the fear of the disruption of business models and the risk to revenue models because of new entrants, new technologies and new customer demands. Every industry is or will be affected, some sooner than others, and all will feel the pain of disruption. The degree of pain will depend on how well companies create new strategies; embrace innovation; fund transformation initiatives; and create a business that will be flexible, adaptable and valuable in the new digital future.

Sadly, only a handful of insurance executives attended the symposium. This stresses the danger we face and the challenge we have as an industry to recognize the disruption that is underway and our need to innovate and collaborate with leaders and thinkers outside our own industry. My observations align with SMA’s Top 8 Essentials for Preparing for the Digital Revolution, identifying critical elements that insurers must acknowledge and embrace as they rethink their businesses to become a Next-Gen Insurer.

  1. Digitalization is everywhere. And it is necessary for winning and retaining customers. We live in a world that is digitally charged and connected, and it is growing exponentially more so. This change is driven by new technologies and the customer experiences that have been reshaped by the use of these technologies, creating an increased preference for digital in the process. In response, modern technology and digitalization must now change how companies view themselves – no longer as value chains but rather as enterprise ecosystems that must be connected.
  2. Digitalization is dramatically destructive. A disruptive, foundational change is taking place in the way all businesses are approaching value creation. The ubiquitous connections of people via the Internet and emerging technologies (such as social media, the Internet of Things, crowdsourcing, mobile and cloud) are disrupting traditional business assumptions – from how to engage customers, to the products and services offered and, ultimately, to business and revenue models. The barrier to new entries into all industries is falling or is already gone, creating more risk to existing business and revenue models. New entrants are finding it easier to build, launch and sell much more rapidly.
  3. Data and information are the new currency in the digital world. And it is critical to the acquisition of insights about customers, the offerings of products and services, the creation of new products and services and more. Increasingly, data is being connected to the cloud, allowing data to be available anytime, anywhere and in any way.
  4. A massive paradigm shift in how we view and understand the world has occurred. The necessity to view businesses in a bigger frame of the world must follow suit, otherwise the view will be too small and detrimental. Align around a vision, projecting possibilities and outcomes. Spend to achieve an opportunity or possibility, not to complete a project; otherwise, you will find yourself trailing the competition. Just think big.
  5. Operational excellence is table stakes, and innovation is the price for future success. The absence of action and innovation creates significant business risk and a potential for lack of relevance. Innovation is the price for strategy enablement and the creation of possibilities. Life-long learning, creativity, an entrepreneurial spirit and the understanding of computer science, math and data are critical characteristics for future success.
  6. Innovation and collaboration are mandatory for future success. These are critical components for digital companies today, but the success with which they are employed will separate out the market leaders of tomorrow. The flow of information to engage collaboration through a network of resources and communities is vital to developing new products and services. The collective intelligence of ecosystems promotes entrepreneurship, provides a greater understanding of new technologies and stimulates the learning and creativity that together are key characteristics for future success.
  7. Customer empowerment defines new engagement models. We used to shape customer experience; now it is shaped for us by the rest of the world. As customers gain market power, are increasingly comfortable with technology, have a stronger voice and demand collaboration, companies must reinvent themselves and have a unified digital strategy that enables customer experience consistency and connectivity.
  8. All technology must be viewed as customer-touching. Social, mobile, analytics, cloud, wearable devices, robotics, the Internet of Things, telematics, driverless vehicles, biotechnology and much much more all influence and define customer relationships. Technology is super-connected. It’s creating new outcomes, new experiences and new products and services. And the future will be the cloud of things, with a world of distributed data, devices, technology, intelligence, computing and more that are highly connected.

Many insurers indicate they are on the journey to becoming a Digital Insurer, a key characteristic of a Next-Gen Insurer. Others are tactically investing in new websites, smart-phone apps or social media presence, but without a framework that can bring together a unified digital strategy and an omni-channel experience for driving consistent, connected customer experiences. But far too many others have yet to begin the journey. SMA’s coming digital insurer framework will help insurers to develop a strategy that brings together all of the critical components, recognizing that all  technology touches the customer in some way and at some level.

Yes … it is a brave new world. But, unlike the world of AD 2540, envisioned by Aldous Huxley in his 1931 book, Brave New World, we can envision and anticipate how the rapid growth and use of technology can bring about good and positive changes, and how the explosion of data and customer expectations can profoundly change each and every business for the benefit of everyone. The industrial revolution disrupted and transformed our world in the early 1900s, and the information age in the mid- to late 1900s. We are now in a new age of disruption and transformation. Rather than being cynical and afraid of these changes like Huxley was, we can welcome them. Embrace the digital revolution. Re-envision, reinvent and change the business. Be brave. Become a Next-Gen Insurer.

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About the Author

Denise Garth is senior vice president, strategic marketing, responsible for leading marketing, industry relations and innovation in support of Majesco’s client-centric strategy.

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