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June 11, 2018

Digital Innovation: Down to Business

Summary:

Are we ready to talk real traction in volume and customer value from innovation that goes beyond just a great concept?

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When presenting at DIA last year, I commented on just how far the industry has come in recognizing the opportunities for insurtech and adopting smart digital techniques in such a short time.

According to Celent’s most recent innovation outlook for insurance, 69% of the insurance innovation leaders surveyed have been pursuing an innovation agenda for somewhere between two and three years, with 11% having only just started. To me, this stat implies that we are no longer at the start of something. Instead, we’re slap bang in the middle of a movement.

See also: Global Trend Map No. 6: Digital Innovation 

And with that added maturity, I guess it should come as no surprise that the questions obsessed about by the industry are no longer focused on “how to engage with insurtech?” “what internal capabilities do I require?” or “will they eat my lunch?” and instead more directed toward understanding the source of value and execution. Simply speaking, conversations today are far more focused on “show me the money” than they were back in 2015.

For example, the global head of innovation at a client recently shared with me that they’ve “fixed procurement,” “fixed internal development,” “reskilled the team” and “embedded their innovation capabilities back into the business (to sit more closely alongside strategy execution).” Consequently, this client has become far fussier about potential partners. If an insurtech does not have any jaw-dropping, protected IP, then they’re unlikely to even get enough air-time to press play on their Prezi or pencil drawing app (of which there are quite a few to choose from now) before the door is slammed in their face.

Although this client’s story may not yet be representative of the industry as a whole, given that many are still struggling with aligning their organization behind new innovation capabilities, it highlights a shift in the general direction.

Aligned with this shift, there also seems to be a more concerted effort to move innovation capabilities back within the business (as can be seen in this chart).



Graph: Please indicate if you are utilizing any of the following innovation tools/techniques at your company (choose all that apply).
Source: Celent – Insurance Innovation Outlook 2018: Practitioners Predictions, n=29 chief innovation officers, innovation leads, digital leads).

Of course, central teams still play an important role. Often, they are the only places where more radical forms of innovation can be experimented with (helping to insulate them from the day-to-day pressures of running an existing business).

However, when considered altogether, the gradual shifts away from what can sometimes feel like an opportunistic mode of engagement (characterized by serial “proof of concept” projects, often sponsored by central teams), toward something more locally aligned, deliberate and focused on real customer value feels like a step forward.

See also: 3 Ways to Leverage Digital Innovation  

Are we now at the point where innovation is truly back with the business and we’re ready to talk real traction in volume and customer value that goes beyond just a great concept? I can’t wait to see!

This article was originally published here.

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About the Author

Jamie Macgregor is the CEO of Celent, a leading financial technology research and consulting firm and a division of Oliver Wyman.

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