The Right Analogy to Guide Insurance Innovation

Incumbents are likened to oil tankers, which change direction slowly. The goal is to be a speedboat, but that's unrealistic. What about being an aircraft carrier, which turns slowly -- but can launch fighter jets?


When IBM was struggling in the late 1980s and early 1990s, analysts often said the company was so big that it was going to take a while to turn around. A common image for the company was an oil tanker: You don't just lean on the rudder and go hard left in that baby. 

A similar analogy is used today at some insurance companies as they try to become more innovative. While surveys show that the industry hopes to improve customer experience, accelerate product development, etc., there is less confidence that companies will succeed. Many seem to feel like that oil tanker, and expect it will take years to get a new heading and gain momentum.

The innovation approach that most embodies the oil tanker is what ITL's Guy Fraker calls the "change management model." The mandate for innovation comes from the top, and everybody is expected to support it. The company may try a venture arm, an innovation lab and maybe even an internal incubator. But not all the efforts are connected, and there is no communication plan or change in incentives and rewards to get organizational alignment and buy-in. The focus is on creating an innovation culture, and, after a few years, you may even have built a new ship—but it’s still an oil tanker. 

What if, instead of an oil tanker, your approach was more like a speedboat? This common approach also is driven from the top, but, instead of a companywide effort, it relies on rotating, virtual teams. The small teams may be more agile but are isolated from the rest of the organization and, over time, can feel exposed and vulnerable. Their efforts to hand off innovation ideas to business units typically meets resistance. The teams may report to the C-suite, but there’s no organizational incentive for existing business units to follow their lead and adopt their recommendations. Like a speedboat, the small team is fun and exciting at first, but it tends to be short-lived and can’t take the larger organization very far. 

If the oil tanker is too cumbersome, and the speedboat is too small, where does that leave us?

Why not convert the oil tanker into something that resembles the strength and adaptability of an aircraft carrier? It can’t turn much faster than an oil tanker, but a carrier can extend its reach by launching multiple assets—and bringing them back to report and refuel—and is constantly scanning the horizon for intelligence. 

The aircraft carrier analogy fits the "innovate to grow model" of innovation. This approach is driven from the top and leverages clearly defined constraints and focus points. It rewards employees for participation, its goals are transparent to the entire organization and the workforce is encouraged to participate. The approach starts small but can scale, so the small team grows over time. It can employ change management tactics, such as a VC arm or an idea development programs. The key difference is that these efforts report up to a person or team in the organization who advises and engages corporate leadership. 

You may think you now need to stop and design and build an aircraft carrier, which would take even longer than turning that oil tanker, but most big companies already are aircraft carriers or can be with a little adaptation.

I just finished the wonderful new biography "Churchill: Walking With Destiny" and learned that England launched a plane from an adapted cruiser in 1924, way before aircraft carriers existed in anything close to today's form and when flying was still in its infancy. Now, Churchill was positively protean. He was at least the godfather of the tank, if not the father, and he became so convinced of the power of planes so early that he asked that the Wright brothers be consulted as England built the Royal Air Force. (He became a pilot himself in the 1910s, only giving up his training when so many trainers and friends died in crashes that colleagues managed to convince Churchill that a senior member of the British government shouldn't take such risks.) 

While I'm not expecting anyone in insurance to be the next Churchill—what a disruption that would be!—we have plenty of resources in front of us to innovate quickly if we just stop thinking in terms of oil tankers or speed boats and start launching planes off whatever aircraft carrier we have or can improvise. 


Paul Carroll

Paul Carroll

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Paul Carroll

Paul Carroll is the editor-in-chief of Insurance Thought Leadership.

He is also co-author of A Brief History of a Perfect Future: Inventing the Future We Can Proudly Leave Our Kids by 2050 and Billion Dollar Lessons: What You Can Learn From the Most Inexcusable Business Failures of the Last 25 Years and the author of a best-seller on IBM, published in 1993.

Carroll spent 17 years at the Wall Street Journal as an editor and reporter; he was nominated twice for the Pulitzer Prize. He later was a finalist for a National Magazine Award.


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