In today's fast-paced and ever-evolving insurance markets, innovation is essential to reaching new buyers and thriving in the face of increasing competition. Larger carriers may have a resource advantage, but to reach innovation objectives and drive transformative change, partnerships have become the norm for carriers of all sizes. For small or medium-sized carriers, in particular, it can be the best way to enter a new space or gain an edge in an existing one.
Choosing the right partner is therefore crucial, as missteps can be costly to both the bottom line and an insurer’s reputation. To navigate this critical first step, the following 10 considerations for evaluating potential innovation partners provide a useful guide. They can be the key to minimizing risks and maximizing the potential for a successful, game-changing collaboration.
#1 Look for cultural fit.
This requires a strong sense of self-awareness, but every company has its own way of doing things. In your exploratory meetings with the potential partner, do the people you meet with feel like they would be comfortable working with your staff? Do they have the same focus on the customer? Do they treat each other and you with the same level of professionalism? Remember, successful partnerships can last a long time. No matter how brilliant their solution or capabilities, you want to avoid choosing partners your team will feel they have to battle every step of the way.
#2 Screen for strategic alignment.
Maybe even more than cultural fit, you also want someone whose strategic goals align with yours. This isn’t to say they need to have the same goals. For example, a technology company and an insurance carrier will likely have different business goals and express them differently. You need to assess whether both organizations respect each other’s goals, whether the goals are in conflict or synergistic and whether both sets of goals can be achieved through a successful partnership.
Remember, you are not seeking to create a one-sided partnership. While you’re evaluating a potential business partner, that partner should be evaluating you. If goals are misaligned, it is best to part ways sooner to avoid long-term roadblocks.
#3 Clarify the problem statement.
A vital first step in innovation is to ensure you are solving for a clear problem based on a validated client need. You must be able to clearly explain it to your executive management so they understand it and buy in to the project. You should expect no less from a potential partner.
If a prospective partner isn’t grasping the problem you’re looking to solve, it could be worth running your problem statement by other industry outsiders who don’t have a vested interest in agreeing with you. This will help you refine your explanation and messaging. If the prospective partner clearly understands the challenge but doesn’t see it the same way, this could be a sign of lack of commitment required for project success.
See also: Is My Organization Actually Innovative?
#4 Listen to how the solution is articulated.
Sometimes a new technology solution is still in development when you are talking with a startup. The company may also be targeting more than one use case. This might lead to varied terminology being used to describe the innovation, so it becomes critically important that all parties are aligned and can clearly articulate what the solution is, the capabilities it delivers and its key attributes and benefits. Test yourselves by asking: What exactly does the solution do, and can everyone understand and restate that?
If something is not clear, ask questions. Don’t assume you know the answers, especially when it comes to the solution’s availability and capabilities.
#5 Determine the amount of change required to fit the use case.
Significant change isn’t always a deal breaker but could signal challenges ahead. Few solutions will have everything you need, so in addition to looking at current capabilities, you’ll want to assess if the solution mostly fits your use case or if the potential partner has the ability to tailor the solution to meet your needs. If the solution and its capabilities are not fully shaped, the carrier can be essential to helping refine the solution and bring it to market.
Remember to consider the resources and technical know-how required to make necessary adjustments and the partner’s ability to meet the desired timeline for delivery. Above all, be honest about the capabilities of both the solution and the partner. Don’t force a partnership where one may not be suited.
#6 Gauge willingness to say “yes” to everything.
Closely related to #5: A partner who agrees to every request without considering the long-term implications may not be the best fit. Saying “yes” to every request is a sign that the partner may be unrealistic. Almost certainly, such lack of discipline will stretch limited resources on both sides and put a strain on your project that can lead to missed timelines and half-met critical measures. Look for a partner willing to provide constructive feedback and push back when necessary. Better yet, look for one that can help you identify potential risks and pitfalls ahead.
#7 Evaluate experience with corporate partnerships.
In partnering for innovation, you may run into companies with little experience creating and managing corporate partnerships. If so, you may need to lead the way. Be clear about processes and expectations. Assign dedicated resources to nurture and mentor the relationship.
#8 Assess susceptibility to distractions and industry “noise.”
This is a common problem for startups and established insurance industry players alike. Look for a partner who is also willing to dedicate resources to the project and doesn’t have too many “top priorities.”
In your exploratory discussions, your teams are likely to come up with a plethora of possibilities. While this is an exciting time, it’s important not to set your sights too high too quickly. You and your prospective partner should both be willing to set milestones thoughtfully and park good ideas on a “futures” list.
#9 Determine appetite for committing to success metrics.
Establishing clear, achievable success metrics to measure performance is vital. A potential partner who is unwilling to commit to these metrics may not be fully invested in the collaboration. If partners have other metrics or set the bar too high, you run the risk they will walk away when the results don't meet their expectations.
This is not to say that a potential partner must always agree on your metrics immediately. The ideal partner is one who will help define success metrics suited to the problem you’re trying to solve and the milestones you both agree to.
See also: Tapping Into Life, Health Innovation
#10 Weigh the opportunity potential.
All parties need to be as realistic as possible when evaluating an opportunity’s potential outcomes and return on investment. Your core team already should have framed out a rough business case as they worked to clarify the problem statement. These estimates often need to be re-evaluated throughout the project’s lifecycle.
While ambition and optimism are essential for any new project, you and your potential partner need to clearly understand the opportunity and the risks involved. You’ll want to agree on what resources will be required to achieve success. If additional resources are required unexpectedly, you should discuss how long it might take to recruit or free up those resources. Finally, you will want to agree on a cadence for project assessment, including the reevaluation of the opportunity, the business case and the thresholds for a go/no-go decision.
Building a successful business partnership demands discipline and commitment from both parties involved. Your team and your prospective partner's team must be willing to evolve and adapt quickly to unforeseen challenges. This process of evolution, while potentially challenging, can also be an exciting and rewarding experience, as it encourages both sides to learn and grow.
When working with partners, you can’t always predict how the journey will unfold, but following the right steps will certainly help you enjoy the ride.