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8 Key Insurtech Trends for 2019

The industry used to be a tech laggard. No more. Though there’s still much work to be done, most insurers are now better-positioned to capitalize on their investment in technology.

Here are eight key tech trends that continue to shape the industry:

  1. Greater stress on cybersecurity

An Ernst & Young security survey revealed that 59% of respondents had encountered a significant cybersecurity incident in their organization. Because insurers store so much sensitive personal and business data, they’re a prime target.

Cybersecurity strategy should be focused on proactive measures rather than reactive strategies. Cyber-crooks are relentless and inventive. Security has to be a top priority for insurers of all types and sizes.

2. Filling a gap in employee benefits automation

While group proposals and policy administration are both well-automated, between the two comes group onboarding, which has not been automated.

But solutions are being developed and implemented. Onboarding solutions will be built on automated data capture and importing. Data integrity is crucial. Employee information must be correct and complete when entered.

The solution must also offer robust data security and comply with privacy regulations to securely gather and store employee information. Flexibility is also mandatory because integrating onboarding closely with both proposal and policy systems is essential to efficient workflow.

See also: Connected Insurance Comes of Age in 2019  

3. Cloud computing

Cloud computing will continue to be adopted widely by insurers and insurtech providers as it is cost-effective, speedy and flexible. Cloud providers will continue to improve their technology to deliver sophisticated capabilities.

The security risks associated with housing data off-site via a third-party, however, can present challenges. While cloud storage companies are expected to protect data, ultimately insurance IT departments are responsible for their cybersecurity. That requires constant vigilance, hiring skilled people and spending enough money.

4. Internet of things and big data

IoT continues to become more useful. Insurers can use real-time data to meet and enhance business objectives. This can boost efficiency and revenue and promote better customer service.

As the Big Data revolution continues to expand, IoT adoption in the insurance industry is expected to grow. It will enable collection of data in real time, resulting in lower premiums for insureds willing to participate. There will be continuing adoption of connected devices for loss prevention and pricing in property-casualty, life and health insurance.

5. Analytics

Analytics can transform big data into actionable insights. As analytics and data science advance, insurers can better extract value from the huge amounts of data that now exist. Insurers can then leverage sophisticated information analytics to gain a competitive edge in the market.

For insurtech providers, there is a huge opportunity in the coming years to develop advanced analytical technologies that can make sense of unstructured data such as real-time video, social posts and live blogging.

6. Artificial intelligence

In 2018, more insurance and insurtech companies found effective ways to integrate AI. In 2019, companies will complement a significant part of their structured data decision-making with AI data analysis and decision-making.

Robotic process automation will begin to gain a wider application facilitating automation of repetitive processes across the entire IT infrastructure. Robotics and AI can offer improved productivity, shortened cycle times and better compliance and accuracy.

See also: How Insurtech Helps Build Trust  

7. Augmented reality

Augmented reality is starting to have a presence in insurance. An article by software development company Jasoren identifies several AR use cases, such as warning of risks, explaining insurance plans, estimating damages and increasing brand awareness. Alternate forms of AR such as virtual reality, mixed reality and extended reality are shaping how AR is being used.

8. Blockchain

The technology behind cryptocurrencies will be adopted for more promising applications. They include “smart” contracts and secure, decentralized data collection, processing and dissemination. While I do not expect to see a full-scale implementation of blockchain technology any time soon, many insurers and insurtech companies are launching projects and initiatives to test its applicability and effectiveness for insurance.

Whole New World for Customer Contact

Common things we hear these days: “If you really want to reach me, text me.” “Send that file to me via Slack.” “I live on Facebook, so send me a message on Facebook Messenger.”

We also observe that many people never answer voicemail, virtually ignore emails and throw away mail without even looking at it.

These are samplings of the communication patterns that are evolving in our society today. Meanwhile, how do we in the insurance industry communicate with our policyholders, agents, claimants and others? Email, phone calls and documents in the mail predominate. Web portals are also common. Some of the newer options for interaction are not on the radar of most insurers. Now, there are certainly individuals who still want to receive information in the traditional ways, and there will continue to be a need for these options, but the tide is turning.

See also: The Missing Piece for Customer Experience  

SMA has been investigating some new communication options and their implications for insurers. Our new research report, Advanced Customer Communications in the Digital Age: New Options for Insurers, explores how communications have evolved, how the insurance industry is using these options (or not), example use cases and what it all means in the context of an omni-channel environment.

Some of the new(er) forms of communication that have been gaining adoption and setting new expectations for customers include:

  • SMS texting and online chat: Although it is difficult to classify these as “new,” the insurance industry still has very little use of the technologies outside of the enterprise.
  • Messaging and collaboration platforms: These have been proliferating over the past decade or so, with tools like Skype, Facebook Messenger, Slack, Zoom and many others gaining large followings.
  • Voice assistants and chatbots: As voice and AI technologies have leapt forward, the opportunities to leverage AI-driven chatbots and voice assistants has increased dramatically. Much experimentation is underway in insurance.
  • Smart documents: Documents in many forms will continue to play a major role in communicating information to prospects, producers and policyholders. Rethinking those documents from a customer perspective and making them interactive and parametric provide great opportunities for the industry.
  • Augmented/virtual reality: Although a bit further out in terms of adoption and implications for insurance, there are already pilots and projects underway in the industry.

See also: How Customers Buy… and Why They Don’t  

The way the world communicates is rapidly changing, and everyone has their favorite options. Insurers would be wise to consider these in their customer journey and omni-channel strategies and plans.

4 Ways Connectivity Is Revolutionary

The Internet of Things (IoT) is predicted to support more than 20 billion devices by 2020, according to Gartner. This is a market that covers 60% of consumers worldwide, creating huge opportunities for industries to connect and engage with their customers.

Connecting with consumers hasn’t always been easy. Contact typically took place at points of sale, during claims and during renewal periods. Now, with the use of wearables, smart homes and telematics, insurers are connecting with customers on a continual basis and providing valuable feedback – and prices – based on activity levels. The business of insurance is complex, with core factors such as risk evaluation, long-term contracts and unpredictable settlements. However, the benefits of insurtech and the unlimited availability of new sources of data that can be exploited in real time have fundamentally altered how consumers interact with their insurance providers.

IoT devices are helping consumers and insurers get smarter with each passing day as these technologies bring promising results in helping insurers reshape how they assess, price and limit risks and enhance customer experience.

See also: Industry 4.0: What It Means for Insurance  

Connectivity and Opportunities

Numerous technologies have shown how improved connectivity can generate opportunities in the insurance industry beyond personalized premium rates. If implemented properly, IoT applications could possibly boost the industry’s customarily low growth rates. It may help insurers break free from traditional product marketing and competition primarily based on price to shift toward customer service and differentiation in coverage.

Several technology trends that are increasing connectivity in insurance include:

Extended Reality (XR) — XR technologies are altering the way consumers connect with society, information and each other. Extended reality is achieved through virtual reality (VR) and augmented reality (AR), which aim to “relocate” people in time and space. Eighty-five percent of insurance executives in Accenture’s Technology Vision 2018 survey believe it is important to leverage XR solutions to close the gap of physical distance when engaging with employees and customers.

Wearable Sensors — Reports indicate that the average consumer now owns 3.6 wearable devices. These technologies can mitigate claims fraud and also transmit real-time data to warn the insured of possible dangers. For example, socks and shoes with IoT apps can alert diabetics on possible odd joint angles, foot ulcers and excessive pressure, thus helping in avoiding costly disability and medical claims and even worst-case scenarios such as life-changing amputations.

Commercial Infrastructure and Smart Home Sensors — These sensors can be embedded in commercial and private buildings to help in monitoring, detecting and preventing or mitigating safety breaches such as toxic fumes, pipe leakage, fire, smoke and mold. This increases the possibility of saving insurers from large claims and homeowners from substantial inconveniences such as lost property or valuables. Savings can be passed to insureds who use these sensors.

Usage-Based Insurance (UBI) Model — Cellular machine-to-machine (M2M) connectivity and telematics link drivers and automobiles in entirely new ways. Traditionally, auto insurance has relied on broad demographic features such as gender and the driver’s age, plus a credit score, to set premiums. Now, through IoT devices, insurers can not only offer reward-based premiums but can provide a connected car experience to customers with feedback on weather, traffic conditions or driving habits.

See also: 3 Ways to an Easier Digital Transformation  

Strategy will play an important role in connectivity as insurance carriers transform legacy core systems into digital platforms that support deeper connectivity with their customers. This strategy must address a carrier’s ability to handle, process and analyze the new types of data that will emerge from the use of these technologies. Artificial intelligence will also have a big impact.

According to a recent study, 80% of insurance customers are happier and more content when they can connect with their insurance providers through various channels such as phone, emails, smartphone apps and online. Through the use of the IoT and connected devices, insurers will improve customer experience by shifting from reaction after an event has occurred to preventing losses digitally.

Key Considerations for Managing Innovation

Innovation is critical for every organization, but it is complex and can be very confusing, too. Poor innovation management and ineffective execution are among the key reasons causing innovation failures in organizations.

Many companies lack well-defined innovation strategy and alignment with business strategy, resulting in poor innovation delivery. While it takes time to build the innovation culture, companies must leverage the startup ecosystem, capabilities of partners to augment the innovation gaps and emerging technologies effectively to deliver innovation faster. Innovation silos within the companies are key impediments that dilute innovation and generate poor innovation results.

It is the time for companies to get honest and acknowledge innovation gaps, prioritize top factors affecting innovation and develop clear innovation strategy and plans that are well-aligned with business strategy. This article covers key considerations, describes the current state of innovation within financial services and the insurance industry and provides recommendations for effective innovation delivery.

Balancing Innovation, Startups and Emerging Technologies

Today, there is lots of buzz on emerging technologies, startups and innovation. While the business environment, economic conditions, political situation and core capabilities of many companies have not changed dramatically over the past year, nevertheless the innovation agenda has taken the front seat in almost every organization.

The big question remains: How effectively are companies managing innovation?

Are companies focusing on business innovation or technology innovation or a combination? Which are the proven models for innovation that deliver results? Is partnering with startups sufficient to drive innovation? Which emerging technologies have higher potential for innovation?

See also: Don’t Just Indulge in “Innovation Theater”  

Well, there are no straight and simple answers to these questions. What matters today is: There need to be serious attempts of organizations toward driving innovation, commitment by senior stakeholders, collaborative culture across teams, alignment between top-down and bottom-up innovations, bridging innovation silos within organization and focus on customer-centricity.

Business Values Are Driving Innovation Initiatives

In my interaction with senior business and IT stakeholders of leading financial services companies in the last few months, one thing has emerged clearly: that business values and outcomes are the most
critical element in getting innovation funding. I have met CIOs of leading insurance companies who have expressed concerns about getting buy-in from the business team for business cases as
one of the key hurdles in delivering innovation. While a majority of innovation efforts are still technology-driven or technology-led, only a portion carries real potential to disrupt the business or push the organization to a rapid growth trajectory. Many organizations are still focusing on incremental innovation, while many others are burdened with operational priorities and legacy challenges.

The good news is that financial services and insurance companies are not fearing experimentation. The partnership with startups, the pace of pilot projects using emerging technologies and the participation of companies in industry events, technology conferences and startup events has grown significantly in recent times. Many financial companies are sponsoring hackathons and are welcoming innovation of all types. A good number of companies within financial services and the insurance industry have already partnered with fintech and insurtech and are clearly finding value. The hunt for innovation is furious. The FinTech, InsurTech influence is pushing companies to innovate faster.

Technologies Enabling Innovation Within Financial Services

SMAC (social, mobile, analytics and cloud) technologies that were new a few years ago have become a new normal, with high adoption rate across industries. Emerging technologies include blockchain, artificial intelligence (AI), robotics process automation (RPA), Internet of Things (IoT), augmented reality (AR) and virtual reality (VR). However, companies are being pragmatic about adopting these technologies.

For example, while it is true that in the last three years more than $1 billion of investment has gone into blockchain technologies alone, with 90-plus companies being part of blockchain consortia across 24-plus countries (according to recent World Economic Forum findings), many companies (insurers, banks and other financial companies) still struggle to identify suitable, viable use cases. The technical complexities and shortage of skills are another big hurdle for adoption of emerging technologies such as blockchain.

While some of these technologies are still evolving, technologies such as AI and RPA are moving faster in terms of adoption within financial services and the insurance industry. For example, AI-enabled chatbot and robo-advisers are moving beyond delivering basic conversational response to enabling channel expansion, enabling cross selling, targeting new segments, delivering training and enabling end-to-end transaction processing within the financial services industry. RPA technologies are also gaining popularity and are in use within financial services and insurance companies, helping
companies automate mundane, repetitive, manual, rule-based tasks or processes. The adoption rate and focus on IoT technologies has been hampered by increased fear of companies toward cyber security risks after various ransomware attacks in the recent past. AR and VR technologies are still hunting for viable use cases within the financial services industry amid the changing shapes and characteristics of AR/VR devices. Emerging technologies are the key enablers for delivering innovation and cannot be ignored any more.

Bridging the Gaps and Making a Balance With Innovation

While every company has a well-defined business strategy and IT strategy that are reviewed periodically, many lack a well-defined innovation strategy. It is time for companies to revisit their innovation strategy, align it to business strategy and make it an integral part of the operating model. The innovation silos, poor governance, complex organizational structure, lack of funding,
talent gaps and organizational politics are a few known elements that hinder innovation delivery. Only a few innovation-driven companies take tangible actions to overcome these challenges and
work toward building an innovation-centric culture. Agility, experimentation, customer validations, pivots, failures and talent development are integral parts of innovation delivery, and
companies that understand that, will measure innovations regularly, reward teams and encourage open innovation.

See also: Pursue Innovation or Transformation?  

While corporate venturing, partnership with startups and acquisitions are some methods to fast-track innovation efforts and mitigate risks, without addressing the root cause that hinders innovation, companies are just postponing the real problems. Startups are a good catalyst for innovation, but many companies merely leverage them as a reference model or mitigation element, which they think they can mimic, buy or obtain through partnership using brand and financial muscles. If companies find many gaps with the existing innovation model, they must explore partnership and acquisition of appropriate startups seriously and integrate them effectively into the companies’ ecosystem to ignite innovation delivery.

Business model innovations that are market- or industry-driven typically deliver successful innovations that are disruptive. Companies that bring together the best elements of
business and technology (talent, people, vision, insights, partners) at the right time, collaborate effectively internally and externally, learn from failures and involve customers in every stage of the innovation life cycle are the ones that are most successful in innovation delivery. In addition, emerging technologies offer numerous opportunities for companies to fast track innovation efforts when coupled with the right business case. Companies must balance the innovation, startups’ influence and the power of emerging technologies for competitive advantage and market leadership.

Winning With Digital Confidence

Today, if there’s a problem with the heat or hot water in your hotel room, you call the front desk and wait for maintenance to arrive. At some chains, you have the option of reporting the issue using a mobile device. But in the near future, many hotel rooms will be wired with connected devices that report potential breakdowns to maintenance and may even automatically fix them. For example, smart-building technology will turn the heat up when your app’s locator notices you are on the way back to your room.

Of course, such developments have significant implications for hotel staff. George Corbin thinks about them from a scientific perspective. As the senior vice president of digital at Marriott, Corbin oversees Marriott.com and Marriott mobile, and he is responsible for about $13 billion of the company’s annual revenue. He says the “skills half-life” of a hotel industry worker is about 12 years, at least for those working in conventional areas such as sales, operations and finance. In other words, if people leave jobs in these functions, they could come back in 12 years and half their skills would still be relevant. But on the digital side, the skills half-life shrinks to a mere 18 months, according to Corbin.

Virtually every other industry faces similar dynamics. Digital competency is practically mandatory in many sectors; if you don’t get on board, you’ll fall behind competitors that do. And yet the knowledge required for widespread digital competency is often in short supply, and the related skills in agility and collaboration are often difficult to achieve in large companies. In a few years, an 18-month skills half-life may seem like a luxury. As a result, many executives’ confidence in their organization’s “Digital IQ” — their ability to harness digital-driven change to unlock value — is at an all-time low.

That’s one of the main findings from the 2017 edition of PwC’s Digital IQ survey. We interviewed more than 2,200 executives from 53 countries whose companies had annual revenues of at least $500 million and found that executive confidence had dropped a stunning 15 percentage points from the year before. These company leaders said they are no better equipped to handle the changes coming their way today than they were in 2007, when we first conducted this survey.

Back in 2007, being a digital company was often seen as synonymous with using information technology. Today, digital has come to mean having an organizational mindset that embraces constant innovation, flat decision making and the integration of technology into all phases of the business. This is a laudable change; however, in many companies, workforce skills and organizational capabilities have not kept pace. As the definition of digital has grown more expansive, company leaders have recognized that there exists a gap between the digital ideal and their digital reality.

See also: Digital Risk Profiling Transforms Insurance  

The ideal is an organization in which everyone has bought into the digital agenda and is capable of supporting it. What does this look like? It’s a company in which the workforce is tech-fluent, with a culture that encourages the kind of collaboration that supports the adoption of digital initiatives. The organizational structure and systems enable leaders to make discerning choices about where to invest in new technologies. The company applies its talent and capabilities to create the best possible user experiences for all of its customers and employees.

Simply upgrading your IT won’t get you there. Instead of spending indiscriminately, start by identifying a tangible business goal that addresses a problem that cannot be addressed with existing technology or past techniques. Then develop the talent, digital innovation capabilities and user experience to solve it. These three areas are where the new demands of digital competence are most evident. They are all equally important; choosing to focus on just one or two won’t be enough.

Our findings from 10 years of survey data suggest the organizations that can best unite talent, digital innovation capabilities and user experience into a seamless, integrated whole have a higher Digital IQ and are generally further along in their transformation. Our data also shows that the companies that use cross-functional teams and agile approaches, prioritize innovation with dedicated resources and better understand human experience, among other practices, have financial performance superior to that of their peers. It’s time for company leaders to build their digital confidence and their digital acumen; they can’t afford to wait.

Getting Tech-Savvy

“We are now moving into a world with this innovation explosion, where we need full-stack businesspeople,” says Vijay Sondhi, senior vice president of innovation and strategic partnerships at Visa, drawing an analogy to the so-called full-stack engineers who know technology at every level. “We need people who understand tech, who understand business, who understand strategy. Innovation is so broad-based and so well stitched together now that we’re being forced to become much better at multiple skill sets. That’s the only way we’re going to survive and thrive.”

In the past, digital talent could lie within the realm of specialists. Today, having a baseline of tech and design skills is a requirement for every employee. Yet overall digital skill levels have declined even further since our last report, published in 2015. Then, survey respondents said that skills in their organization were insufficient across a range of important areas, including cybersecurity and privacy, business development of new technologies and user experience and human-centered design. In fact, lack of properly skilled teams was cited this year as the No. 1 hurdle to achieving expected results from digital technology investments; 61% of respondents named it as an existing or emerging barrier. And 25% of respondents said they used external resources, even when they had skilled workers in-house, because it was too difficult or too slow to work with internal teams.

The skills gap is significant, and closing it will require senior leaders to commit to widespread training. They need to teach employees the skills to harness technology, which may include, for example, a new customer platform or an artificial intelligence-supported initiative. They will also need to cross-train workers to be conversant in disciplines outside their own, as well as in skills that can support innovation and collaboration, such as agile approaches or design thinking. Digital change, says Marriott’s Corbin, is driven by using technology in ways that empower human moments. “Rather than replace (human interactions), we are actually finding it’s improving them. We need the human touch to be powered by digital.”

One way that companies can accomplish these goals is by creating a cross-discipline group of specialists located in close proximity (we refer to this as a sandbox), whether physically or virtually, so each can observe how the others work. Such teams encourage interaction, collaboration, freedom and safety among a diverse group of individuals. Rather than working in isolation or only with peer groups, members develop a common working language that allows for the seamless collaboration and an increased efficiency vital to moving at the speed of technology. This approach avoids the typical workplace dysfunction that comes with breaking down silos: Because business issues are no longer isolated within one discipline but rather intertwined across many, colleagues from disparate parts of the organization are able to better understand one another and collaborate to come up with creative solutions.

Part product development and part project management, the sandbox approach enables your workforce to visualize the journey from conception to prototype to revelation in one continuous image, helping spread innovation throughout the organization. The culture of collaboration can speed the adoption of emerging technologies.

For example, this approach enabled the Make-A-Wish Foundation to bring employees together from across the organization, including some whose role in developing a new tech-based feature may not have been obvious, such as a tax expert and a lawyer. In just three months using this approach, the foundation created and operationalized a crowdfunding platform to benefit sick children.

Investing in the Future

At GE Healthcare, engineers are experimenting with augmented reality and assistant avatars. “Part of my job is to help pull in (great innovations) and apply them through a smart architecture,” says Jon Zimmerman, GE Healthcare’s general manager of value-based care solutions. “The innovations must be mobile native because … our job is to be able to serve people wherever they are. And that is going to include more and more sensors on bodies and, if you will, digital streaming so people can be monitored just as well as a jet engine can be monitored.”

Amid an increasingly crowded field of emerging technologies, companies need strong digital innovation capabilities to guide their decision making. Yet this achievement often proves challenging as a result of organizational and financial constraints. Our survey revealed that fewer companies today have a team dedicated to exploring emerging technologies than was the case in years past. Many are relying on ad hoc teams or outsourcing. Moreover, 49% of companies surveyed said they still determine their adoption of new technologies by evaluating the latest available tools, rather than by evaluating how the technology can meet a specific human or business need.

Equally troubling is that spending on emerging technologies is not much greater today, relative to overall digital technology budgets, than it was a decade ago. In 2007, the average investment in emerging technology was roughly 17% of technology budgets, a surprisingly robust figure at the time. Fast-forward 10 years, and that rate has grown to only about 18%, which may well be inadequate.

It’s time to change these trends.

You’ve identified a problem that existing technology cannot solve, but you shouldn’t just throw money at every shiny new thing. A digital innovation capability must become a central feature of any transformation effort. This approach goes beyond simply evaluating what to buy or where to invest to include how best to organize internal and external resources to find the emerging technologies that most closely match the direction and goals of the business.

Nearly every company is experimenting with what we call the “essential eight” new technologies: the internet of things (IoT), artificial intelligence (AI), robotics, drones, 3D printing, augmented reality (AR), virtual reality (VR) and blockchain. The key is to have a dedicated in-house team with an accountable, systematic approach to determining which of these technologies is critical to evolving the business digitally and which, ultimately, will end up as distractions that provide little value to the overall operation. This approach should include establishing a formal listening framework, learning the true impact of bleeding-edge technologies, sharing results from pilots and quickly scaling throughout the enterprise.

Perhaps most importantly, organizations need to have a certain tolerance for risk and failure when evaluating emerging technologies. Digital transformation requires organizations to be much more limber and rapid in their decision making. Says GE Healthcare’s Zimmerman, “One of our cultural pillars is to embrace constructive conflict. That means that when an organization transitions or transforms, things are going to be different tomorrow than they were yesterday. You must get comfortable with change and be open to the differing thoughts and diverse mind-sets that drive it.”

See also: Systematic Approach to Digital Strategy  

In a promising development, signs indicate that companies are starting to focus on bringing digital innovation capabilities in-house. According to the New York Times, investments by non-technology companies in technology startups grew to $125 billion in 2016, from just $20 billion five years ago. The Times, citing Bloomberg data, also noted that the number of technology companies sold to non-technology companies in 2016 surpassed intra-industry acquisitions for the first time since the internet era began. Walmart, General Motors, Unilever and others are among the non-technology giants that made startup acquisitions last year. General Electric, whose new tagline is, “The digital company. That’s also an industrial company,” spent $1.4 billion in September 2016 buying two 3D printing businesses in Europe.

Other companies are engaging in innovative partnerships. At the annual Consumer Electronics Show in January 2017, Visa, Honda and IPS Group — a developer of internet-enabled smart parking meters — teamed up to unveil a digital technology that lets drivers pay their parking meter tab via an app in the car’s dashboard. By “tokenizing” the car, or allowing it to provision and manage its own credit card credential, they essentially make it an IoT device on wheels. “The car becomes a payment device,” explains Visa’s Sondhi. “And taking it even further, we can turn it into a smart asset by publishing information that’s related to the car onto the blockchain. This can enable a whole host of tasks to be simplified and served up to the driver, such as pushing competitive insurance rates or automatically paying annual registration fees.”

Solving for “X”

At United Airlines, Ravi Simhambhatla, vice president of commercial technology and corporate systems, views digital innovation as a way to break free from habits ingrained in his company over nine decades because they are no longer relevant to its customers and employees. The company plans to use machine learning to create personalized experiences for its customers. For example, when someone books a flight to San Francisco, the company’s algorithm will know if that person is a basketball fan and, if so, offer Golden State Warriors tickets.

“What we have been doing is really looking at our customer and employee journeys with regard to the travel experience and figuring out how we can apply design thinking to those journeys,” says Simhambhatla. “And, as we map out these journeys, we are focused on imagining how, if we had a clean slate, we would build them today.”

With the right digital skills and capabilities comes great opportunity to improve the experience of both your employees and your customers. One constant that emerges from 10 years of Digital IQ surveys is that companies that focus on creating better user experiences report stronger financial performance. But, all too often, user experience is pushed to the back burner of digital priorities. Just 10% of respondents to this year’s survey ranked creating better customer experiences as their top priority, down from 25% a year ago. This imbalance between respondents’ focus on experience and its importance to both customers and employees has far-reaching effects. It creates problems in the marketplace, slows the assimilation of emerging technologies and hinders the ability of organizations to anticipate and adapt to change.

Part of the reason user experience ranks as such a low priority is the fact that CEOs and CIOs, the executives who most often drive digital transformation, are much less likely to be responsible for customer-facing services and applications than for digital strategy investments. As a result, they place a higher priority on revenue growth and increased profitability than on customer and employee experiences. However, user experience is also downgraded because getting it right is extremely difficult. It is expensive, outcome-focused as opposed to deadline-driven and fraught with friction.

However, unlike so many other aspects of technological change, how organizations shape the human experience is completely within their control. Companies need to connect the technology they are seeking to deploy and the behavior change they are looking to create.

Making this connection will only become more critical as emerging technologies such as IoT, AI and VR grow to define the next decade of digital. These — and other technologies that simultaneously embrace consumers, producers and suppliers — will amplify the impact of the distinct behaviors and expectations of these groups on an organization’s digital transformation.

Companies that focus too narrowly on small slivers of the customer experience will struggle to adapt, but overall experience-and-outcome companies that seamlessly handle multiple touch points across the customer journey will succeed. That’s because, when done right, the customer and employee experience translates great strategy, process and technology into something that solves a human or business need. You have the skills and the capabilities; now you need to think creatively about how to use them to improve the user experience in practical yet unexpected ways. Says United’s Simhambhatla, “To me, Digital IQ is all about finding sustainable technology solutions to remove the stress from an experience. This hinges on timely and contextually relevant information and being able to use technology to surprise and delight our customers and, equally, our employees.”

The Human Touch

When talent, innovation and experience come together, it changes the way your company operates. Your digital acumen informs what you do, and how you do it. For example, Visa realized back in 2014 that digital technology was changing not only its core business but also those of its partners so rapidly that it needed to bring its innovation capabilities in-house or risk being too dependent on external sources. It launched its first Innovation Center in 2014; the company now has eight such centers globally, and more are planned.

Visa’s Innovation Centers are designed as collaborative, co-creation facilities for the company and its clients. “The idea was that the pace of change was so fast that we couldn’t develop products and services in a vertically integrated silo. We want the Innovation Centers to be a place where our clients could come in, roll up their sleeves, work with us, and build solutions rapidly within our new, open network,” says Visa’s Sondhi. “The aim is to match the speed and simplicity of today’s social- and mobile-first worlds by ideating with clients to quickly deploy new products into the marketplace in weeks instead of months or quarters.”

See also: Huge Opportunity in Today’s Uncertainty  

Across industries, company leaders have clearly bought into the importance of digital transformation: Sixty-eight percent of our respondents said their CEO is a champion for digital, up from just one-third in 2007. That’s a positive development. But now executives need to move from being champions to leading a company of champions. Understanding what drives your customers’ and employees’ success and how your organization can apply digital technology to facilitate it with a flexible, sustainable approach to innovation will be the deeper meaning of Digital IQ in the next decade.

“It’s the blend that makes the magic,” says GE Healthcare’s Zimmerman. “It’s the high-impact technological innovations, plus the customer opportunities, plus the talent. You have to find a way to blend those things in a way that the markets can absorb, adopt, and gain value from in order to create a sustainable virtuous cycle.”

This article was written by Chris Curran and Tom Puthiyamadam.