Tag Archives: digital media

6 Technologies That Will Define 2016

Please join me for “Path to Transformation,” an event I am putting on May 10 and 11 at the Plug and Play accelerator in Silicon Valley in conjunction with Insurance Thought Leadership. The event will not only explore the sorts of technological breakthroughs I describe in this article but will explain how companies can test and absorb the technologies, in ways that then lead to startling (and highly profitable) innovation. My son and I have been teaching these events around the world, and I hope to see you in May. You can sign up here.

Over the past century, the price and performance of computing has been on an exponential curve. And, as futurist Ray Kurzweil observed, once any technology becomes an information technology, its development follows the same curve. So, we are seeing exponential advances in technologies such as sensors, networks, artificial intelligence and robotics. The convergence of these technologies is making amazing things possible.

Last year was the tipping point in the global adoption of the Internet, digital medical devices, blockchain, gene editing, drones and solar energy. This year will be the beginning of an even bigger revolution, one that will change the way we live, let us visit new worlds and lead us into a jobless future. However, with every good thing, there comes a bad; wonderful things will become possible, but with them we will create new problems for mankind.

Here are six of the technologies that will make the change happen.

1. Artificial intelligence

shutterstock_272866295

There is merit to the criticism of AI—even though computers have beaten chess masters and Jeopardy players and have learned to talk to us and drive cars. AI such as Siri and Cortana is still imperfect and infuriating. Yes, those two systems crack jokes and tell us the weather, but they are nothing like the seductive digital assistant we saw in the movie “Her.” In the artificial-intelligence community, there is a common saying: “AI is whatever hasn’t been done yet.” People call this the “AI effect.” Skeptics discount the behavior of an artificial intelligence program by arguing that, rather than being real intelligence, it is just brute force computing and algorithms.

But this is about to change, to the point even the skeptics will say that AI has arrived. There have been major advances in “deep learning” neural networks, which learn by ingesting large amounts of data. IBM has taught its AI system, Watson, everything from cooking, to finance, to medicine and to Facebook. Google and Microsoft have made great strides in face recognition and human-like speech systems. AI-based face recognition, for example, has almost reached human capability. And IBM Watson can diagnose certain cancers better than any human doctor can.

With IBM Watson being made available to developers, Google open-sourcing its deep-learning AI software and Facebook releasing the designs of its specialized AI hardware, we can expect to see a broad variety of AI applications emerging because entrepreneurs all over the world are taking up the baton. AI will be wherever computers are, and it will seem human-like.

Fortunately, we don’t need to worry about superhuman AI yet; that is still a decade or two away.

2. Robots

shutterstock_279918557

The 2015 DARPA Robotics Challenge required robots to navigate over an eight-task course that simulated a disaster zone. It was almost comical to see them moving at the speed of molasses, freezing up and falling over. Forget folding laundry and serving humans; these robots could hardly walk. While we heard some three years ago that Foxconn would replace a million workers with robots in its Chinese factories, it never did so.

Breakthroughs may, however, be at hand. To begin with, a new generation of robots is being introduced by companies—such as Switzerland’s ABB, Denmark’s Universal Robots, and Boston’s Rethink Robotics—robots dextrous enough to thread a needle and sensitive enough to work alongside humans. They can assemble circuits and pack boxes. We are at the cusp of the industrial-robot revolution.

Household robots are another matter. Household tasks may seem mundane, but they are incredibly difficult for machines to perform. Cleaning a room and folding laundry necessitate software algorithms that are more complex than those required to land a man on the moon. But there have been many breakthroughs of late, largely driven by AI, enabling robots to learn certain tasks by themselves and by teaching each other what they have learned. And with the open source robotic operating system (ROS), thousands of developers worldwide are getting close to perfecting the algorithms.

Don’t be surprised when robots start showing up in supermarkets and malls—and in our homes. Remember Rosie, the robotic housekeeper from the TV series “The Jetsons”?  I am expecting version No. 1 to begin shipping in the early 2020s.

3. Self-driving cars

shutterstock_346541690

Once considered to be in the realm of science fiction, autonomous cars made big news in 2015. Google crossed the million-mile mark with its prototypes; Tesla began releasing functionality in its cars; and major car manufacturers announced their plans for robocars. These cars are coming, whether or not we are ready. And, just as the robots will, they will learn from each other—about the landscape of our roads and the bad habits of humans.

In the next year or two, we will see fully functional robocars being tested on our highways, and then they will take over our roads. Just as the horseless carriage threw horses off the roads, these cars will displace us humans. Because they won’t crash into each other as we humans do, the robocars won’t need the bumper bars or steel cages, so they will be more comfortable and lighter. Most will be electric. We also won’t have to worry about parking spots, because they will be able to drop us where we want to go to and pick us up when we are ready. We won’t even need to own our own cars, because transportation will be available on demand through our smartphones. Best of all, we won’t need speed limits, so distance will be less of a barrier—enabling us to leave the cities and suburbs.

4. Virtual reality and holodecks

shutterstock_308823104

In March, Facebook announced the availability of its much-anticipated virtual reality headset, Oculus Rift. And Microsoft, Magic Leap and dozens of startups aren’t far behind with their new technologies. The early versions of these products will surely be expensive and clumsy and cause dizziness and other adverse reactions, but prices will fall, capabilities will increase and footprints will shrink as is the case with all exponential technologies. 2016 will mark the beginning of the virtual reality revolution.

Virtual reality will change how we learn and how we entertain ourselves. Our children’s education will become experiential, because they will be able to visit ancient Greece and journey within the human body. We will spend our lunchtimes touring far-off destinations and our evenings playing laser tag with friends who are thousands of miles away. And, rather than watching movies at IMAX theaters, we will be able to be part of the action, virtually in the back seat of every big-screen car chase.

5. Internet of Things

shutterstock_214888774

Mark Zuckerberg recently announced plans to create his own artificially intelligent, voice-controlled butler to help run his life at home and at work. For this, he will need appliances that can talk to his digital butler: a connected home, office and car. These are all coming, as CES, the big consumer electronics tradeshow in Las Vegas, demonstrated. From showerheads that track how much water we’ve used, to toothbrushes that watch out for cavities, to refrigerators that order food that is running out, all these items are on their way.

Starting in 2016, everything will be be connected, including our homes and appliances, our cars, street lights and medical instruments. These will be sharing information with each other (perhaps even gossiping about us) and will introduce massive security risks as well as many efficiencies. We won’t have much choice because they will be standard features—just as are the cameras on our smart TVs that stare at us and the smartphones that listen to everything we say.

6. Space

space

Rockets, satellites and spaceships were things that governments built. That is, until Elon Musk stepped into the ring in 2002 with his startup SpaceX. A decade later, he demonstrated the ability to dock a spacecraft with the International Space Station and return with cargo. A year later, he launched a commercial geostationary satellite. And then, in 2015, out of the blue, came another billionaire, Jeff Bezos, whose space company Blue Origin launched a rocket 100 kilometers into space and landed its booster within five feet of its launch pad. SpaceX achieved the feat a month later.

It took a space race in the 1960s between the U.S. and the USSR to even get man to the moon. For decades after this, little more happened, because there was no one for the U.S. to compete with. Now, thanks to technology costs falling so far that space exploration can be done for millions—rather than billions—of dollars and the raging egos of two billionaires, we will see the breakthroughs in space travel that we have been waiting for. Maybe there’ll be nothing beyond some rocket launches and a few competitive tweets between Musk and Bezos in 2016, but we will be closer to having colonies on Mars.

This surely is the most innovative period in human history, an era that will be remembered as the inflection point in exponential technologies that made the impossible possible.

Become a Brand Behemoth — Locally

Suppose you walked into a store to look for a new television. If the store only carried one brand, would you shop there? Of course not, but that’s just what today’s insurance behemoths want you to do when you buy insurance.

With an abundance of information just a few key strokes away, today’s consumers demand choice. From automobiles to zucchini, consumers do research online before they make a purchase. Today’s policyholders no longer accept a single company quote. It’s hard to satisfy this consumer demand if you’re an agent who can only offer one product. It’s why the era of the captive agent is coming to an end. Only independent agencies that “meet” their customers online by leveraging their customers’ desire for information and choice will succeed.

The rise of digital media—the web, social media, the smartphone and other mobile devices—has leveled the playing field and even tilted it toward independents. Independent agents can now compete against the industry’s brand behemoths by making their brand even more powerful in their area. They can become local brand behemoths.

Digital tools enable you to provide a better experience to existing clients. Online lead generation allows you to more efficiently find new clients.

Improving customer experience

In a commoditized industry like insurance, the only way you can differentiate yourself is to provide excellent customer service. In the digital age, that means providing your customers with the opportunity to interact with your agency whenever and however they want. From policy changes to evidence of insurance, customers today would rather do things themselves online than have to wait to call your office when it’s open.

One of the most surprising things is how much people love self-service. Surveys show that companies of all types, including insurers, consistently get better service scores when they let consumers manage their account themselves.

Does your website allow customers to make policy changes, track their claim, get a quote or review their policy limits? Consumer tastes also require that your website be mobile-compatible. The smartphone has replaced the computer as the device of choice for consumers. A mobile-compatible site must be clean, because smartphone screens are small. Users must be able to navigate and read your site quickly on a smartphone. Is your company’s website easy to use on a smartphone?

Your website can’t be static and one-dimensional. People don’t want to read gobs of copy online. Your site should give visitors interactive experiences. For instance, display the icons of the companies you represent instead of listing them.

Attracting new customers

Use online resources to expand the reach of your marketing efforts.

LinkedIn provides a great example. Start by identifying people on LinkedIn whom you are connected to indirectly (i.e. through an existing contact but not directly) or are members of the same business group as you. These are your LinkedIn prospects. Next, go through your existing business network and identify a service provider like an accountant, photographer or other small-business owner. Ask if they would be willing to provide a discount to customers you refer to them. If they agree, send an email to your prospects identified from LinkedIn letting them know they can receive a discount. This creates a win-win for both of you.

Here’s a real-life example: I received an email from an executive coach introducing herself and offering me a 75% discount on professional executive photographs. All I had to do was contact the photographer, mention the promotion and schedule a time for my photo shoot. At the end of the email, the executive coach asked me to add her to my network on LinkedIn. While I didn’t need a professional photo taken, I was intrigued by this online joint venture.

It turns out that one of the executive coach’s referral sources is a professional photographer, and they created a photo day for the executive coach’s clients and prospects. The photographer could give a deep discount because he only had to set up once for all of the photos that day.

Thirty people set up appointments. Existing customers of the executive coach were impressed with the value she brought in addition to her coaching. Prospects were introduced to the executive coach in a positive way – you just saved me a lot of money and introduced me to a quality photographer. The executive coach attended the whole day and used the time in between photo shoots to introduce herself or reacquaint herself with past clients. It was a win-win situation for both the coach and the photographer.

Digital giveaways

No one gets excited about a birthday card from his agent. Instead, how about giving away a mobile app so your business can stay top of mind? An app that gets your name on a client's phone is a great way to stay in touch—and provide something of real value.

Facebook, Twitter, Tumblr and more….

You need to be on social media. Although engaging with social media takes time, what you learn online provides you with valuable customer insights. It’s like getting the questions to a test in advance. You have a real advantage.

Social media isn’t just about following people. Post or tweet information about how to prepare for catastrophes unique to your area so people can prepare for them. The more you engage digitally, the more relevant you become online.

You’re probably thinking: “I don’t have time for this!” You’re right! Find someone who uses these tools everyday – a student or a young person in your office and put that person in charge.

All the pieces have fallen in place for independent agents. Seize the digital moment now and prosper!

Future Is Bright for P&C Agents

The experts guaranteed that the Baylor and Alabama football teams would win their bowl games after the 2013 season. Both lost. Baylor was favored by a whopping 17 points over Central Florida but lost by 10, while Alabama was favored by 15 over Oklahoma but got crunched by 14. 

Likewise, for decades, the “experts” have been betting against independent insurance agents, yet agents keep winning. Why? The consultants, finance guys and others who populate the skyscrapers on Wall Street discount the power of the local trusted insurance agent who does business on Main Street.

That’s not to say that the recent report from McKinsey on the future of property/casualty insurance agents should be discounted. It raises some very good points about how insurance agents need to evolve to continue to be the distribution channel of choice in the insurance industry.

McKinsey got some things right, some wrong. Let’s start with the latter.

What McKinsey got wrong

— The agent’s role hasn’t changed.

Automation has reduced independent agents' role in underwriting and processing, so insurance companies perceive agents are doing less and should get less commission. But the agent’s role has not changed. The client still needs a local, trusted adviser to explain and recommend the proper insurance coverage. Today, that role is valued even more, with trust in big corporations and the government at all-time lows. Cost-cutting is the easy way to increase short-term profits, and the biggest cost for most insurers is commissions. The McKinsey report gives a short-sighted insurance company executive a reason to lower commissions, but companies that reduce commissions will be following a “fool’s gold” strategy producing short-term gains at the expense of the long-term viability of their agent-based distribution.

— Brand awareness doesn’t translate into customer loyalty.

A talking gecko, the discount double-check, Flo, Mayhem or Farmers University don’t build customer loyalty. They do build customer awareness, so the big insurance companies spend hundreds of millions of dollars on ad campaigns. But being top of mind doesn’t mean the customer will have any loyalty to the company. You can’t create a relationship with a person through advertising. People create relationships–for example, with someone whose son or daughter plays on the same soccer team and attends the same school as the agent's children. The opportunity to establish a relationship is unique to the agency distribution channel. It takes time and effort, but once established the relationship creates strong customer loyalty. That’s why you never see any studies from big consulting firms that ask people whom they trust more – their local agent or the insurance company We all know the answer.

— Independent agents will gain market share as auto insurance becomes commoditized.

I agree with McKinsey that some parts of the auto insurance market are becoming commoditized but disagree with the conclusion that this will hurt independent agents. Because they can offer multiple carriers, independents will still get the sale. They will just place the business with the best-priced carrier. The big losers will be the captive distribution companies, which will be unable to offer their clients choice.

–A multi-channel distribution strategy ends up cannibalizing agent-based distribution. McKinsey argues that insurance companies must balance their investments among multiple distribution platforms. It sounds reasonable, but in reality it means a company must reduce the amount of money it commits to its agency distribution channel to reallocate its resources to contact centers, web portals, advertising and other costs of building a direct consumer platform. Companies that follow this strategy will discover that they traded valuable multi-line customers for single-product consumers with no company loyalty.

Where McKinsey got it right

— Agents must evolve in the way they attract and retain their customers.

Absolutely! The cost of technology is dropping so fast that small and mid-sized agencies can now use tools like social media and data analytics that only large companies could afford a few years ago. Local agents need to be able to engage with their customers in real time. That requires they have a digital media and mobile-compatible platform as well as a social media capability to engage with clients and prospects.

— Agents must be seen as able to handle all of a client’s insurance needs. Product peddlers won’t survive. Agents have to be able to demonstrate the value they add by virtue of their expertise and that their advice can be trusted.

— Agents must understand the customers they are targeting and stay focused on that segment. One size no longer fits all in today’s insurance market. Independent agents need to understand their target market, the attributes of profitable customers, and how to reach and serve them. Just like the big insurance companies use advertising to create a top-of-mind brand, agents today must become top of mind with their customer segment.

Today, we live in a world that is moving so fast and becoming so much more complicated that people need someone they can trust—and work with conveniently when and where they want. Current trends in the insurance marketplace bode well for the local, trusted, independent adviser who represents the interests of her clients. The McKinsey report supports that conclusion.