I am intrigued by the continuing trend of pursuing competitive advantage through early adoption of analytics, and the concept of “first mover advantage,” but was taken aback by a contrary view expressed at a recent round table on compliance and risk. There, it was suggested that, because of uncertainty about the requirements of insurance regulators, it might be better to wait before committing time, money and resources.
The participants talked of “last mover advantage,” and in their particular case perhaps they have a point. I wondered where else last mover advantage had been used and to what effect, and what the implication is in the insurance sector. Last mover advantage is a tried and tested strategy with our old friends, the retail sector. Own-label branding often relies on branded suppliers to invest in marketing to establish a new product, before retailers enter the market with a lower-priced version. It was suggested at the round table that “first mover advantage” is a myth. Chux was cited as an example–it entered the market ahead of Pampers but lost out.
Personally, I don’t buy into that idea. Effective innovation is no longer just about being the first to have a good idea, but being able to quickly execute on the idea in a sustainable way that meets the customer’s needs.
There's no doubt that innovation is speeding up. IHS Consulting cites a study showing that, of 46 major innovations in the 20th century, the average timespan between introduction and follow-on declined by 90%, from 33 years to 3.4 years, and that was in the pre-digital age. What does innovation look like at the speed of WiFi?
In a rapidly growing global marketplace, speed to market remains critical for insurance innovators and can mean the difference between success and failure of a new venture. Analytical accelerators can only increase that speed and provide greater certainty of a successful outcome. Incremental improvement that continuously differentiates, including customer and staff feedback obtained through social media analytics, allows insurers to keep ahead of their competition.
How insurers obtain and keep competitive advantage remains critical, and innovation is clearly a part of this. But I wonder, what is more important: the quality of the innovation, or the quality of the competition?
I am reminded of an old joke, which goes something like this:
Two hikers in the jungle came around the bend to find an enormous tiger up the trail. The tiger spies them and begins running toward them at a full speed, licking its lips. One hiker drops his backpack, sits down, throws off his boots and starts lacing up a pair of running shoes.
The other hiker says: “What are you doing? You’ll never outrun that tiger!”
The first hiker replies: “I don’t have to outrun the tiger. I only have to outrun you.”