It’s the beginning of May. That means over the next month a huge group of college students hit graduation day and begin a new journey in their lives.
I have many friends who are graduating, and I can already start to sense some panic about what lies ahead for them after graduation. For many of my friends who do not have a clue what field they want to pursue, I often suggest careers in insurance. Aside from working in the industry and selfishly wanting to recruit some friends to join me in the field, I give my friends four other big reasons why they should join the insurance industry:
Simply said, the talent in the insurance industry is graying. It is estimated that nearly 60% of the insurance industry’s current employees are older than the age of 45 and that by the year 2020 there will be more than 400,000 job opportunities. Those are some substantial numbers, and these numbers are on many insurance employers’ mind. The industry is hungry for young, driven talent to fill the pipelines before current staff disappears. As a young professional, I see the endless opportunities in terms of future leadership roles in the industry. I suggest getting in early and soaking up as much knowledge as you can from many of these soon retiring professionals.
2. Job Security
The insurance industry provides a considerable amount of job security, in my eyes. I don’t see insurance going away any time soon. I would argue quite the opposite. No doubt the industry will have to evolve as risk changes (e.g. self-driving cars), but risk assessors and risk advisers are here to stay.
3. Job Variety and Flexibility
Insurance is everywhere. You won’t be limited to a particular list of major cities when looking for a career in insurance, and the industry offers an array of professions to pursue, from actuaries analyzing the numbers to the creatives who are fighting today’s marketing wars. (Side note: I’m a big fan of Flo from Progressive and Mayhem from Allstate). Whatever your passion is, you can pursue it in the insurance field. Many sales and underwriting professionals in the industry pursue their interest specializing in advising for not-for-profit organizations, tech companies, medical professionals, breweries, etc. Being able to relate and understand how a business works is the essential feature of what makes an insurance professional great.
If you aren’t up for an intellectual challenge, I highly advise not pursuing a career in insurance. There is a vast amount of information to learn just to get started, and laws and regulations are changing every day. I learn something every day.
But if learning motivates you, come join the fun.
I don’t believe there is anything more satisfying in the industry than the stories I hear about how insurance saved people’s livelihoods. Some accidents are just unpredictable, and whenever insurance companies step up and provide the financial support to rebuild someone’s home or business it really reenergizes my dedication to the industry. The insurance companies that have stuck around for many years are those that are out to make a difference in their customer’s lives whenever those customers call needing help.
A classic SWOT (strengths, weaknesses, opportunities and threats analysis) is usually considered as a good start for strategic planning efforts and further analysis. A disruptive and cascading SWOT can re-position the whole strategic plan to seriously pursue disruptive innovation. A great strategic plan should not just be about beating the competition at their game, but about redefining the game as no one has done before you.
The hyper-connected and cascading behavior of global risks
The World Economic Forum (WEF) has published a global risk report since 2006. The WEF pleads the case that the more connected our world becomes via a globalized economy, social media, the Internet, etc, the more vulnerable the whole world is to any weak links in the system. The reports include constant references to the connected risks that can cause global system breakdowns. The descriptions of the potential threats include combinations of slow-building and creeping risks that are hyper-connected, capable of linking to create unforeseen and high-energy cascade effects that can create tipping points into a perfect storms with high local and even global fallout.
The hyper-connected and cascading behavior of internal risks
My independent research into the causes of historical disasters, which started in 2004, has identified certain cascading principles and mechanisms of how the combined effects of underestimated internal risks can wreak havoc and self-destruction even without the help of external forces. If your SWOT ignores the cascading and hyper-connected nature of internal and external risks, your efforts could be futile. Too often, risks are assumed to approach from over the horizon from the outside. This mindset ignores the fact that most organizational failures stem from internal risks and a dysfunctional work culture. The triggers of such havoc can emanate from the top of the organization and quietly ripple through the organizational cascades to create undesirable events.
A SWOT analysis on the SWOT analysis
A SWOT analysis is a mini-risk assessment and mitigation brainstorm tool. However, its strengths will become weaknesses if the assessments are superficial. If the SWOT is reconfigured to meet the realities of a hyper-connected and cascading world, this tool can be very insightful.
What follows is a short SWOT analysis on the SWOT analysis tool to assess its capabilities to pursue true disruptive innovation. This exercise can be viewed as a self-diagnostic of a SWOT:
Simple and easy to understand
Helps you identify and understand challenges and opportunities
Can be used to develop a robust action plan
Concentrates on the most important factors
Its simplicity will not always prompt its users to go deep enough to make its analysis meaningful
It does not prompt its users to investigate hyper-connected risks that can cascade and ripple through an organization in a destructive manner
It does not prompt its users to investigate slow-burn/slow failures (aka creeping risks) that can build up over time and create tipping points that produce a perfect storm of unintended consequences
It does not prompt its users to solicit true and candid cultural perceptions and threats for all employee levels
It will not lead to disruptive innovation in its basic form
Invigorate the classic SWOT into a cascading SWOT to match the way in which the world and modern organizations actually operate
Identify hidden threats and uncomfortable and unspoken talk rules
Include assessment of internal leadership gaps
Include factual assessments of cultural health of the organization
Include assessments of internal process inefficiencies and risks in key business processes
Assess the quality of your business metrics
Assess the organization’s responses to critical situations
Assess how your organization learns from its mistakes and makes the necessary changes
Assess the internal and external customer satisfaction levels
Include a “points of pain” assessment as perceived for various levels of employees
The assumption that SWOT-KISS (keep it simple, stupid) is the right approach may not fit well in the complex and cascading world in which we live
It can misdiagnose luck as skill; the organization will be ill-prepared for adverse events
It assumes that, if you ask fellow employees for inputs, they will tell you the whole truth, without fear of punishment
Summary of the SWOT analysis on the SWOT analysis
A good SWOT should be provocative and assess the sensibility on your own strategies, track your efforts to solicit and address internal taboo talk rules, monitor employee frustration levels and assess your internal culture’s momentum toward success or failure. Most importantly, do not forget to gather multiple perceptions on the above opinions from leadership, mid-management and non-management employees. If the perceptions are vastly different, determine why the same people under the same roof are describing the same company in very different manners.
Transforming the SWOT into the foundation for disruptive innovation
It must be stressed that an energized SWOT is only the foundation of a good strategic plan. It is not the final analysis or strategic planning tool. The annual corporate strategic planning cycle is usually time-consuming and interactive and must get off to a good start with the right tone if anything of value is to be expected.
SWOT expansion to include internal cascading risks
The biggest opportunities to achieving strategic objectives lie in the ability of leadership to identify, assess and manage the internal cascading connections and cause-and-effect relationships that exist. The main areas of internal, hyper-connected top-to-bottom cascading elements and loops include:
Leadership strategies, attitudes and behaviors
Responses to shortfalls in performance metrics
Feedback loops to leadership that either incorporate lessons learned or ignore such lessons, offering the next cycle of adverse events the opportunity to sink the ship
Each of the above mentioned elements of internal cascades should be SWOT-ed separately with candid and honest inputs from all levels of employees (See graphic below). Embracing such logic allows leaders to create a cascading strategic plan that can energize the organization instead of just addressing the symptoms of issues with sugar-coated Power Point slides or adding a fresh coat of paint to the Titanic while it is sinking.
Figure 1. Each element of internal cascades should be SWOT-ed separately with candid and honest inputs from all levels of employees
SWOT expansion to include external cascading risk assessments
External risks need to be listed, rated for connectedness and assessed for their impact and likelihood of affecting the business. This offers a good start for subsequent strategic risk management efforts. The World Economic Forum’s annual Global Risk Report offers a good reference to use as a starting point for possible risks to consider. Separate SWOT analysis should be carried out for the six main areas of global risks:
Real-time feedback loops to leadership on the status and changes in global risks
Organizations and the world are hyper-connected communities that are exposed to threatening invisible cascade, ripple and domino effects. Today’s risks can easily leap past national borders, firewalls and other security safeguards and trigger very unexpected circumstances that can threaten the reputation and existence of the business. Modern applications of the SWOT analysis should consider this complex and cascading nature in which the world now operates. A thorough SWOT analysis can be a good start for any level of strategic planning, including the ultimate wish of any organization, which is to create disruptive innovation and value that will ignite the passions of its employees and customers.
If you think that the analysis you use to identify the strengths, weaknesses, opportunities and threats (SWOT) in your business is adequate, beware. It is intended to provide a 360-degree view of your risks and opportunities but often fails to fill that requirement because of superficial applications and failure to look at risks from connected systems.
If your risk and opportunity analysis techniques are lacking, you could be very unprepared for the next recession, disruptive technology or game-changing way of thinking that could soon affect you. Too often, the last domino that struck in the last crisis is the main focus of all future risk-mitigation efforts. The whole string of triggers and threatening signals that led up to that last publicized tipping point and bursting bubble are ignored.
Here are the 10 most common shortcomings for SWOT analysis:
Underestimating the role that vertical and lateral cascading human factors can play and having fragile back-up plans
Absence of war gaming, stress testing and disruptive failure mode analysis testing of your leadership mindset, strategy, work culture, processes, products and services
Lack of focus on disruptive innovations; you respond to them but do not create them with proven innovation-on-demand techniques
Assumptions that cyber security and patents are safe, so they aren’t stress tested with advanced cyber-circumvention and patent-busting techniques
“Taboo talk rules”; uncomfortable discussion topics are avoided or not identified with focused and anonymously solicited inputs from employees
Ignoring “Trojan horse” risks that are secretly lurking in the hearts and minds of your employees or piggy-backing on purchased technology, software, products or services
Lack of use of “gamification” techniques to address the most sensitive threats in a disciplined, humane, engaging and effective manner
Failure to include effective strategies to attract and retain key human talent
Failure to identify low-profile threats that create unstoppable cascading risks — from leadership to culture to processes to bad performance to weak responses to critical situations
Lack of use of external perspectives to challenge group-think assumptions of perceived safety and robustness
Simple SWOT analysis and risk-management techniques will not offer the protection required to survive the next economic crisis or disruptive technology. KISS concepts (keep it simple, stupid) have lost their ability to identify and protect against complex cascading risks. The world is a fragile, hyper-connected and cascading system full of surprises that will punish casual optimists and reward those who hope for the best but seriously plan for worst-case scenarios.
The World Economic Forum’s 2014 World Risk Report describes the global risks that can quietly cascade across borders and affect organizations in unsuspecting and surprising ways from a variety of threatening and linked factors. The complex dynamics that exist between developed, developing and emerging world markets is further complicated by the fact that many organizations know very little about the cascading system dynamics within their own four walls.
Classic methods that attempt to describe the risk and opportunity landscape for individuals and organizations have not kept pace with the rising complexity and interactions between highly networked workplaces, global economies and internal and external threats. We have now entered a new era where we need new ways to describe and understand the complex world we have created, which has outgrown the simple tools we like to describe it with.
To say we struck a nerve in the industry with the Google and Insurance: Far Reaching Implicationsresearch is an understatement! It was picked up by all the major industry media – in some cases multiple times. It has set a record for downloaded and purchased SMA research, generating a torrent of follow-up calls and discussions. It has been shared and used by executive teams for discussion and strategic planning. The companion blog for the research had nearly 10,000 views – and continues to be posted, tweeted and retweeted a month and half after it was published!
So why has there been such a strong interest and reaction in the industry?
Well, one reason might be that there is a fascination and admiration for the competitive drive in Google’s transformation from a search engine to an innovator of technologies and solutions like Android, Google cars, Google glasses, wearable devices and others. And then there is the fact that Google is securing a strong, growing (and enviable) customer loyalty. Don’t overlook the challenge to other innovators like Apple, Amazon and Microsoft – it’s impossible to ignore, just like Google's impressive growth and financial results! But the appeal that underpins all of this is Google’s unwavering vision of making information universally accessible and useful. Having a huge imagination that is spearheading innovation in multidimensional ways doesn’t hurt either!
As Google drives innovation, offering an integrated and seamless customer experience and making available the use of its ground-breaking technologies to people in their everyday lives, the levels of customer intimacy and loyalty continue to increase. In the opposite direction, the vast amount of data becoming available via some of these technologies concerning individuals and their cars, homes and bodies is breath-taking. The change will be transformative!
This is why the implications for insurance are so great. Google is bringing an outside-in, customer-driven approach to innovation that is causing insurers to rethink, reimagine and reinvent their visions of a technology-enabled future. Google is organizing data, technology and location around people, creating a level of customer empowerment and -centricity unheralded in any industry, let alone insurance. Not only is this powerful, it is fundamentally changing the business of insurance!
Innovation is no longer just a nice-to-have initiative. It has become a must-have, strategic, core mandate that will define a new era of winners (and losers). Why? Because the increasingly rapid pace of change is challenging decades of business traditions and assumptions and demanding a response. This is unprecedented in the history of the insurance industry. All the while, the changes just keep coming: new technologies, the mash-up of technologies and new uses for these technologies.
These changes are highly disruptive, but they are also transformational. One industry innovation leader whom we recently spoke to about innovation noted that: “There is an outrageous level of individualism – from devices, data and components that will break the traditional infrastructure, culture and systems of traditional insurers.” Companies like Google, Apple, Uber, Zipcar and others, as well as next-gen and emerging technologies, are intensifying this level of individualism.
Many insurers, large and small, are struggling to get their heads around a comprehensive view or a full understanding of the impact that these influencers will have on the disruption and transformation of the insurance industry. That is why the Google and Insurance research report has provoked such a response in the industry – because it provides insights and a glimpse of the challenges and opportunities for the industry. It also points to why, as an industry, we need to rethink how we respond to and embrace innovation as the core of a new culture and keystone of a new future.
Other industries, from retail to books, music and movies, have experienced the same thing the insurance industry is now encountering: the very foundations of their businesses are being challenged, requiring novel thinking, experimentation, innovation and adoption of the new and emerging technologies. As one industry leader and CIO recently commented, “Insurers must build knowledge, a network and an ecosystem of outside-in relationships to reimagine and contribute to their company’s future.”
This persistent and continual disruption will necessitate a new way of embracing change and innovation. It will require a culture and model built around continuing collaboration and ideation that extends outside the traditional insurance organization. This is why an innovation mandate is critical.
The innovation mandate must track and assess trends and influencers both inside and outside the industry, prepare plans and scenarios, experiment and collaborate to gain competitive advantage. Unfortunately, the day-to-day operational demands, time constraints and shortage of expertise or resources for evaluating the many implications for insurance will find most insurers unprepared or unequipped to respond to this level of disruption. More troubling is the way that many insurers are continuing to operate with the long-standing approach of wait-and-see or being a fast follower. With the accelerating release of next-gen technologies, eager competitors, new influencers and increasing customer demands, failing to adopt a culture of innovation and collaboration could create a potentially unsurmountable risk to survival of the business.
For insurers, the coming years promise unparalleled opportunity to increase their value to their customers. Those that are best able to capitalize on the key technology influencers will reap the most in rewards. In contrast, those that do not prepare for the future will find themselves falling behind, losing both competitive position and financial stability. To capture the full potential, insurers must determine to create and participate in an ecosystem of outside experts and resources; inspire their leadership; and enable their journey of change, transformation and innovation. Why will this be so important? Because the ecosystem will integrate new ideas and thinking from outside the organization, and provide that outside-in perspective needed to break legacy assumptions.
The innovation journey toward rethinking, reimagining and reinventing the business of insurance has started. Strategy Meets Action has joined the journey. Have you?