Tag Archives: pepsico

Are You Innovating in the Dark?

The insurance industry is ripe for disruption, drawing a flood of investment and spurring all sorts of smart conversations. But many insurance companies today are either confused or are just shooting in the dark hunting that “big thing” (unknown) in the name of innovation.

The good news is that the fear of disruption has pushed the innovation agenda for many companies. But there are only a handful of players in the industry who are taking innovation seriously. For such companies, innovation is never accidental, seasonal or impulsive. Rather, it is an integral part of the company’s culture of organization and is a continuous process.

Are you a victim of “innovation phobia?”

Innovation makes many players in the industry nervous, forcing them to act fast to do something innovative or deliver superior values to clients in difficult times, spurring a reactive innovations race in the market.

The sad part is that such “knee jerk” reactions last for short lifespans and do not deliver any value to an organization. Typically, such momentum often dies within 12 to 18 months because of reasons such as change of organization priority, leadership change, shortage of funds, skill shortage, poor support within an organization, company politics and resistance of companies to change. Companies burn millions of dollars each year in the name of reactive innovation. Is it time for organizations to assess if they are the victim of the innovation phobia? Are there better ways to use their funds? The answers are yes.

See also: How to Create a Culture of Innovation  

Build meaningful offerings, not just elegant facilities and prototypes

In the last 12 months, innovation activities have ignited insurance industry collaboration with startups and insurtech. Other innovation players are picking this up, which is a good thing and a positive sign for the industry. Keywords such as “incubator,” “accelerator,” “innovation labs,” “garages” and  “design thinking” are gradually becoming the jargon of the insurance industry. Many companies have built (or are building) large, elegant facilities for innovating, assembling teams, creating fancy prototypes and leveraging newer technologies. Few companies are funding startups and few have started separate venture capital funds to capitalize future opportunities. Things are really changing — and fast.

Still, the big questions remain:

  • Are these real attempts toward innovation?
  • Are these meager reactions triggered because of innovation phobia?
  • Are these attempts to create a market illusion that your company is innovating?

None of the above aspects can guarantee success. The hard reality is that such efforts are not sufficient for innovation. Innovation is not about building fancy facilities or shiny prototypes that anyone can mimic easily. It is not about the number of experiments or proof of concepts you are developing. It is also not about the number of hackathons you sponsor or the total partnerships you have with startups or insurtech firms.

It is about creating something meaningful for customers that is distinctive in the market and gives you a long-term competitive advantage. And it is about understanding your future customer’s needs, market insights and evolving industry trends in a timely manner (ahead of your competitors) and about building something meaningful that customers will value the most.

Addressing the “missing” elements of innovation in your organization

Innovation is not an easy thing and cannot happen as a matter of reactive actions. Unless organizations build a culture for innovation; make it a continuous process; invest in people and capabilities; and commit themselves for long-term innovation, any efforts toward achieving innovation are going to be shortsighted. Failures are an inevitable part of innovation, so building a culture that encourages failures and motivates teams to think big, imagine the future, gather insights, validate assumptions and deliver value with greater agility are important part of innovation. It is time for companies to be honest and discover the missing elements of innovation in their organization. Innovation is about building a foundation for the future of the company; it is about creating a futuristic business, talent, expertise and the people of tomorrow.

Many of today’s innovation efforts are merely trying to keep pace with the emerging technologies — such technologies are threatening the existing business models of insurance companies. If you look closely, you would agree that such scenarios have existed for many decades in the industry. It is impossible to keep the same business pace when technological changes are maturing and evolving at a faster pace. There is a need to look for some missing element in your organization, which, when paired with emerging powerful technologies, can bring the real innovation out.

Invest in market intelligence and competitors’ moves

Successful innovation demands long-term organizational commitment, unique market insights, customer validation-feedback, talent, organizational agility and correct assessment of timings of market readiness for any new value proposition.

If you look closely at the history of some of the most successful innovation companies (such as Google, Apple, GE, P&G, PepsiCo and Toyota), you would notice that such high-performance companies have assessed the market, customer behavior and competitors’ moves very cautiously and constantly and have made appropriate investments in the journey for innovation. These companies have built an innovation culture over years. Unfortunately, today, companies do not have the patience to gather the right intelligence on the market and the insights on customers’ behavior. And many companies just want to take advantage of becoming the first movers without doing the proper homework about market readiness, competitors, customer needs and the industry preparedness.

Beware of those fancy insights that everyone knows

Many companies’ innovation agendas get biased and influenced by a few survey results from the top consulting and analyst firms; few companies are also using future market size projections from the global research companies as a part of justification for the company’s innovation efforts. By and large, the entire insurance industry is referring to the same set of intelligence and insights. If that is the case, there is little possibility that meaningful offerings would emerge that can disrupt the industry as a whole. If you are going to create another new-style offering (similar to that of others or that can be mimicked easily), by leveraging the similar market insights and similar technologies, your innovations efforts are likely to deliver poor results.

Beware of those commoditized insights and research reports that may distract you from doing genuine innovation.

See also: Innovation Won’t Work Without This

You must invest in assessing market intelligence and customer intelligence continuously. Your futuristic offerings are likely to be as differentiated as those of the unique market and customer insights you gather. Align your innovation efforts accordingly, leveraging the best proven technologies and the expertise of your people and partners.

Going back to basics

Industry players must assess if they are addressing innovation requirements holistically. How accurately a company infers future market movement, customer behavior and demands — and creates offerings in a timely manner ahead of its competition — plays a critical role in the success of innovation. If you think this type of innovation sounds more like gambling or shooting a gun up in the air, you are advised to spend your money on some other initiatives that can improve your business performance faster.

Now is the time to invest in your people and build capabilities (underwriting, risk management, sales and distribution, claims, etc). It is the time to build core foundations and address the missing elements of innovations within your organization.


Innovations are critical for a company of any size. Insurers must commit themselves to innovating and must build an innovation-centric culture in their organization. Insurers must honestly assess if they are a victim of innovation phobia and must address the missing elements and innovation gaps in their organization. The distinctiveness of market insights, customer preferences, competitors’ moves and industry readiness plays an important role in the potential success of the innovation. Innovation is never accidental but, rather, is a continuous process that requires the best talent, best capabilities and agility. The role of technology and the startup community cannot be ignored in innovation. Insurers must stop innovating in the dark and instead start fixing the broken elements that are hindering the company’s growth.

Learn about Innovator’s Edge, a first-of-its-kind insurtech matchmaking platform.

Value in Informal Employee Networks


Connected companies are organizations that move away from traditional hierarchies to embrace communities of employees that reach across departments and geographies. By implementing innovative technology solutions and designing workspaces that remove bottlenecks to collaboration, these companies are building smarter and more productive teams, increasing talent retention and creating a more satisfying work experience for their employees.

Within an organization, such networks can lead to innovation and competitive advantage. Mapping these communities reveals that the amount of knowledge and information that flows through them far outweighs what is available through traditional organizational hierarchies and silos. The challenge for many large companies today — particularly at a time when consumers are more demanding in the services and support they seek — is to find ways to channel the power of such informal networks to fuel growth and revenue and to better serve their customers.


Businesses, both large and small, are typically organized by department. Within these formal structures, dozens of informal, shared-interest communities develop — either intentionally to enable collaboration across teams, or organically by employees through their shared interests.

Increasingly, it is through these often-invisible networks that work actually gets done in today’s knowledge-intensive companies. As ideas are shared — whether through instant messaging, collaboration tools, intranets or digital social networking platforms — extracting the value within these networks has never been more important – or, if implemented effectively, easy.

Perhaps the biggest barriers to harnessing the power of these peer groups are the formal hierarchies, matrices and organizational charts that overlay them. These formal structures tend to downplay the power of informal relationships and the ideas and innovation that are their byproducts.

As executive leadership teams contemplate ways to boost the value of these networks, they should consider implementing both technological and structural changes. The idea is to encourage goal-oriented collaboration, create pathways to forging value-creating informal connections and remove bottlenecks to networking across business functions.

Addressing the Needs of an Evolving Workforce

Changing workforce demographics are forcing organizations to rethink talent management. For example, the impending retirement of baby boomers means companies could face a serious talent shortage and loss of important institutional knowledge. The new workplace imperative is to accommodate the needs of all employees, ensuring they can share information and knowledge effectively.

With various skills in short supply, some businesses are increasingly hiring outside their traditional geographic regions to attract and retain top talent, creating a more distributed workforce. As a result, companies are retooling their knowledge-sharing technology to support remote employees.

Flexible working programs are forcing executives to rethink corporate real estate and space planning. Should virtual workers be entitled to office space? What workspace designs and technology are necessary to support office workers collaborating with their virtual counterparts?

Similarly, many employees want stronger and deeper connections with each other and their leadership, and they are looking for more instantaneous feedback on their work instead of the traditional employee review.

Maximizing the Benefits of Instant Feedback

“Today’s business environment is real-time,” says Teryluz Andreu, U.S. engagement leader at Aon Hewitt. “Customers act and interact with the swipe of a screen and a click of a button. Data is available immediately, and, increasingly, today’s customer expects instant results.”

Employees are no different.

“Millennials, in particular, are looking for continuous feedback loops to improve their daily work — not after long, sometimes rather complex, process and formal surveys,” Andreu says.

This feedback from employees is essential for the organization to analyze and act upon. Research has shown that employees want organizations to encourage them to speak up, actively solicit their feedback and encourage conversations across the business.

Making Informal Networks Formal

To help address these emerging needs and maximize the opportunities they present, businesses with entrenched hierarchical structures could consider introducing flatter structures that encourage collaboration, similar to those popularized by startup culture.

Rather than completely restructure, businesses can explore designing and supporting informal networks around ad hoc peer groups. These can be designed to focus on a specific work area of mutual self-interest, bringing more diverse perspectives to problems and unlocking enormous value at low cost.

Before undertaking such an effort, leaders need to very clearly understand the objectives and the outcomes you are trying to drive in your company and (with) your colleagues,.

Just as formal hierarchical structures have defined management roles, employee networks should have defined collaborative roles. These connected communities benefit from designated group owners and “knowledge managers.” In this way, networks can support the creation of small, focused communities of interest within larger communities — for example, sub-communities focused on the different industries within healthcare, such as pharmaceutical and medical devices.

By participating in these smaller communities, talented workers gain access to knowledge across the company. A person in the medical devices community could also be a member of a marketing community, helping both groups better understand the needs of the other.

Carrying out analysis of existing communities by working through influential employees who are already connected with them can help companies formalize networks. This can often make collaboration more efficient and secure buy-in from existing members. These individuals also tend to have a strong perspective on which people from disparate functions, locations or groups can add the most value.

Learning How to Listen

A critical factor in formalizing employee networks is ensuring employees are engaged and empowered to participate. “Agile listening” encourages continuous conversations between employees and company leadership, often through technological solutions. These new types of feedback loops are often less cumbersome, intrusive and costly than their annual or semiannual survey counterparts, helping companies and employees put new ideas into practice quickly.

“Creating networks and connections is a basic human need,” Andreu says. “Having issues addressed and feedback acted upon is essential to an individual’s engagement and work output. Organizations that listen and respond to their worker’s concerns satisfy the need of employees to feel connected to their organization and part of a larger community.”

According to Andreu, one of the primary benefits of agile listening is the ability to act on feedback in real-time and to also help balance the onus of “employee engagement.” Instead of staff feeling employee engagement is only a result of what the organization does, these new tools can now help the individual to proactively improve their own engagement.

“These personalized engagement reports for employees help address what they need to change about their own behavior to improve their engagement and, more importantly, what things they can change in the workplace to feel more connected,” Andreu says.

From Connections to Collaboration

To enable these connections and boost internal networks, businesses need to identify and implement the right mix of technological tools. Just as LinkedIn, Facebook and Twitter have changed the way individuals communicate, there is now an array of powerful and secure communications tools that allow for easy collaboration across time zones and from virtually any location.

Internal social networks like Microsoft’s Yammer or Facebook for Business can also support the development of communities of interest within larger networks. Rather than searching for an answer or expert within a large and often cumbersome database, these tools allow employees to search for employees outside their direct groups based on expertise or skills.

Companies can also establish a robust intranet or private website that is accessible by employees only. These are useful not only for publishing news and sharing essential company policies and updates, but they can also serve as a secure place in which to communicate in real time, improve collaboration, outline strategy and provide essential training.

Rethinking Workspaces to Break Down Silos

Beyond the business case, companies should have some sort of cultural readiness assessment in place because it is a (big) cultural change. Technology alone is often not enough to help bring about such changes.

This is why, in addition to technology powering collaboration, structural changes to physical workspaces can help promote a more networked work environment. A well-designed workplace can catalyze the collaborative behaviors businesses want to promote, energize and motivate among workers.

It’s essential to understand “people want to interact, socialize and play with each other at work,” says Lyle Sandler, head of technology, design and human experience at Aon. “But they find themselves sequestered to cubicles and windowless offices. Instead of interacting with humans, they are glued to computer screens and sometimes overly tied to technology instead of what is more natural to us: human interaction. The ‘agile workspace’ provides us with the opportunity to explore these natural human behaviors — behaviors that produce ideas and drive innovation.”

Sandler also notes that well-designed agile workspaces can encourage “successful collisions.” A smart and thoughtful workplace design can “get people to literally bump in to each other, speak with others that one wouldn’t normally interact with and ask for help and perspectives from people with different backgrounds.”

The Business Benefits of Collaboration

Networks can generate significant value by activating talented employees and encouraging them to work together across the enterprise. The benefits of a networked approach can be substantial: smarter teams, improvements in workforce productivity, better customer service, product innovation, efficiency gains and reduced overheads.

The connected company also constitutes a win for employees and a strong reason to join — or stay with — a company in an age of increasing competition for top talent. They can look forward to greater workplace flexibility, more engaged and satisfying experiences on the job and a culture of collaboration. All this can lead to better financial performance and better long-term prospects for the entire business.

Talking Points

“We are at an interesting inflection point — a time when many of the scenarios we have been talking about for a long time are almost becoming reality.” – Jackie Fenn, fellow emeritus in business innovation and emerging trends, Gartner

“In a nutshell, collaboration tools eliminate silos — one of the biggest inhibitors to digital transformation today.” – Andy Litherland, VP of European channels, Avaya

“When it comes to breaking down silos, I don’t think you’re ever really done. It’s something you work on every day and every year, by emphasizing that we’re all in this together.” – Pat Cunningham, director of aviation, Pepsico

Further Reading

Thought Leader in Action: Chris Mandel

Back in the ’70s, Chris Mandel quite literally stumbled into insurance, as a result of a racketball injury at Virginia Polytech Institute when he suffered a detached retina. After two months of lying flat in a hospital bed, he had to forego his post-graduate job in retail management and start looking for employment in D.C. — he began an unexpected career in managing claims at Liberty Mutual.

Mandel excelled in his job but realized a career in claims management wasn’t what he wanted. So, in the early ’80s, he moved to Marsh brokerage for five years and set up a risk management program for an AT&T spinoff that evolved into what is now Verizon. He then left Marsh to be Verizon’s first risk manager — building its program from scratch.

By the ’90s, he landed in several top corporate risk management positions at the American Red Cross, Pepsico/KFC and Triton Global Restaurants (YUM Brands). Mandel also began his six-year volunteer stint as the president of RIMS (1998-2004), after serving in many different key RIMS leadership roles. He earned an MBA in finance from George Mason University along the way.

By 2001, Mandel was on several advisory boards (i.e. Zurich, AIG, FM Global and Liberty Mutual), before making a career and geographic move to the USAA Group in San Antonio. There, he built an enterprise risk management (ERM) program because he saw a “broken traditional approach” to risk management. After nearly 10 years of developing an ERM program lauded in the industry (including by AM Best, Moody’s and S&P), Mandel was promoted at USAA to head of enterprise risk management, as well as president and vice chair of Enterprise Indemnity, a USAA commercial insurance subsidiary. While at USAA, he was recognized as Business Insurance’s Risk Manager of the Year (2004).

His dream was to be a corporate chief risk officer, but he saw that title more often going to “quants,” (like actuaries), rather than risk professionals. So, as a well-known and sought-out industry spokesperson and visionary, Mandel moved on from USAA in 2010 to found a Nashville-based risk management consulting group, then-called rPM3 Solutions, which holds a patent on a game-changing enterprise risk measurement methodology. Then, in 2013, he moved to Sedgwick as a senior vice president. He is responsible for conducting scholarly research, driving innovation, managing industry relations and forging new business partnerships.

In early 2016, he was appointed director of the newly formed Sedgwick Institute, which is an extension of the firm’s commitment to delivering innovative business solutions to Sedgwick’s clients and business partners — as well as the whole insurance industry. In 2016, Mandel was awarded RIMS’ distinguished Goodell Award (see video below).

When asked what he sees as critical strengths for someone entering risk management, Mandel said: “I try to hire managers who can think strategically and who can convince C-suiters and boards of the value of being resilient in addressing a company’s risk profile. Progressive leaders understand the strategy to leverage risk for value.”

A holistic approach, as he describes it, “seeks a vantage point that can assess both the upside and downside of all foreseeable risks.” He believes true innovation evolves from a company’s risk-taking. “It’s not so much identifying what or when adversity is going to happen, it’s how a company responds to risk in order to minimize disruption,” he said.

In assessing his personal strengths and accomplishments, Mandel feels that a person needs to be “emotionally intelligent” — able to adapt to different people in organizations. He doesn’t consider himself a people person but says he learned to be one the hard way. He advises: “Team spirit is putting other people first and helping them succeed. … Admit your failures and build trustworthiness from your mistakes.”

Besides writing, teaching, speaking and (still) playing racketball, he serves an active role as an advisory board member of Insurance Thought Leadership. He and his wife also serve in church ministries, where he often plays guitar alongside his grown children, who are ordained ministers. Mandel said, “I’m blessed by a Creator who’s had my back.”

fat tax

Should You Announce How Fat Workers Are?

A shockingly serious proposal has been floated to first persuade (and later possibly compel) publicly traded companies to disclose to shareholders quite literally how fat their employees are.

Also, how much they drink, how well they sleep and how stressed and depressed they are.

This proposal, advocating what is known as a fat tax, shouldn’t even merit a discussion among rational businesspeople, and yet here we are, discussing it. Even Harvard Business Review (HBR) is discussing this.

Why? Because the well-financed, well-organized cabal behind this fat tax proposal include corporate names like Johnson & Johnson, PepsiCo, Humana, Merck, Novo-Nordisk and Unilever. The leader of this group is a South African insurer called Discovery Health.

If you guessed that any critique written by me would also implicate Ron Goetzel, you would be correct. Despite having now himself admitted that most wellness programs fail, he is the one justifying this entire scheme by claiming that wellness programs increase stock prices — even though they don’t. We’ve already offered a completely transparent analysis to the contrary.

He also made a rookie mistake in his own analysis. The stock prices of companies in his study diverged greatly in both directions from the averages, and he didn’t rebalance existing holdings annually. It’s simple compounding arithmetic. Suppose the stock market rises X% a year. If every stock in your portfolio increases at that rate, you’ll match the averages. However, if half your stocks increase 2X% a year while the other half don’t appreciate at all, and you don’t rebalance, you’ll beat the averages. Simply by doing nothing.

Goetzel’s study appeared right before the fat tax proposal was floated at Davos. No coincidence here — Discovery Health (the sponsor of the Vitality Institute) cites the study as a basis for wanting shareholders to “pressure” companies into disclosing the number of fat employees they have. And the more fat employees a company has, the more shareholders will insist on wellness programs, thanks to this study. Johnson & Johnson and Discovery both sell wellness programs, while Merck and Novo-Nordisk sell drugs for various wellness-related conditions.

We urge reading the HBR link in its entirety to see why a fat tax would be even worse than it sounds. Some highlights:

Most importantly, though – and you don’t need Harvard to learn this – it’s just not nice to stigmatize employees for their weight or other shortcomings unrelated to job performance. Basic human decency should have been taught to this cabal a long time ago.

We’ve pointed out many times in ITL that these wellness people were absent the day the fifth-grade teacher covered arithmetic. This proposal suggests that they were also absent the day the kindergarten teacher taught manners.

Disease Management: Savings at Pepsi

The second-most read article from Health Affairs in 2014 was a fantastic piece by the employee benefits professionals from Pepsi and researchers from the RAND Corp.

The Pepsi team and the RAND researchers evaluated PepsiCo’s wellness program over a seven-year period and found the following:

  • The disease management component of the overall wellness program lowered healthcare costs by $136 per member per month (PMPM) and decreased hospital admissions by 29%
  • Lifestyle management/wellness showed a return on investment (ROI) of .48 to 1 (in other words, it LOST money)
  • Disease management’s ROI was 3.78 to 1
  • Combined ROI for wellness and disease management was 1.46 to 1
  • Findings were consistent with RAND’s workplace wellness programs study, which found that lifestyle management did not lower healthcare costs
  • Lifestyle management program’s cost was $144 per participant per year

The article concludes that “blanket statements like ‘wellness saves money’ are not warranted.”

As employers evaluate their healthcare strategies, it is important to keep these findings in mind.