Dig | In preview: Bold, decisive action necessary for insurance transformation
One of the key factors in a company successfully pulling off a digital transformation is taking bold, decisive action, says Scott Ham, CEO of Digital Small Commercial Insurance at McKinsey & Company.
“The surprise I have personally had is the continued hesitancy of companies to make those bold moves…and struggle with the initial decision on transforming their business,” he says. “And to me, that’s one of the things that has impacted insurance for years now. We get there, but it just takes our industry so much longer than others.”
He faults a comfort level that the industry would survive–even if it wasn’t quick to adapt to changing times, like other businesses were forced to do–through fat times and lean.
“To a certain extent, there’s some truth there, but as we see now, the customer is king. And the customer expectations are driving business no matter what industry,” he points out.
Ham says insurers would be wise to start shifting from thinking first about regulators and intermediaries to looking at increasing customer value.
It is one of four key shifts he says must take place within companies in order find success during and after a digital transformation. He will outline these during his presentation at Digital Insurance’s Dig | In: The Digital Future of Insurance, alongside colleague Mariano Neiman, which will take place May 29-31, in Austin, Texas.
In addition to shifting to a more customer focused approach, three other “battles,” as Ham calls them, must be won, he says: Moving from gaining market share to gaining dominance in your industry; taking an external instead of internal view of your company, in order to “hack your business;” and becoming more agile.
Ham says that last bit, simple as it may seem, is often the most difficult.
“Going from planning on an annual basis to being a first-mover, to test and learn in an agile manner–That’s the new operating model that has to be adopted, in our opinion, in order to have a successful digital transformation.”
With a proper roadmap, and the confidence to stick to it, Ham says success is much more assured: “The companies that have been able to successfully do this, they’ve had clear definitions on what they’re trying to accomplish. As opposed to chasing the shiny object and not knowing why.”
“The other thing that is important is understanding [the economics of the transition they’re making],” Ham continues. “What is going to come through with your digital transformation? Is it going to be more of a value transfer? Is it going to destroy some value? And that’s likely.”
He and Neiman will use case studies to illustrate how companies have both succeeded and failed in their digital efforts.
Ham says the presentation should be of interest to insurers of all sizes, while also providing “an ancillary benefit to some of the insurtech players, that may have openings that will assist in some of these transformations.”