A study released this week reveals that insurance chief executives believe that creativity ranks beyond rigor, management discipline, integrity or even vision in a company’s ability to remain competitive and successful.
The study, released by IBM, was performed by having consultants conduct face-to-face interviews with 1,541 CEOs, general managers and senior public sector leaders, including 78 insurance respondents from 28 countries.
Sixty-eight percent expect the level of complexity to grow significantly over the next five years, but just 53% believe they know how to deal with it successfully. Eighty-two percent of insurance CEOs cited increased government regulation as a major source of uncertainty in the new economic environment.
“For insurance CEOs, avoiding complexity is not an option—the task is to figure out how to respond to it,” said Mark Lewis, GM, IBM Insurance Industry. “The effects of rising complexity call for CEOs and their teams to lead with bold creativity, to connect with customers in imaginative ways and redesign operations for speed and flexibility.”
To overcome complexity and yield competitive advantage, CEOs are redesigning operating models for ultimate speed and flexibility. They are carefully considering how to best take advantage of global efficiencies while addressing local needs.
Fifty-five percent of insurance CEOs are focusing on simplifying their products and operations to manage complexity more effectively. Insurance CEOs beat the sample population average (48%) for simplifying products and processes. The most dexterous CEOs are intent on reducing their fixed costs and increasing their variable costs, so that they can rapidly scale up or down. They are also exploiting the information explosion to deliver unprecedented customer service.
The study also revealed that insurance CEOs are comfortable dealing with ambiguity. Surprisingly, executives are skilled at driving change in the organization to stay ahead of the market, using a wide range of communication styles and rules. For example, 64% use iterative strategic planning processes as distinct from formal annual strategy reviews, although only 27%—slightly less than the global average—favor quick decisions. In terms of leadership styles, insurance CEOs rely less on hierarchical styles of leadership; 60% tend to persuade and influence rather than to command and control; and 34% prefer managed viral communication to top-down communication.
Senior executives in the insurance sector are prioritizing customer centricity like never before. A resounding 90% of insurance CEOs put getting closer to customers at the top of their agendas.
Accessing multiple avenues of technology, customers today are more empowered, and have more options at their fingertips. Globalization, combined with the rapid rise of non-traditional sources of insurance information, has markedly changed the way increasing numbers of consumers select carriers and access their services. Insurance companies are challenged to engage customers in new and interesting ways to generate loyalty and diversify revenue sources. To do this, they must become better connected to consumers, understanding their wants and needs so that they can predict what they really want, based on their customized preferences.
IBM’s research has found that the most successful organizations will co-create products and services with customers, as well as integrate customers in their core processes.
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