Four key success factors for digital transformation
There's no end to the talk of digital transformation across the insurance landscape: Insurtechs certainly seem to be pushing everyone in this direction. But what should an ideally digitally transformed insurance organization look like?
Aite Group's Samantha Chow recently spoke to this confusion, noting in a research note that “'digital' means different things to different people, regardless of whether they are thinking as a consumer or as an individual in the insurance industry. These perceptions have proven to be a barrier to developing and implementing a strong digital strategy."
Consumers, at least, tend to associate digital transformation with access to information, interacting with chatbots, the ability to pay digitally, and the ability to apply for quotes online or by email.
For insurers, digital transformation covers all of the above, plus initiatives such as telematics, AI-driven fraud detection, mobile estimates, and robotic process automation, just to name a few.
The catch is, all these initiatives require a cohesive enterprise, with many functions – and data – crossing departmental lines. If there was ever a time to beat down the silos, this is it.
Once these barriers are brought down and these various digital efforts coalesce, what advantages do they bring insurance enterprises, and will they be ready to compete, or connect, with the InsurTechs?
Ultimately, it's not glitzy technology that will set digitally transformed companies apart from their lagging counterparts. Rather, it's the speediness in which they can respond to challenges and opportunities, and the corporate culture that supports that speediness. That's the conclusion drawn from a survey of 4,300 executives conducted by Deloitte and MIT Sloan Management Review.
The team of MIT and Deloitte researchers, led by Gerald Kane of Boston College, attempted to look at the makeup of a successful digital enterprise. The identified four key factors:
Speed. "The pace of doing business" is the leading factor that separates the digital leaders from the laggards, Kane and his team find. "Put simply, digital business requires companies to act and respond faster than they ever have before." This is challenging, as everyone has access to the same technology, which keeps going down in price – so everyone can speed up at the same pace. What's pushing this need for speed is the entry of new competitors. For insurers, the InsurTechs – and insurers partnering with them – may hold the edge with faster application and claims approvals.
Culture and mindset. Organizations succeeding with digital transformation know that it's about changing mindsets – a task easier said than done. "Many respondents note that these cultural shifts also result in tensions with employees who have a more traditional mindset." This is certainly a challenge in a long-established, conservative industry such as insurance.
Organizational structure. The digitally driven organization of the future is not likely to be a hierarchical command-and-control structure of full-time employees, but teams of core employees who go to outside contractors or peripheral teams to get thing done. Again, this may be a difficult step for many insurance companies that have been built on the traditional employment model. "For some companies, this model may require a new perspective on how to blend full-time employees with talent sourced from the open market."
Productivity. Related to speed to market, productivity improvements were also cited in the MIT-Deloitte research as a key element to digital success. However, productivity is not just about efficiency –it's about getting things accomplished with new ways of thinking.