Twenty-one years ago, Michael Treacy and Fred Wiersama, two respected management consultants, published a book called The Discipline of Market Leaders. They boiled down market success as coming from three important factors: 1) operational excellence, 2) product leadership, and 3) customer intimacy. Many insurance executives were inspired by the book and took these guidelines to heart, shoring up their capabilities in these three pillars.

Just as the digital revolution has been turning everything on its head in recent years, Treacy and Wiersama’s three-pillar framework suddenly seem dated. Joe Weinman, cloud and digital economics guru, says while operational, product and customer excellence will never go out of style, it’s time to adapt this formula to the digital age.

In Weinman’s latest book, Digital Disciplines: Attaining Market Leadership via the Cloud, Big Data, Social, Mobile and the Internet of Things, he explains that the three foundations of business success laid out in the mid-1990s actually should be four – all with a digital cast. These include:

From operational excellence to “information excellence”: “Excellence in physical operations can be complemented, enabled or replaced by excellence in information,” Weinman says. He defines information excellence as "the employment of comprehensive real-time information, predictive analytics, dynamic optimization, integrated virtual and physical operations to implement better business processes and to better use assets."

From product leadership to “solution leadership”: “Rather than standalone products,” Weinman states, “solutions are product-service systems, with a physical product or service touchpoints and service-delivery enablers connected over wireline and mobile networks to cloud services, partner ecosystems, and social networks.” In the process, Weinman adds, such a solution can grow “exponentially -- in terms of features, customer adoption, and revenues -- via network effects."

From customer intimacy to “collective intimacy”: “Customer intimacy is evolving from face-to-face personal and organizational relationships to data-driven relationships at scale, where advanced algorithms can drive better relationships with each customer,” Weinman states. Collective intimacy is "about developing intimate, value-added relationships with every customer... goes beyond mass personalization to develop a unique relationship with each engaged customer, based on insights derived from all customers using big data algorithms."

“Accelerated innovation”: Treacy and Wiersama didn’t talk a great deal about innovation, but with the arrival of digital processes and platforms, innovation can be easily and cheaply woven into every piece of the market success fabric. Accelerated innovation through digital "enables companies to innovate products, processes, and relationships faster, cheaper, and better than their competition by complementing internal resources with ad hoc external ones, through open, external innovation, published big data sets, crowdfunding, open source, platforms and agile development,” says Weinman. For rapid innovation, a company doesn’t need to rely on internal expertise, he adds. Instead, innovation will come from outside the walls of the organization, expressed through “transactional engagements” such as contests.

The key takeaway for insurance companies is that the companies seeing success in today’s world have adapted to their digital surroundings, with the understanding that success comes from the networks that are built and nurtured, versus a closed or mysterious product-development system.

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