How insurance CEOs can become 'undisruptable'
The insurance industry has squarely entered a period of rapid-fire and constant disruption, with neither consumers nor the world of technology willing to wait for large insurance companies to catch up. The resulting and growing threat of fintech disruption has come to challenge the relevance, even the existence of the big players in the industry.
Facing this disruption successfully often requires more than navigating insurers through these massive changes, however. It can demand that industry CEOs adopt a radically different stance, one that can enable them to pilot through contact turbulence while incessantly fine-tuning their course – something more closely approximating a martial arts master, swift of foot and ready to swivel in any direction. They should become “undisruptable.”
We wanted to get to the bottom of what is necessary to build this new model of leadership, so we launched a research project that involved speaking with Fortune 250 CEOs across multiple industries, ultimately trying to answer one critical question: What does it take to be ‘“undisruptable” today, and what will be demanded of CEOs and their organizations to avoid disruption tomorrow?
We found that undisruptable CEOs will need to drive constant transformation of their organizations by cultivating a high tolerance, if not a passion, for ambiguity—and infusing others with the same mindset. \ They should acquire the flexibility, agility, and willingness to extend their organization’s capabilities into new and unexpected areas to stay ahead of ever-encroaching competition in a volatile environment. And to be successful, this profound work on the culture of big insurers can only come from its leadership. Some of the traits necessary to affect this kind of deep change are already being taught in business schools, but there are meta-management facets to undisruptable leadership that might be more akin to something you’d learn in a martial arts class. Here they are:
CEOs we interviewed collectively felt a need to simultaneously work on two fronts, enhancing current operations and exploring the continually emerging new frontier. For example, compared with Baby Boomers, Millennials have twice as much interest in buying insurance online; they are eager to buy their insurance from names they recognize, such as Amazon and Google, if they were to offer insurance; and they are far more likely to switch home insurance companies if, by doing so, they could save by taking advantage of smart technologies. Those leaders who wield this kind of ambidexterity would place high value on ensuring that the needs of both loyal, long-term customers and new, younger ones are met.
Insurance leadership is called to practice ambidexterity as an exercise between short-term, efficiency-driven profit optimization and fail-fast-fail-often exploration throughout a fully integrated organization. Here, this also involves facing the external challenge presented by insurtech startups, tiny tech companies that are able to respond more quickly and specifically to consumer as well as industry demands for innovation.
Cultivating emotional fortitude
The CEOs we interviewed remarked that in order to lead in a chaotic world, they should bring a certain chaos into the organization, and accept that some failure is inevitable. We call this leadership attribute cultivating emotional fortitude. Disruptive forces—even b-to-b technologies that appear to be serving traditional carriers—up the ante on the speed and seamlessness with which business operations are expected to be performed. Many of these systems make use of artificial intelligence and data analytics to democratize the process of applying for and using insurance—for example, by pre-populating application and claims forms, touching in via IoT to detect problems such as leaks and smoke in the home, and using data to know when customers have a life change that will affect their insurance.
In the face of these shifts, CEOs should cultivate for themselves and within their organizations an ability to use fear of the changing landscape to fuel more productive outcomes. Emotional fortitude combines a clear-headed assessment of potential risks and roadblocks with the fearlessness to pursue lofty visions. In the case of large insurance carriers, this may mean forging innovative partnerships with some of the upstarts; all can come at the price of the emotional stability that comes with doing things exactly the way they’ve always been done—a way that can certainly lead to irrelevance.
Mastering disruptive jiu-jitsu
The CEOs we studied expressed the importance of recognizing threatening disruptive patterns from competitors and others in the environment. For example, many insurance and financial services disruptors—startups such as At-Bay, Ethos, and Wrisk—are insuring, through smartphone apps that work in seconds, everything from cybersecurity and identity to cars and homes to headphones to life itself. What we call mastering disruptive jiu-jitsu is a multifaceted process of breaking down a recognized disruptive threat into its components, selecting those components that can strengthen the CEO’s organization, and then finding a way to appropriate these disruptive elements to use for their own competitive advantage. For large insurance companies, this will often point toward paying closer attention to the customer.
Becoming the ultimate end-user ethnographer
CEOs also should strive to gain insight into the experience of their ultimate end users, becoming trusted champions by discovering their customer’s most urgent needs and desires – essentially, what will solve their problems. Because today’s customer is online, social, connected, and clued in to the products, CEOs expressed a need to achieve an even greater understanding. This requires nothing short of stepping into your customer’s shoes and getting into their minds—deeply studying the end-to-end customer experience from the top of the marketing funnel to exceptional after-sales service, then developing innovative ways to address those wishes and needs.
We call this vital undisruptable leadership attribute becoming the ultimate end-user ethnographer. Insurance leadership should take a note from the tech giants on the one side and the tiny tech startups on the other, all of whom are wielding far more agile, powerful, and relevant modalities to communicate with today’s insurance consumer.
In sum, new forces have entered the insurance world, and these “new kids” aren’t going away—they should be acknowledged and integrated, or they may take over the playground. The role of the stereotypical CEO, who formerly may have been seen as the conductor of a symphony orchestra—bringing together as one body a diverse group of instrumentalists—has changed. The leadership model called for today is much more akin to a jazz bandleader, encouraging improvisation that has a clear goal, albeit one you can’t always see at the outset, and merging this voice with multiple others within—and even some outside—the organization. Undisruptable leaders in insurance should constantly reinvent their own work, seek fresh new approaches, and encourage the same from their organization.