Lessons for insurers from Microsoft and Amazon
I recently had the distinct pleasure of hosting our third “Innovation Tour” in Silicon Valley, an opportunity to take a group of more than 20 senior insurance carrier leaders on a wide-ranging experience which includes visits with incubators, accelerators, large tech firms that have maintained their vitality and innovative spirit, startups with big aspirations, and venture capitalists up on the legendary Sand Hill Road. In addition to issues ranging from culture to process to technology, and beyond, one of the recurring themes was that growth takes place when both people and organizations press themselves to step outside of their comfort zones. Rewards require a willingness to take appropriately calculated risks, and one of the critical, underappreciated ingredients to make all of this work is leadership from the top of an organization which sets the culture accordingly.
In a world where many insurance carriers refuse to even put a boat in the water without knowing, with certainty, exactly where they are going and when they are going to get there, the willingness of other organizations to bet big, fail fast, learn key lessons, and come back hard with improved offerings is both remarkable and refreshing. The direct line that Amazon shares between the failed Fire Phone and the wildfire success that is Alexa is remarkable; the same engineers armed with new insights and a couple of degrees of revision in “the plan” led to a success that goes well beyond anything that could have originally been conceived. Being situationally aware and open to possibilities become the foundation for a world where successes breed future successes and where pulling back to live in the shadow of successes from a bygone era are a recipe for what may charitably become a “death by a thousand cuts.”
A story highlighting Microsoft’s planned expansion and leverage of the Office 365 environment seems like a prime example of not only the “art of the possible,” but also the critical role that leadership and culture play in an organization’s direction. Over the years, Microsoft has clearly built, bought, and assembled capabilities to create a technology powerhouse. In that time, they also created a series of assets, including the Office Suite, which provided them with a remarkably robust annuity related to the cycle of selling and upgrading software deployed in the most traditional format possible. As valuable as this had been historically, other options appeared which began to chip away at the near monopoly power that they held in this space. Enter a new CEO, with a different vision and the energy to drive it, and the company makes the fateful decision to pivot to a subscription-based deployment with a cloud-based capability in the form of Office 365. It was by no means a foregone conclusion that this would work or that a company reeling from the memories of Windows 8 would be able to pull this off. Of course, hindsight is 20/20 and the raging success of this transition has rewarded the company handsomely for their efforts.
For many insurance carrier CIOs, this has also provided the framework to finally modernize their environments and, in a surprising number of cases, retire creaky and aging IBM/Lotus Notes environments. More to the point, while no CIO would ever have argued that they were able to create differentiation through their skill in running email, many would recognize that keeping this close to the vest so they could assure performance and availability was key to personal survival. The advent of Office 365 takes that off the table; Microsoft can run the utilities while CIOs can focus on doing the things that really should contribute to improved company performance.
Of course, Microsoft isn’t resting on their laurels either. Having “bet big” with one of the company’s crown jewels, the future now looks like a far more dynamic and engaging space. Success also breeds success, and their revamped culture now positions them to be a differentiated player, set apart from the “traditional” competitors they faced off against a decade ago.
With demographic and market changes already showing the broad outlines of a very different future, insurance carriers would be well advised to take a page from the Microsoft playbook and understand what the root cause for their ponderous execution speed really is. The view from Silicon Valley was, in a word, remarkable.
This blog entry was reprinted with permission from Novarica.