This is second half of a pair of blogs about innovation in insurance, for part one, click here.
To take the launch metaphor a step further, consider President Kennedy’s audacious vision, outlined in a speech in 1961, to land an American on the moon by the end of the decade. Was this inspirational leadership in action? No question. But President Kennedy also had to scare up $100 billion or more, in 2013 dollars, to make the vision a reality. One could argue that the vision was the easy part of that effort.
Experience teaches us that motivated heroes are often the only people standing between bold proclamations and utter failure to deliver. These heroes can occasionally move the innovation needle through extraordinary efforts, particularly when it comes to simpler, incremental innovation. But to do it consistently, over time, in a way that anyone will notice, is nearly impossible without a sustained, well-funded effort, driven by staff with specific knowledge of the discipline.
It Takes a Unified Village
Every organization is different when it comes to their support for innovation. But there are clear signs that financial services firms are not responding well to the innovation challenge.
Respondents to our survey were asked to rate the apparent level of support for innovation from people in their organizations with various titles and roles, on a scale of one (low levels of support) to 10 (high levels). We processed their responses using a modified Net Promoter Score (NPS) approach, where ratings of their colleagues from 1 to 6 suggested those colleagues were Innovation Detractors, and ratings of 9 or 10 suggested those colleagues were Innovation Promoters. (Ratings of 7 or 8 were ignored.) The Net Promoter Scores by title show some interesting differences.
Not surprisingly, CEOs (NPS = +12%) and Chief Innovation Officers (NPS = +33%) had high, positive Net Promoter Scores for their support of innovation, indicating that staff think they are supporting their firms’ innovation efforts fairly well. While 25% of responses for Chief Innovation Officers fell in the Detractor bucket, this may be a comment about resource issues generally, not a broad sense that Chief Innovation Officers lack passion for their function.
But what about people in the other functions? Is it possible that 25 percent of CEOs, 65 percent of CFOs, 39 percent of COOs and 41 percent of line of business heads are not buying into the need for innovation? Based on recent discussions of this data with industry leaders, the unfortunate answer is yes.
An aggregate view of these results looks something like this:
CFOs (NPS = -54%) are typically “drive by the numbers” types, who are measured (and compensated) on aggregated metrics like ROE and ROI that are negatively impacted by funding of innovation efforts, particularly in the shorter term.
COOs (NPS = -17%) have complex businesses to run, and while they might champion incremental innovations that relieve stress on budgets, they are not typically motivated to fundamentally change their operating models.
CIOs (NPS = +9%) are modestly oriented toward transformation, given its strong affinity to emerging technology stories such as cloud computing, analytics, and the explosion of mobility. But they are also weary from a decade of being asked to do more with less, and well aware of the risks associated with new technology.
Line of business heads (NPS = -27%), like COOs, pursue incremental innovation, which is really more like continuous improvement. They are typically hampered by short-term reporting, and perhaps accustomed to the CFO’s heavy stare during budget season. The result? A lukewarm, passionless response to innovation that is palpable.
Figure 2: Who Else Supports Innovation?
How well do people with the following titles or close functional equivalents support innovation in your organization? (1 = No Support At All, 10 = Support Completely)
These results suggest that many CEOs present themselves as innovation practitioners but are not incorporating innovation best practices into their own thinking. They may get “the vision thing” regarding innovation, and talk it up in the quarterly newsletter. But many have not acted on other essential elements, like building out their innovation infrastructure, and changing performance management approaches to reward and recognize the behaviors that will truly transform their businesses. Until they do, we should expect their innovation efforts to fail miserably.
Craig Weber is CEO of Celent, a research and advisory firm.
Readers are encouraged to respond to Craig using the “Add Your Comments” box below.
This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.
The opinions of bloggers on www.insurancenetworking.com do not necessarily reflect those of Insurance Networking News.
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