Innovation in Insurance 3 rd Sollers Consulting and Guidewire Conference

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1 Innovation in Insurance 3 rd Sollers Consulting and Guidewire Conference December 1 st 2014, Hotel InterContinental, Warsaw Media patrons:

2 Craig Beattie Senior Analyst, Celent Responsible for: Enterprise architecture Applications architecture Legacy modernization Insurance vendor analysis Before Celent: Royal Bank of Scotland RBS Insurance Also... Speaker at industry events in North America and London

3 MAKING INNOVATION HAPPEN Are you tired of kissing frogs? Innovation in Insurance December 1, 2014 Craig Beattie Senior Analyst

4 CONFIDENTIALITY Our clients industries are extremely competitive. The confidentiality of companies' plans and data is obviously critical. CELENT will protect the confidentiality of all such client information. Similarly, management consulting is a competitive business. We view our approaches and insights as proprietary and therefore look to our clients to protect CELENT's interests in our presentations, methodologies and analytical techniques. Under no circumstances should this material be shared with any third party without the written consent of CELENT. Copyright

5 Innovation is easy to cheer for 62% C-Level Champions My company has 11% Chief Innovation Officer 27% Innovation Center of Excellence Source: Celent 5

6 but harder to execute. Ability to deliver a great shopping or service experience by smart use of technology Online Retailers Traditional Retailers With Web Sites Banks Telecommunications Utilities Healthcare Providers Securities & Investments Firms Insurance Companies Traditional Retailers Without Web Government 2,65 4,14 4,17 4,82 5,41 6,37 6,43 6,48 7,12 7,40 Source: Celent 6

7 There s an organizational friction How well do people with these titles publicly support your company's innovation efforts? NPS CEO 25% 37% 12% CFO 65% 12% -54% COO 39% 22% -17% CIO 28% 37% 9% Chief Innovation Officer 25% 58% 33% LOB heads 41% 15% -27% Answer on a 10-point scale, where 1 means Little to No Support and 10 means Very High Support. 7

8 but the future may not wait for Replacement human organ created with 3D Printer Commercial space flight Social Commerce Simple tasks done by location aware drones Smart energy meters and smart grids DNA sequencing for $100 Widespread use of 3D manufacturing Instant Charge Batteries Electric highway Crash-proof car

9 1. Establish common language 1 Improvement Increasing customer value within existing performance tradeoffs 2 Innovation Increasing customer value by breaking existing tradeoffs A theory of innovation, where: 3 Disruption New markets are established Success in fringe markets sets the stage for up-market march 9

10 2. Map innovation efforts to business strategy Market and product agility Growth and Retention Profitability and Control Risk and Compliance Pre and post sale customer engagement STATUS QUO Efficiency and expenses Source: Celent disruption assessment Business model enablement and partnerships Liability management Improvement Innovation Disruption 10

11 3. Establish disciplined innovation processes FEEDBACK Generate Choose Develop Launch Measure Market VOC Ideation Source: Celent Social platforms Strategic fit Prioritization High level requirement Capability planning Business case Detailed requirements Right-sizing projects Fast /cheap failure Cross functional, matrixed teams People dev. (new skills, etc) Integration into / outside of existing Partnership strategies Governance Leadership Communication Incentives Culture (behaviors, symbols, values) Implement key metrics Track and refine effectiveness 11

12 EFFORT 4. Think in terms of natural progression EVERYONE PLAYS A ROLE CUSTOMER CO-INNOVATION PERVASIVE INNOVATION PARTNER CO-INNOVATION SYSTEMIC INCUBATION CAPABILITY CENTER OF EXCELLENCE DEDICATED RESOURCES PROCESS TRAINING REWARDS RECOGNITION SPECIFIED EVENTS BRAINSTORMING Source: Simonelli Innovation, LLC EVENT DRIVEN RESULTS 12

13 5. Create realistic expectations of flow and failure Number of ideas at each stage Discovery 100 Research & Exploration Concept Development and Testing Pilot Launch 5 ~5% 13

14 6. Build cohesion beyond the innovation team IT HR Innovation COE Business Staff Corp Comm 14

15 A return to the arms race 15

16 Events 2015 May 25 th Insurance Forum - Customer Experience Warsaw October 15 th Wine Tasting Sollers Consulting 15 th Anniversary - Warsaw November 1 st 4 th Guidewire Connections San Francisco December 7 th 4 th Insurance Innovation Conference - Warsaw

17 Innovation in Insurance 3 rd Sollers Consulting and Guidewire Conference Media patrons: