There is a universal framework in professional sports activities. Whether you own a team for football, cricket, football or basketball – you are constantly balancing investment areas. Where should you place your funding to be able to compete according to your strategy and the strategies for them in your league? If you are not the biggest player on the block, how can you invest to compete?
This week, insurance companies may consider studying the Tampa Bay Rays. The Tampa Bay Rays, one of the most underrated and undervalued baseball teams in the major baseball teams, also had the third lowest payday for the opening day of Major League Baseball. Still, they are now in the World Series against one of the most well-funded teams, the Los Angeles Dodgers. No matter how the Rays go against the Dodgers, you can be sure that even "power pack" teams will use the off-season to consider how the Rays have done so much with so little.
The complexity of technology and business. Investing in insurance may differ from sports franchises, but some of the same issues arise. Do we invest where we need to fill gaps in functional weaknesses to adapt to the competition? Do we invest where we are already strong ̵
We start with a conversation about innovation and investment and ask,
How do insurers invest in their own companies? How do they invest to build the level of innovation within the organization?
Bryan began with the idea of the structure of the innovation laboratory.
"Sometimes a laboratory is just a corporate venture capital unit. Other times the carrier uses the capital to" play "and to test and prove the concept, to try to simulate things. The airlines I have seen do this effectively look at their different legal entities and where the capital fits in. This allows them to test things and incubate the next tool for the business.
"However, it is not just an innovation issue. It is an investment issue. "There are tax benefits to this approach and capital protection because of the way they have structured the ownership of capital units. It can open the operator to capital flexibility. It allows you to try things with better finances than if you did it through the usual business budgeting process."
Bryan then raised an issue that deserves serious consideration.
Innovation Policy: Make Innovation and Investment Ga does the companies' commitment rank?
Moving the investment from the core organization to another entity entails some risk. Does an innovation team receive carte blanche to develop and implement their solutions? If they are a separate entity, are they then forced to come back and sell the now viable idea to the rest of the business?
“The question is, do innovation teams have to sell this to the company and find an owner in order to actually drive it forward when anchored business unit leaders have their own priorities, problems and budget?
"Leaders can be blinded by an innovation team that has the authority to say & # 39; Hello, do this. & # 39; You need to make sure that whether it's an external entity or an internal team, it needs to be integrated into the decision – making process of management so that carriers do not waste time and energy-developing ideas that become politically truncated. ”
New perspectives on internal technology investment.
Of course, investing in your business does not mean that you always invest in your own solutions. Decisions on technical investments must be made with an expanded set of options, criteria and variables that are taken into account such as speed, timing, expertise, costs and future capacity and value. Rob Galbraith gave us some food for investment thinking regarding the new definition of internal investment.
"I tell people that the debate Build vs. Buy is ready. It should almost always be, Buy .
“It's not worth the money it takes for you to build something on your own and then make the continuous investment required to upgrade it and make it better and distribute it.
“When you compare it to all these companies out there investing in a certain technology, it does not make sense. With an external partner … this may be their only product. They have an interest in cultivating it and making it better. When you make a construction decision, you need to be very clear about why you are making a construction decision. I think there are only rare cases where it actually makes strategic sense.
What does this mean for the internal organization? Why is the talent moving so that insurers do not lose their expertise in insurance and technology? Rob made a good analogy.
“IT departments were used to being members of the orchestra. They may have been in the woodwind section, the strings or the percussion. Each member of an IT organization played their different instruments and it created harmony. But I think IT organizations need to swing to become leaders. Maybe the orchestra members are not necessarily employed. Salespeople and strategic partners play the music. Your job is to be a conductor. ”
The beauty of the conductor's example is perspective. The conductor sees more of the orchestra and has the ability to make everything work together.
“It is important that IT really understands what their business partners need. It is very easy to be quiet. Because you are used to your systems, it is difficult to look up and see that there may be a new and better way of doing things. IT professionals can encourage business and suggest: "Let's find people we can work with to make it fast and economical."
Invest your investment in new markets.
Technology is a crucial part of our ability to succeed for the future. Can insurance companies learn from large technology companies how to get up and move quickly into other markets? Many of these large technology companies have looked at their technology in terms of how it suits the customer. So with that filter in mind, is there a best way to invest for the future? How do transport companies find the balance between building valuable functions and creating partnerships that add real value to the customer experience they are trying to provide?
“What is right to keep in the house and what or how? I do not think there is a comprehensive answer. It is perfectly okay and strategically important to make these decisions when you see each of the options. Traditionally, companies built everything, but insurance companies are not software for software technology.
What Bryan pointed out is that almost no area of the business should be considered sacred for outsourcing, provided it fits the overall strategy.
“A carrier can say, & # 39; Outside partners will be the better insurers in this niche and we will provide the capital. We have partnered with an MGA and outsourced the insurance contract to them, "which is one of the insurance companies' core functions and functions."
This fine-tuned mix of internal and external features and processes will look uniquely different at each insurer. Every part of the value chain deserves a look. The questions are far-reaching. Investments can be in something as small (but important) as ledgers. CFOs may not think they need to spend money on it. Or it could be as big as spinning a lot of business into an organization that works under the insurer's name.
"If this company functioned like us, with our name, would we really feel that we were properly represented? The answer to me is never a pure yes or no. You really have to look at the strategy."
An ecosystem strategy for technology investments for the future
Reaching new markets, launching new products and creating new and improved customer experiences is a primary goal for growth and relevance in most insurance strategies, so what Rob and Bryan have given us is a formula which contains some crucial necessities:
- Analyze “why” to invest
- Shift from investing in development to organizing development investments
- Stay customer focused
- Build partnerships and an ecosystem to provide new features or parts of the value chain
Their formula also contains some open variables regarding how and where to invest, the question then comes back to you and your organization.
What does your ecosystem of solution partners and internal teams look like? Who can add features and services to your overall value proposition? Will partnerships allow you to reallocate certain resources to other areas that may have a higher investment priority? Your organization is unique. Your experience is unique. Your rulebook is written by you.
Rob ended the discussion by pointing out that an insurance company can almost never go wrong if they keep an eye on their agility.
“Go through the budget and your project portfolio and ask, does this effort make me more agile and flexible. Flag the projects that do not. If you spend 80% or more just to keep the lights on and do not invest in agility, you may need to rethink and re-prioritize. Make sure you invest in outside people who have experience with these techniques. And do not get stuck in your silos.
That thought leads us back to the team method needed for technical investments. How can your company's team take a difficult season and get the most out of their pressure to perform?
Sports teams, like many other industries, take the opportunity to rethink the customer experience. They have had to "go digital." They have built innovation on how to give fans an improved experience at home. They understand how ecosystem relationships and business partners can be used to meet customer needs while growing market share.
At Majesco, we believe you should invest where it counts not only for today but, more importantly, for tomorrow, now more than ever. Do not wait to look for new markets, build new products or create your future business model. Use partners to build flexibility and agility in your future. Continue to continue with your innovation investments through the customer's lens and the future and know that the size of your current investment is not an accurate measure of your potential and your ability to achieve much more — will help you achieve market leadership.
For more inspiration on building a future-focused insurance practice, be sure to listen to myself, Rob Galbraith and Bryan Falchuk in our discussion, Planning and Preparing for Tomorrow – Today: What You Need to Focus on for the Future of Insurance.