It was 1999 and everything about business changed. The internet was hot and growing! Ebay and Amazon were launched in the last four years. Napster debuted peer to peer music file sharing network – the forerunner of iTunes. It was about e-commerce!
The magazine Fast Company published monthly data of 300 pages covering the most innovative companies and people imaginable. Every time you turned a corner, you found a new Starbucks that you had not seen before. Apple had just created berry-colored egg-shaped computers called iMacs. The economy was hot. The IT departments were busy with Y2K preparations. The future came fast and furious! Can life get better?
With all the optimism for the future in the air, the time was ripe for people to "discover their work selves". Two canter scientists, Marcus Buckingham and Curt Coffman, wrote a guidebook, First, Break All the Rules, that made us think about how to do things differently with our individual strengths. They used interviews with over 80,000 employees to identify practical insights about managers. Some of the insights for individuals and managers are very relevant when they are transported to insurers and systems. In their chapter on How to Manage Around a Weakness for example, they discuss how managers can design a support system that keeps an individual's strengths operational while their weaknesses are irrelevant. [i] Exactly the same principles can be applied to insurance companies that are in weaknesses that seem to make their strengths ineffective. There are support systems that can make these weaknesses irrelevant.
In a 2001
If we think about what has happened in the last twelve months during the COVID-19 crisis, we see a pattern emerging that is crucial for insurers to revisit.
- There are great new and existing opportunities in COVID and Post-COVID economics.
- Insurers need to know their organizations well enough to know if they are willing to take advantage of the opportunities or not. They need to know what strengths and talents they lack and what they have in hand.
- They need to focus on their strengths while seeking help from others to combat weaknesses.
- They need measurements. They must continue to continuously evaluate where they are against competitors as that landscape is constantly changing. They need to know, "Are we leaders, successors, or successors?" They must use that position, whatever it is, as inspiration to move forward.
For the past five years, Majesco has been helping insurers to look in the mirror and to measure their efforts in the face of market changes and trends. and other insurance organizations. In what ways do these companies lead? Do they do enough to be considered leaders? Are they Followers, still in the race, trying to close the gap? Do they perhaps need Laggards' desperate need to look in the mirror and reconsider their activities in the light of their strengths and weaknesses?
This year's comparison and analysis have been colored by the presence of COVID-19. How do companies react? Has it changed their plans? Majesco's latest thought-leadership report, Strategic Priorities 2021: Despite challenges, leaders widen the gap, highlighting how COVID-19 has negatively and positively impacted insurers and their future plans. We will share some important insights from Majesco's report below.
Finding opportunities and a way forward in a crisis
We have seen the significant impact of the COVID crisis on growth and strategic activities last year for all three segments; even the leaders were not immune. But what distinguishes leaders from the others is how much better they were prepared and responded to the crisis. Our research suggests that the pandemic may be a turning point that redefines all companies in the industry – by driving Laggards to further irrelevance, testing Followers to reuse a new digital future and giving Leaders a springboard to accelerate innovation, competitive differentiation and growth.
Leaders can take advantage of the unique crisis conditions that can create the springboard that sparks innovation. A recently published article in MIT Sloan Management Review helps to explain these unique conditions and emphasizes that there are "five interdependent conditions that characterize a crisis and stimulate innovation." [ii]
- A crisis gives a sudden and real feeling of urgency.
- Organizations can lose all other priorities and focus on a single challenge and reallocate resources as needed.
- Teams gather to solve the problem with a greater diversity of perspectives.
- The importance of finding a solution legitimizes what would otherwise constitute waste, enabling more experimentation and learning.
- As the crisis is only temporary, the organization can commit to a very intensive effort over a short period of time.
Leaders undoubtedly see these conditions as an opportunity to exploit a competitive advantage, which is reflected in their stronger optimism about the future compared to Followers and Laggards.
When assessing ou over the next three years, the effects of COVID are clear, as shown in Figure 1. Both Laggards and Followers have the same level of reduced optimism for the future as they had in assessing their companies' growth and strategic activities 2020 compared with 2019. However, Laggards also had a decrease of almost 25% in its outlook for both last year and the next three years while Followers, while smaller, still showed minor declines of 10% in both.
Leaders, on the other hand, show much more optimism. Despite a 5% reduction in their future expectations compared to last year's survey, this is less than half of a 12% reduction in their assessment of their companies' performance in 2020 compared to 2019.
Figure 1: COVID-19's impact on the prospects for business growth and strategic activity over the next three years
The most convincing result was a dizzying, game-changing 103% gap between Leaders and Laggards in how they imagine their companies during the next three years, a marked increase from the alarming gap of 64% of their assessment of the past year (Figure 2).
Although the Followers' 28% gap is smaller, it does not bode well for their future and contradicts previous evidence that they are keeping pace with the leaders. While the first appearances may have been encouraging, deeper highlights dig that the breadth and effect of what Followers do is not enough for the future. The gap is growing slowly and with a new crisis, it could significantly affect their future. Given that we have seen several major events or crises almost every four years over the last two decades that have accelerated the change – dot.com, 9/11, 2008 financial crisis, the emergence of InsurTech and COVID – the probability is high!  Figure 2: Interruptions between leaders, successors and laggards in assessments of business growth and strategic activities over the next three years
Even more disappointing for these two segments is the continued growth in the gaps with Leaders in their optimism for the future. This is particularly alarming for the laggards, whose gap grew by almost 40 percentage points.
Although not encouraging, followers and laggards must remember that every challenge has an opportunity or solution, some of which are incredible and give hope for an exciting, new future. They just need to proactively plan and implement these to create an optimistic future.
Mirror, Mirror on the wall
Instead of asking the evil queen's famous quote in Snow White – "Mirror, mirror, on the wall – who is the most beautiful in the country?" … Insurers should ask themselves "Mirror, mirror on the wall – am I a leader, follower or laggard? ”
This is where Majesco's high – level analysis is intended to help answer that question. The most important analysis takes place at the individual insurance level. Some form of introspection and analysis must occur within each insurer to confirm their positions in leaders, followers. For a quick review, rate your own company against these definitions below.
Leaders: Companies that understand market dynamics and have quickly gone to planning and implementation in most of the key areas. on a two-speed strategy by investing in the modernization and optimization of today's business, while investing in future operations almost equally.They are or have moved from older or non-platform cores to cloud platform core solutions and utilize a range of platform, digital and emerging technologies to enhance customer experiences, launch new products, expand channels and embrace ecosystems for at t change the business.
Followers: Companies that understand market dynamics but do not move so quickly or widely into the various areas of planning and implementation. They are strongly focused on modernizing and optimizing today's operations, but less than leaders for future operations. Although they are relatively close leaders in many areas, the pace of implementation when looking at three years is not the same, which means that the gap will increase steadily. Because of this, they may not recognize the danger in the gap until it is too late.
The Laggards: These are companies that generally understand market dynamics but are clearly stuck in the past and have failed to move quickly to planning and implementation across a range of strategic areas. They do not move to new cloud platform solutions or include platform and emerging technology. They keep their business solely focused on the current business model, which lacks the level of automation, digital features and more needed to meet the rising demands of a new generation of buyers. If not already, they are approaching a downward spiral of relevance that is almost impossible to reverse.
Because leaders are so far ahead, their investments will be significantly less than successors or laggards who have waited, hesitated, or just moved too slowly. Playing catch-up is expensive – both in the outlay of resources but also in lost opportunities. The key is to confirm where you are and never lose focus on it. Your organization deserves to know where it stands.
Fast-Tracking Transformations That Play to Your Strengths
The significant gaps between Leaders versus Followers and Laggards become so large that there is a risk that Followers are constantly trying to play catch-up rather than their own game to win, and for Laggards to enter an accelerating downward spiral. If you are still relying on the past and pre-digital age, before pandemic business models, it is now time to re-evaluate.
It's time for bold moves. It's time to skip some of the traditional steps involved in transformation and pull in support systems that help your organization play to its strengths. It's time to ask the tough questions to Mirror on the Wall!
Majesco has designed a transformation model that artistically and effectively combines your industry expertise with the digital tools and ecosystems you need to take a step forward.
Start by assessing where you are in the Knowing-Doing Gaps, from our research on strategic priorities, which defines leaders who accelerate digital transformation with resilient digital business models. Think about and re-prioritize your strategies to take advantage of change and opportunities. And perform these priorities with a sense of focus and urgency.
[i] Buckingham, Marcus and Curt Coffman, First, Break All the Rules: What the World's Greatest Managers Do Differently, p.164, Simon & Schuster, 1999
[ii] Johnson, Elsbeth and Murray, Fiona, "What a Crisis Teaches us about innovation ", MIT Sloan Management Review, 30 November 2020, https://sloanreview.mit.edu/article/what-a-crisis-teaches -us-about-innovation /