Innovation as a Business Unit
A recent MIT/Sloan Management Review survey of digital maturity in businesses across industry and around the world uncovered an intriguing divide. Respondents in insurance, finance and entertainment were more likely to say that their organizations would not exist or would be materially weakened as a result of digital transformation than respondents from agriculture and oil and gas.
This finding illustrates a fundamental difference in mindset: between digital disruption as something that is done for a company, or to it. Companies in ag and energy have adapted technologies to improve efficiency out of necessity. Just watch a farmer controlling his irrigation pivots with an iPad in his truck, or a rig operator monitoring emissions from her well pads with remote technology.
But insurers and bankers haven’t faced the same cost pressures or environmental imperatives that these other industries have. The digital transformation in their sectors springs from competitive pressures. And for many companies, that can create a sense of dread rather than possibility. It’s a mindset that, as the authors of the MIT/Sloan report note, is rooted in a belief that “digital disruption is eroding whatever fixed advantage they might have.”
One way to get beyond that fear-based thinking is to approach innovation as a business unit. MIT cites a partnership between MetLife and the Boulder-based accelerator TechStars. MetLife brought TechStars to its North Carolina campus to jumpstart the company’s innovation by creating its own insurance technology accelerator. Of the 10 startups invited to participate in the inaugural program, MetLife developed a partnership with one that provides customized recommendations to seniors for Medicare plans. MetLife isn’t in the Medicare business, so the partnership results in no direct revenue to them. But they get valuable information about a key customer segment. And bringing startups to their campus for intensive accelerator programs fosters an innovator’s mindset.
At my own insurance company, Pinnacol, we’ve established an innovation center that is our own digital transformation incubator. That’s where we developed our Cake Insure digital platform, and it’s now the site of a team working on other transformations to our core business.
While others in the insurance sector may fear what digital disruption will do to them, we embrace what it will do for us. Running toward innovation with intent, rather than away from it in fear, allows you to own your future.