Other parts of this series:
- It’s time insurers bust the myths about change management
- Insurers are overlooking key change drivers as they ready themselves for digital disruption
- Disrupt or be disrupted: It’s time for insurers to explore another route
- Three change management moves that will help insurers come out on top in the digital economy
“Disrupt or be disrupted” has become the rallying cry of the digital economy. Corporate giants such as Apple, Amazon and Google have shown the power of disruptive strategies that redefine markets and industries by unleashing radically new, often low-cost, digital products, services and platforms. Competitors that have failed to adapt quickly have been swept aside.
In the face of escalating digital disruption, insurers appear to be caught in a high-stakes dilemma. Either they dramatically change their businesses and try to become industry disruptors. Or, they stick to what they know well and hope that they can weather the impending storm that threatens to disrupt their businesses. Both options are risky.
Fortunately, however, there’s another route. Insurers can implement change management practices that will position them as digital enablers. They can then become indispensable within a network of diverse partners. This will allow them to thrive on digital disruption without taking the huge risks required to become digital disruptors.
Our research shows that four market activities will endure in the digital economy – inventing, producing, designing and assembling. These activities require a set of core capabilities that can be adapted to meet requirements beyond an organization’s current products, services, customers or partners. Even when industries and technologies change, these market activities will still remain relevant.
Companies that can become world-class in one or more of these market activities will flourish. They’ll be able to establish themselves as essential components of digitally-connected partnerships and ecosystems, as illustrated below.
Some of these market activities may appear foreign to the insurance industry. Production and assembly, for example, seem especially remote. Big insurers, however, have plenty of experience producing products and services that address the diverse needs of customers in a wide range of markets. Furthermore, broad portfolios of products, often from different service providers, can be pulled together, or assembled, by insurers to address specific customer requirements.
The advent of digital ecosystems, and the platform businesses that operate across them, frees organizations from many of the constraints of their traditional practices. It allows them to adopt change management practices that will draw on their inherent strengths and capabilities to create businesses that are powerful digital enablers. Our four-part model of market activities – inventing, producing, designing and assembling – provides a lens through which insurers, and other organizations, can see how they can best prepare themselves to thrive on the disruption that lies ahead.
In my next blog post, I’ll discuss how insurers can manage change to make themselves indispensable in the digital economy. Until then, have a look at these reports written by my colleagues Warren Parry, Randy Wandmacher, Paul Nunes and Joshua Bellin. I think you’ll find them useful.