While culture is the central ingredient in the innovation recipes of most property/casualty insurers, strategy games and idea labs are among the more novel approaches P/C leaders describe when asked how their companies encourage innovation.
Executive SummaryProgressive, Assurant and Gen Re are among the P/C companies with some novel approaches to encouraging innovation.
Eight of 16 industry leaders who responded to emailed inquiries from Carrier Management about how their companies encourage innovation specifically used the word “culture” in their answers, with many describing their roles as innovation advocates and supporters for new ideas in their workforces.
Dave Pratt, general manager for usage-based insurance at Progressive, stood out from the respondents, giving an answer that described a cultural dynamic instead of expressly stating its existence. He said that innovation projects at Progressive actually can be driven by any of the company’s employees—almost literally—into a testing “garage.” Inside the garage, Progressive “mechanics” build the engines to move the most promising ideas forward.
“Progressive is a test-and-learn culture, and over the years we’ve developed a number of programs to help foster innovation among our employees. One example is our Business Innovation Garage (BIG),” Pratt said, explaining that BIG essentially is a way to connect some 26,000 employees “to solve problems across disparate business areas and geographic locations.” Operating as a separate business unit, BIG is “a secure think-tank for innovating products and services,” he said.
IT analysts, who staff the garage, “work with partners across the business to collect and cultivate new business solutions, with the end goal of exploring ideas before we actually invest significant time, dollars and resources,” he said. “BIG provides Progressive with an internal ‘lab’ to test and learn in such a highly regulated environment like the insurance industry.”
Erin Baginski, a Progressive IT director who oversees the Business Innovation Garage, provided more details. She noted that while the BIG door officially opened in April of this year, the operation was running in pilot mode—and generating ideas—before then.
The idea for BIG itself, she said, came from an employee. In a meeting back in 2009, the employee submitted a question to Progressive CEO Glenn Renwick asking about the possibility of having a separate business unit to test-drive potential innovations. “After researching and presenting options to our business leaders, including Chief Information Officer Ray Voelker, the idea was turned into a reality,” she reported.
Baginski said that the IT analysts staffing BIG’s mechanic positions work there on an 18-month rotational basis. With a garage manager prioritizing the work and overseeing the innovation process, “people across the company can submit ideas through email or by stopping by BIG’s physical location at our company headquarters,” she said.
“It’s a bit of an internal incubator,” she said, reiterating Pratt’s description of a testing environment for vetting ideas before resources are fully committed—and before issues such as insurance regulation have to be addressed. “BIG isn’t involved in compliance,” she said. The “separate, dedicated virtual environment…allow[s] for collaborative opportunities with IT and other business areas within Progressive while reserving our internal enterprise systems needed for day-to-day functionality and run-the-business requirements.”
“BIG’s creation has allowed us to innovate faster and get best-in-class products to market more efficiently,” she said, noting that 27 experiments were completed in nine months during a pilot phase. Offering another measure of the pilot’s success, she said BIG achieved 100 percent positive feedback from those using the garage.
Among the pilot experiments was one focused on Progressive’s usage-based insurance offering, Snapshot, she said.
“Snapshot was the first-ever marketed UBI program that allowed customers to earn personalized rates based on their safe-driving habits. The goal of this particular experiment was to test whether a mobile application could potentially replace the need to plug our Snapshot device into participants’ cars via their OBD-II port,” Baginski reported, referring to the onboard diagnostic systems port of automobiles.
“The mechanics worked side-by-side with people on our UBI team, and a prototype mobile application was developed on an accelerated timeline and requiring fewer people.”
Baginski also confirmed a report in Crain’s Business revealing a BIG project to scan damaged cars with virtual reality headsets and turn them into 3D images. “That is something we’re exploring, but it’s in the very early stages,” she said.
According to Baginski, both the Garage and Progressive’s Edison program are part of IT’s Innovation Services. “Edison is a program within Progressive that encourages employees to submit ideas to solve business problems and delight customers, and [it] tries to answer the question ‘What could we do?’ BIG is where experimentation and prototyping happen,” she said. “The Business Innovation Garage helps you quickly set up and run experiments, design and build prototypes, realize results, and share key learnings.” In fact, she said, “BIG itself was born out of an Edison idea and is now a fully deployed part of the business.”
Separately, Ming Lee, CEO of catastrophe modeling firm AIR Worldwide, said his company has a test lab for idea generation. “The importance of innovation at AIR will only continue to grow as our customers’ demand for analytics becomes more urgent and more sophisticated and as the rate of technological change continues to increase. That’s why we launched our Idea Lab, which creates a forum in which employees from across AIR’s global organization can contribute and exchange ideas, vote on what’s good, and collaborate on seeing them to fruition,” he said.
Strategy Games and Mind Games
Idea exchanges at Assurant can take place in the game room, according to CEO Alan Colberg. The first step to jumpstarting innovation, he said, is the company’s leadership development program.
Leadership development focuses on “fostering adaptive leadership skills to unleash the creative potential and tap into the entrepreneurial spirit that exists within our employee talent base,” he said. “We need to employ innovative thinking to products and related services to best address customers’ evolving needs.”
Then the games begin.
“To further stimulate innovation, enhance decision-making skills and engage employees, we launched a strategy learning game at Assurant. The game encourages employees to adopt an enterprise mindset, helping to break down any silos that may exist between departments and generate new ideas,” Colberg said.
Among other things, the game provides an opportunity for senior leaders and front-line employees to sit down at the same table and discuss company strategy, he said. “Some business executives have played the game several times just to hear the discussions among employees and broaden their own perspective of the company,” he said, adding that nearly 10,000 Assurant employees have played already.
At XL Catlin, gaming takes on a different meaning, according to Greg Hendrick, Chief Executive of Reinsurance, who described an all-out competition to launch innovative products and services. The first contest was a companywide internal innovation competition called Competition 25, launched to commemorate the company’s 25th anniversary in 2011, he said.
“We have built on our enterprisewide innovation competitions by encouraging individual business units to develop various contests and challenges to get colleagues working together and thinking about new ways to tackle the risks our clients face,” he reported. “But it isn’t just about new products alone. Recently, one of our business units initiated a rapid results initiative (RRI) to quickly find ways that they could improve processes and efficiency in 2015. They received some 125 suggestions, which they are now prioritizing to implement,” he said.
Over at Gen Re, mind games rather than innovation contests and strategy matches are the focus of efforts seeking to ensure that innovation happens—and to simply stimulate good decision-making on a day-to-day basis, according to Berto Sciolla, who is an executive vice president and manager of North American Treaty Reinsurance. The company has embarked on two initiatives to accomplish both goals over the past 24 months, he said.
“First, we’ve made an increased investment in the qualitative side of decision-making at Gen Re.
“As risk takers, much of our knowledge comes from data, actuarial analysis and models. Yet that’s only half of what it takes to make a decision or to forge a new path. We also need to acknowledge our subconscious, emotional and biased selves as we seek new opportunities and to be innovators,” Sciolla said.
“For instance, we verify we understand our customer’s strategy and goals, informed by a variety of perspectives, before we begin to discuss possible alternatives and to design a response or product to meet their needs. We check ourselves against ‘listening to respond’ versus ‘listening to understand the other person’s perspective,'” he said.
“By addressing biases in our thinking and focusing on being disciplined about thinking, we are more apt to develop both innovative and successful solutions.”
Sciolla said that a second effort at Gen Re involved conducting a “cultural inventory” of the company, “including a snapshot of our current culture and a description of our ideal culture, both as stated by our employees. We now are working to close the gaps between the current and ideal, which will strengthen Gen Re’s long-term effectiveness as an organization, including our ability to innovate appropriately,” he said.
Back to Culture
There were numerous specific references to creating open and innovative cultures among the responses P/C leaders submitted to respond to Carrier Management questions about how their companies encourage innovation and how they lead the efforts. Below, we excerpt just a few.
• Stanley Galanski, President and CEO, The Navigators Group: It is important to create a culture in which employees are encouraged and rewarded for making suggestions and bringing forward new ideas. Many large corporations express a will to innovate, but woe to the employee who actually brings up a new idea. They are tortured by the corporate bureaucracy.
I have found the best source of innovation is spending time with customers—listening to them to understand their needs and concerns, and then acting upon it. That can occur at any level of a company.
• Kevin Kelley, CEO, Ironshore: Dedication and commitment to innovation comprises the ethos of my job at Ironshore. My role is to listen to the market, motivate new thinking and build a culture to innovate.
At Ironshore, we approach product innovation in a systematic manner. Management meets at least once a month…to update one another on trends within their specialty business lines and to elicit input from our various profit centers. Ironshore’s process for encouraging innovation leads to a culture of collaboration…
• John Lupica, Vice Chair, ACE Group: ACE is innovative because we don’t shy away from asking questions and soliciting feedback, which is where all of our innovations begin. It’s the frank conversations with the broker and customer that prompt internal discussion and self-reflection…
Innovations and innovators need sponsors because they present change that not everyone is comfortable with. I make sure the most promising developments have a chance to progress and that they have support and buy-in at all levels. I also demand bottom-line results. Ultimately, innovation has to make business sense at ACE and contribute to our success.
• Mark Watson, President and CEO, Argo Group: Though “innovation” is a buzzword that gets kicked around a lot, at Argo Group it’s one of our core values. We invest a lot of energy in promoting a culture of curiosity, creativity and community…We recognize that no matter what your role is in the organization, everyone has a hidden gem of an idea just waiting to be discovered.
To facilitate discovery, we have a business unit dedicated solely to innovation and the research and development around it. The team’s charge is to explore new possibilities, leverage emerging technologies and engage our amazing talent to help drive the spirit of innovation throughout the organization…
As chief entrepreneur, I have the privilege of setting the tone of innovation throughout the organization. Anyone who knows me knows that I am passionate about innovation…I assume the task of setting the example, so my leadership team can follow and do likewise. In this light, it is important to convey to others that some disruption is not only okay but is encouraged. We need different perspectives to grow. We need to execute well and remember that failure is just part of the learning process. We need change agents that will champion our cause and keep our business evolving.
It all comes down to collaboration, commitment and communication. These are the parts of our innovation engine that fuel success and keep the wheels spinning.
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