Organisational Agility in Insurtech takes more than a CTO
Insurers play a key role in our society. They protect people and their assets and shoulder the risk that enables economic opportunity. Yet its importance in our society is no shield from today’s disruptive trends. General insurance is under a range of pressures: new forms of competition; empowered consumers with greater choice and flexibility; and the need to reduce costs, modernise products and simplify claims.
Organisational agility offers a way for insurers to respond to these headwinds and become more responsive to existing and evolving forms of disruption – such as the increasingly competitive war for talent. Our research on organisational agility found that the top 10% of financial performers were 30% likelier to display agile characteristics.
But while the case for organisational agility is clear, it’s less clear how insurers become and stay agile. They’re often held back by traditional and rigid operating models; extensive legacy technologies; and by the cost of change that comes with complex and aging systems.
Some insurers’ technology leaders will assert that agility is in place but struggle to demonstrate the benefits at scale and crucially evidence how agility spans across the wider organisation. But if agility isn’t delivering the benefits sought – be it a reduction in lead time to market for products, increased revenue and market share, or empowered staff better able to respond to new trends – then the reality is that it’s not being done right.
The leaders of the pack do four things
To reap the benefits of organisational agility, you need to extend the principles of agility across the entire enterprise – beyond the narrow confines of process and technology. True organisational agility is about end-to-end improvements, not technology people working differently from business colleagues.
It's about creating long-lived delivery structures centered on the goals of your customers. It’s where people work in aware, alert, inclusive, and responsive teams to rapidly respond to changing customer and competitive dynamics.
From our experience and research, we found that there are four necessities for insurance leaders to consider when looking to ensure agility scales across their organisation.
Build genuine and unanimous top-team commitment
Almost all major change calls for executive-level commitment. Agility pushes this to the limit and calls for leaders to take up new measures, structures, and leadership styles. Leaders’ commitment to why they want to change and how to use agility to achieve the outcomes they want must be unanimous, unshakeable, and tangible.
For example, an insurer might decide to embrace organisational agility to increase their ability to rapidly and effectively respond to extreme weather events. The key difference between this approach and traditional crisis management is that the organisation and its constituent parts are already set up for success, constantly alert, and able to quickly pivot to address the situation at hand. The outcome is a great customer experience and an insurer with reduced organisational stress and fewer spikes in consumption of precious resources.
Create the conditions for success from the outset
Traditional agile evangelists often ‘start now and ask questions later, but the adage that ‘those who fail to prepare are preparing to fail’ is true. A successful move to organisational agility starts with careful and considerable work before any wider organisational pronouncements. This includes ensuring your company has the right culture of curiosity for agility to blossom, lining up supporters, and determining how you are going to measure and communicate progress. Without these, you won’t succeed.
Like many other sectors, insurers will have invested in agile by focusing their efforts on agile delivery, placing the topic in the hands of the Chief Technology Officer or Chief Operating Officer. But in our experience, organisational agility places accountability across the whole executive community – not just one individual. It spans all functions and facets of an organisation and insurance executives who recognise this and re-define their organisational construct will reap the benefits. They’ll unlock the power of their organisation and its people by creating persistent and long-lived structures focused on creating customer and business value in the most sustainably short lead time.
An organisation recently needed to reignite its agile transformation in the wake of an extensive investment in agile which was focused on transforming the technology department. Through our support, they broadened the scope of the transformation – which started with the executive leadership unanimously agreeing to back the adoption of organisational agility across the entirety of the business.
Cut out the compromises
Many organisations end up with an ‘agile but’ approach, where leaders pander to constraints and old habits. Leaders should resist the temptation to water down agreed design elements – and make sure these non-negotiables are reflected from the outset.
Isolated adoption results in fragmentation and inefficiency, leading to uncertainty and confusion. Insurance leaders must think carefully about ensuring the right organisational design, including how people behave and interact with one another.
In giving this necessity the right amount of investment, communication, and commitment from the top, insurers will build an organisation where people can better understand the link between their role and how the value they create is linked in a transparent and inclusive way to the value created by others. This ensures that people, both individually and collectively, have a persistent, pervasive, and permanent focus on value creation.
Accept that tomorrow’s leaders will be different from today’s
Lasting success requires leaders through the organisation who support, own and live the change. Tomorrow’s blockers must go, even if they’re successful in today’s model. It’s vital to spot new leaders and strike the right balance between homegrown people and newcomers.
Insurance companies tend to lean towards conservatism, taking measured steps in a functional silo construct. This approach retains old habits and fiefdoms, leaving change functions to act as the ‘go between’. It takes courage to suggest that a previously successful function should no longer exist as a function but as an integrated capability as part of an end-to-end value creation-based construct. The leaders who look to break down organisational silos are the ones that insurance executives should elevate.
The leadership group of a corporate function that we worked with moved from cautious and resistant to advocacy and endorsement. The key driver – business leaders seeing first-hand the outcomes being delivered in a faster, more collaborative way. Consequently, the leadership team moved from adoption to promotion.
The role insurers can play in our society is bright for insurers who are able to fully embrace organisational agility across their business. Liberated from traditional, function-based designs and with empowered people, insurers will drive top-line growth by accelerating time to market and reducing operating costs through more effective and predictable delivery.
About the author: Aron Thompson is an agility and financial services expert at PA Consulting. He is an expert in Digital strategy and organisational agility leadership. He is also experienced in managing insurance and banking portfolios. His key areas of specialism include re-designing businesses to increase speed to market, productivity, innovation, and collaboration.