Embracing Disruption
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The document discusses creating a culture of innovation at CSAA Insurance Group. It provides background on AAA and CSAA Insurance Group, and notes that CSAA has grown significantly in recent years in terms of financial strength rating, payments to policyholders, capital, direct premium written, and policies in force. The document outlines six questions to identify key trends and assess the current culture to define what can and can't be done. It discusses building new structures to drive innovation through multiple channels, and identifying metrics to measure innovation efforts. The goal is to develop a strategic approach to innovation that protects and grows the core business while innovating for the future.
Embracing Disruption
- 1. 8 September 2017 Creating a Culture of Innovation @ CSAA Insurance Group
- 2. AAA WAS FOUNDED IN 1902 • Founded 115 years ago in 1902 in Chicago, Illinois • More than 56 million members in the United States and Canada.
- 3. CSAA INSURANCE GROUP WAS FOUNDED IN 1914 A A.M. Best financial strength rating $2.4B Payments to policyholders in 2016 $3.4B Capital to serve AAA Members in their time of need ~$3.8B Direct premium written = 30% growth since 2011 2.7M Policies in Force 15.8% growth since 2011 Coast-to-coast footprint of 23 States & D.C. = 12 million Member households
- 6. “Innovation has nothing to do with how many R&D dollars you have. It’s about the people you have, how you’re led, and how much you get it.”
- 7. • The biggest threat to innovation is internal politics and an organizational culture, which doesn’t accept failure and/or doesn’t accept ideas from outside, and/or cannot change. 2016 Gartner Financial Services Innovation Survey
- 8. “Culture tells us what to do when the CEO isn’t in the room” Frances X. Frei and Anne Morriss
- 10. Identify the forces shaping the industry. Name the collective outcome, the impact. Call out the danger, disruption and opportunity.
- 11. LOOK OUTSIDE TO IDENTIFY KEY TRENDS, DISRUPTIVE FORCES Marc Andreessen
- 12. Assess and understand the culture. Be clear about the starting point. What can and can’t we do, and how fast.
- 13. ASSESS THROUGH MULTIPLE LENSES
- 14. Executive team defines innovation. Interviews with executive team & Board. 100% commitment, minimum 80% agreement.
- 15. DEFINE INNOVATION Innovation at …. is the process of finding better, faster, and cheaper ways to improve service, creating outstanding member experiences (simple, proactive, personal), creating new products and services, and growing partnerships and revenue.
- 17. Think about innovation as a continuum. One destination, different speeds. Define non-negotiable leadership behaviors.
- 18. OrganizationalFocus Easier & Lower Risk Shorter Term Smaller Investments New Capabilities Longer Term Harder & Higher Risk Continuous Improvement Sustaining Innovation / Major Advances Disruptive Innovation Continuous improvements, to go faster, better and cheaper – with the customer experience in mind. Leverage our platform investments and capabilities to reinvent the way we do business from a customer perspective. Develop disruptive new businesses that (a) help replace expected decreases in auto insurance premiums over the next 1-2 decades and (b) provide new growth. ENSURE INNOVATION DOES NOT HAVE ONE DESTINATION
- 19. CREATE STRONG ALIGNMENT • To the strategy • To the values • To how you assess, • pay and develop talent Foster a Culture of Insight and Innovation
- 20. Identify what and who needs to change. Build capability to drive transformation. Define the priorities, and in what order.
- 21. BUILD NEW STRUCTURE TO DRIVE IMPACT
- 22. STRATEGIC APPROACH TO INNOVATION Strategy & Innovation Strategy & Partnerships Corporate Innovation Internal – “Invent” Actively track trends and competitor moves to inform enterprise strategy including themes for innovation and investing. Design strategic plan for partnerships. Builds new revenue generating ventures and transformative cost/efficiency plays. Tests new concepts for strategic value. Corporate Venture Capital Disruptive Innovation Labs External – “Invest” Dynamic team with authority to build disruptive concepts to influence, shape, and control our future Focused team with authority to invest in ventures for early looks at new capabilities, experiences, and models We envision a system of complimentary components that together comprise a growth engine Growth Engine
- 23. DEVELOP MULTI-CHANNEL SOLUTIONS Lean Innovation Innovation Hub
- 24. Operational Improvements Customer Service & Claims Product & Service Enhancements Evolving Insurance Products Connected, Holistic Solutions Future of Autonomy & Risk Continuous improvements for operational excellence Improving the insurance value chain for members Updating products for new market demands Evolving products and business models per the sharing economy Connected Home & Car lead to Connected Life & Solutions Autonomous vehicles will create myriad opportunities • Artificial Intelligence • Blockchain • Chatbots • Mobile Claims Management • Pay-Per-Mile • Next-Gen Affinity • Growing Commercial Fleets • Auto Leases as Subscriptions • On-Demand Insurance • Connected Member • Risk Prevention • Fee-Based Services (with links to Insurance) • “Insurance of Me” • Autonomous Fleets • Related Consumer Services • A.V. Claims Administration AN INTEGRATED VIEW Innovating in Insurance*Illustrative Protect & Grow Our Core Innovate Our Future Key: Current Testing or Recent Discussions * Does not include disruptive or non-insurance innovation testing Sample of Next Opportunities: Amazon Alexa Concept Testing Lyft Credits for Claims Autonomous Drones for Claims or U/W Nest Connected Home Pilot Usage-Based Insurance Tech-Based A.V. Players Ride-Sharing Enhancements Traditional OEM Autonomous Vehicles (A.V.) Players GIG Car Sharing (Claims Admin.) InsurTech Players Forging New Models Current or Potential Partners: Satellite Imagery for U/W Home-Sharing Enhancements
- 25. TO SERVE MILLENNIALS WE LAUNCHED THE ROOM8 APP FOR ROOMMATE MATCHING Room8
- 26. Use a balanced set of metrics, analytics. Use only what makes sense. And, there is no “there.”
- 27. IDENTIFY KEY METRICS Innovation Index Sustainable Engagement Index Innovation Competency Trends Innovation Platform o ROI of innovation platform investment o Number of challenges run, number of ideas generated and launched o ROI, financial or productivity gains of ideas generated o Employee, organization and location participation rates Innovation Tools & Training o Number of employees/teams trained on innovation o Financial impact, productivity/process improvement gains generated by the training Disruptive Innovation o Number of new/disruptive products/services launched o Percent of total revenue/income generated by new/disruptive products/services o ROI/time to market of new/disruptive products/services o Percent new/disruptive products/services generated with external partners •
- 29. Act like a leader who has the authority to change things, even if you don’t Hacking Innovation Be user- centered. Design from the bottom up, not top down Tools matter. Use what works and solve problems in the now Produce, and non-believers become sponsors A simple way YOU can hack innovation
- 31. Additional Thoughts & Resources
- 32. Toolkit
- 36. SUCCESSFUL MOVEMENTS ALL HAVE 3 ACTS S-CURVES Nancy Duarte
- 38. KEY DRIVERS OF INNOVATION Innovation 27. The company does a good job of improving efficiency. 33. The company demonstrates a willingness to invest in continuously improving our processes. Training & Development 25. I feel comfortable voicing my ideas and opinions even when they are different than others. 35. The Executive Leadership Team members take an active, visible role in communicating to employees. Communication 4. The career development discussions I have had with my immediate supervisor in the past year were effective in furthering my development. 24. The company does a good job of providing opportunities for professional development (for example, training, project assignments, lateral transfers). Continuous Improvement/ Efficiency Driver Items Key Drivers Colored cells indicate a statistically significant difference Current% Fav 74 78 60 79 70 70 vs. Ins. Norm vs. HP Norm +2* +4* +8* +3* +2 +3* +12* +16* +14* +18* +17* +9* +10* 0 -2 +7* -4 -11
- 39. CULTURAL ASSESSMENT COMPETING VALUES FRAMEWORK
- 40. Adhocracy CULTURAL ASSESSMENT NOW VERSUS PREFERRED ELT Now Preferred Diff Execs Now Preferred Diff Random Sample Now Preferred Diff Clan 37.3 27.4 -9.9 Clan 32.3 27.5 -4.8 Clan 26.7 29.9 3.2 Adhocracy 10 23.3 13.3 Adhocracy 12.5 24.9 12.4 Adhocracy 16.8 24.6 7.8 Market 20.6 30.4 9.8 Market 25.5 27.5 1.9 Market 28.9 23.8 -5.1 Hierarchy 32.1 18.9 -13.2 Hierarchy 29.8 20.2 -9.6 Hierarchy 27.6 21.7 -5.8 Clan Adhocracy MarketHierarchy Clan Hierarchy Adhocracy Market * Gaps of > 5.0 between Now and Preferred indicate a need for significant culture change.
- 41. More of Less of The organization is a very dynamic and entrepreneurial place. People are willing to stick their necks out and take risks. The organization emphasizes permanence and stability. Efficiency, control, and smooth operations are important. The management style in the organization is characterized by hard- driving competitiveness, high demands, and achievement The organization is a very personal place. It is like an extended family. People seem to share a lot of themselves. The management style in the organization is characterized by individual risk taking, innovation, freedom, and uniqueness. The management style in the organization is characterized by security of employment, conformity, predictability, and stability of relationships. The leadership in the organization is generally considered to exemplify entrepreneurship, innovation, or risk taking. The management style in the organization is characterized by teamwork, consensus, and participation. The glue that holds the organization together is commitment to innovation and development. There is an emphasis on being on the cutting edge. The organization is a very controlled and structured place. Formal procedures generally govern what people do. CULTURAL ASSESSMENT BIGGEST PAIN POINTS, BIGGEST OPPORTUNITIES
- 42. • Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow.
- 43. • “The more you engage with customers the clearer things become and the easier it is to determine what you should be doing” • John Russell, President, Harley Davidson
- 44. • It is easier to act your way into a new way of thinking than it is to think your way into a new way of acting Harry Stack Sullivan
- 46. “THE BEST WAY TO HAVE A GOOD IDEA IS TO HAVE A LOT OF IDEAS” • Dr. Linus Pauling