What History Can Teach Us About Innovation

Last week, I had the great pleasure of hosting Novarica’s latest Silicon Valley Innovation Tour with 15 senior insurance carrier IT leaders. It was a remarkable journey through true start-ups, mature companies that have maintained innovation as part of their DNA, to accelerators, incubators, and one of the key VC firms in The Valley.

Innovation is often the result of minor adjustments to things past failures. The ability to test and learn while failing fast is critical to making real breakthroughs. Circumstances change. Ideas that once failed due to immature context or underdeveloped ecosystems can later find new life and remarkable success. There is value in incremental change in the short term; in the long term, incremental change can lead to fascinating dead ends with disastrous consequences for the organizations that find themselves trapped without a vision for the future.

Speaking with a CIO after the event, I realized that there is an interesting parallel in history. Just over a century ago, as World War I came to an end, questions emerged of how to prevent future wars. The Great War was once called “the war to end all wars.” The name didn’t stick.

After the signing of the Treaty of Versailles, the French government realized the high likelihood of future wars. They embarked on a massive construction effort to address a weak border that allowed invading armies to move into France and strike toward Paris. The obvious answer was to build a wall and fortification structure. Known as the Maginot Line, it remains today as a museum and park along the border of France and Germany.

While the impressive tactical fortifications are testaments to early 20th-century technology, it is not a paragon of smart investing. The designers assumed technology would never move forward—so while it was an ideal structure to defend against the machines of the Great War, it was obsolete by the time construction ended in the 1930s. By 1940, invading armies flew over the wall (or drove around it by invading Belgium first).

The rapid movement of technology is hardly a new phenomenon! To put it in a different context, the period between the Maginot Line’s construction and its surrender was far less than the time between the Dot-Com era and today.

As insurance carriers strategize for the third decade of the 21st century, one fundamental concern is to avoid creating solutions that, while effective in the past marketing era, will be useless in the one to come. There is no doubt that mobile capabilities and digital strategies will be important, but carriers should consider to what end.

We are watching significant demographic and customer preference shifts. The average age of when people get drivers licenses is increasing for the first time. The number of investment options is unprecedented. Flexibility and agility in career planning are critical; continuous learning is essential. Traditional products, even with new bells and feature whistles, may not meet market demand.

While technology can’t answer critical market research questions or augur product development priorities, it is increasingly vital to new product delivery (as well as an integral component of new products themselves).

Carriers need to move away from treating IT as a cost center and instead look on it to create competitive advantage. Finding ways to let go of the past (e.g., closed blocks to BPO providers) to focus on the future is one way to recognize how quickly the world can change—and to avoid the false promises a failure to see this can create. Just ask Kodak.

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