Novarica recently hosted its sixth semi-annual Silicon Valley Innovation Tour for a dozen senior carrier IT leaders. On this tour we had some great discussions and site visits with Emergence Capital, Vymo, Quid, Amazon Web Services, Limelight Health, DocuSign, an impressive trio of startups from Andreessen Horowitz, Plug and Play, and K&L Gates. On the tours a couple key themes came up: mission critical considerations; product innovation, and accessing InsureTechs.
While many factors come together to create the “perfect storm” that is Silicon Valley, several considerations should remain top of mind for insurers who are attempting to innovate. Culture is critical to whether or not a company will be able to pursue “fail-fast” options, which are key to effectively leveraging a test-and-learn approach.
Leadership is also foundational to innovation and very closely tied to culture. Particularly for large legacy organizations, leadership must help enable innovation and be the prepared to facilitate moving away from legacy processes. Access to talent is another key consideration for those looking to innovate. In the past most companies required employees to be in the same building, but today’s organizations offer flexibility and are more focused on retaining culture over co-location.
In terms of product innovation, organizations must be flexible enough and willing to pivot and change directions as needed. We met with one company that changed the foundation of their business model once it realized its differentiator was in data analysis rather than data acquisition. Now, the company doesn’t just collect data from drones, but instead collects data from a variety of sources and focuses on business intelligence analytics. By course correcting early on, companies can make strategic decisions that have the potential to sharply bend their own successful curve.
Additionally, while product innovation is a major part of what innovation looks like, carriers should maintain skepticism about overhyped solutions. As an example, blockchain was once touted as a “silver bullet” for insurers. Now after the dust settled, we are seeing that while it is a tool appropriate for certain use cases, it is in no way a solution for all business problems. IT leaders should remain open to new technologies but should also be prepared to pivot when clarity emerges. New technology doesn’t always translate to “better” or “right.”
With this meeting being our sixth tour in Silicon Valley, we also observed some ways to best connect with InsureTechs. Carriers should understand the startup mentality and organize for innovation before attempting to collaborate with InsureTech companies. Startups tend to revisit overarching business strategies, and at times pivot away from things that may have been foundational at the beginning. Startups also organize differently from traditional companies.
For example, DocuSign recently changed its organization at the executive level to create a separate team that works on ideation and innovation and to guarantee both product and engineering resources. While this may seem like a risky move, it was a way for the company to make sure there was a permanent way to sustain innovation. It is important for insurers to be open minded when working with InsureTechs and related startups. Keeping an eye on these companies can be a great way to see how innovation is done well, but it can also be a way to find strategic partners to create long-term success.
For more, see Novarica’s report on the latest Silicon Valley trip and our perspective on how to optimize the InsureTech startup/insurer relationship.
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