Editor’s Note: This article is the second in a series of six installments. Please find links to the other parts below.
Successful innovation requires a deep understanding of the market in which the insurance organization operates. Every insurer needs to understand not only the nature of its business, but the levels of market at which different approaches to innovation must occur.
Every market can be stratified in three layers, according to Tim Kastelle, writing in Innovation for Now and for the Future. The first layer is the one in which the organization already operates. IT can introduce innovative responses to this present market layer through currently deployed technologies and services that aim to improve the current business landscape. Incremental and gradual improvements are the typical manifestations of an innovative IT response at this layer.
The second layer is a target market which a company understands but has not yet begun to operate in. IT innovation at this layer will utilize technologies that have not yet been used but have been studied and are ready for deployment in the near future. Typical innovations at this layer manifest as incremental, with significant cumulative impact in the shorter term.
The third layer is the new market which is not yet known let alone understood. Research and experimentation characterize the mode of operation in this layer. IT’s response to this layer is with an eye to future technologies that either do not exist or require exploratory work in order to prepare them for operational use. At this layer, changes resulting from successful innovation are drastic, enabling a leap forward.
In Part III, we will discuss how to organize an innovation-capable IT organization.
Editor’s Note: Click the links below for the other installments in this series: