6 Insurance Innovation Imperatives, Part II: Match Innovation to Market Level

In addition to understanding the fundamentals of the business they’re in, insurers need to approach innovation with reference to three market levels that offer different opportunities and require different tactics: the present market, the target market and future market.

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:

Part I: Plot a Clear Path.

Part III: Cross the Seven Frontiers of Innovation Capability

Part IV: Integrate Innovation into IT Strategy and Operations

Part V: Apply 5 Key Steps to the Execution of Innovative Ideas

Part VI: Establish a Comprehensive Program

Alfred Goxhaj // Alfred Goxhaj is an IT professional with over 18 years’ experience in a variety of industries as a developer, analyst, architect and manager. During his career he has managed large-scale enterprise architecture, application development, business intelligence, data management, ERP and e-commerce projects. In Jan. 2013, he became CIO of Endurance Specialty Holdings, after a four-year stint as CIO of Tokio Marine North America/Philadelphia Insurance Companies. Goxhaj’s trademark achievement has been the establishment of a clear vision and strategy for the integrated architecture and technology for life and P&C insurance companies, and leading successful implementations in record time. He holds degrees in advanced physics, applied mathematics and an MBA/MIS from the University of Pittsburgh.

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