Editor’s Note: This article is the fifth in a series of six installments. For the other installments, please see the links below.
Within insurance IT departments, there’s always a risk of making innovation merely a colorful and animated presentation or an academic exercise. Innovation is especially difficult in mature and highly competitive industries with very few barriers to the adoption of technological advances. The insurance technology market is saturated with claims of innovative solutions. The hopes and pressures from the business are always high and the IT leaders find themselves caught between the demands of day-to-day operational performance demands, on the one hand, and the executing on a vision the future, on the other. The latter almost never wins. Hence, it is important to create a management framework and build upon it the necessary expertise to manage progressive solutions that have disruptive potential. Where does it all start?
First, IT leaders need to define the problem they are trying to solve before they embark on the innovation route – and start to make promises that could make or break the future of their organizations and their own careers. Having a solution and looking for a problem is the wrong way to go about developing future value. The first step in successful innovation is identifying the problem in the clearest possible way and focusing on it is the first step towards the successful management of innovative ideas.
Second, the IT management and leadership must recognize and align the innovative solution with the technological and business domains that are part of the organization’s value chain. For example, is the solution aimed improving a well understood, established business domain, such as sales reporting? Or does it involve an area that is fairly experimental, such as advanced sales analytics. Defining the domain defines the risk, the value and the ability to sustain the innovation.
Third, the IT leaders must be able to answer the “Who” question. Who is capable of solving it? Not everyone person is cable of doing so, not every business partner is able to do so. Identifying the most capable resources, internally or externally makes the solution viable and implementable.
Fourth, the “Who” questions is tied to “How” would the technology department go about finding the solution. The “Who” and “How” combined create the value network, which in essence is the network of qualified resources interacting with each other to create business value. In this case, of unprecedented value for the organization.
Fifth, identify the solution in terms of the business value it is projected to generate. In this context, the cost of setting up or utilizing the proper value networks justifies the end goal, its cost and risks. The most common mistakes IT makes in this regard are of two types: either IT works separately from with the business, pursuing innovation as a technological exercise or, contrariwise, IT succumbs to the business’ pressure for innovative solutions while the business itself is unable to define the problem and/or the need for it. This is a classical case where IT and business should not only be aligned but they should think as one cohesive unit and act in unison.
Developing expertise in the five areas above will enable IT leaders to manage innovation successfully and efficiently. While management cannot be confined to these activities, strengthening internal skills in those five areas minimizes risk and provides the foundation for successful journey towards sustained progress.
Editor’s Note: Click the links below for the other installments in this series:
Part II: Match Innovation to Market Level
Part III: Cross the Seven Frontiers of Innovation Capability
Part IV: Integrate Innovation into IT Strategy and Operations