To Control Your Destiny, Control your User Experience

The automotive industry provides a lesson in the dangers of ceding control of differentiating capabilities to vendor or investor partners

(Image credit: Headway/Unsplash.)

It isn’t every day that an automotive technology story has lessons that insurers can learn, but some interesting developments in that ecosystem provide a thought-provoking view into the future with implications for the insurance industry. It also may cause carriers to think about what their competitive differentiators are, and for whom.

Without question, user experiences (UX) are critical across many consumer products. The engineering “under the covers” is critical too, but a great product with a lousy UX is hardly going to take consumers by storm.

Auto manufacturers have spent the last 40 years moving away from a “build” mentality to a “buy” one for many major components. A wide array of companies spun up when manufacturers (e.g., GM, Ford, Toyota) found it economically better to simply purchase and assemble components rather than make everything in-house. This has parallels to insurance in many ways.

Which makes GM’s recent announcement that they are eliminating the nearly ubiquitous Apple CarPlay from new vehicles fascinating. Why would they do that?

It turns out that Apple in the middle has created a UX that makes for a homogenized experience. If you need to look at the logo on the hood to figure out what you’re driving, that’s a problem in their view. In addition, with Apple’s plans to create their own cars now mothballed, a focus for them has been to move to provide the heartbeat of other people’s motor vehicles.  The plans, comparable to Google’s, go well beyond phone and navigation integration.  They want to provide the core systems which allow many critical features, and all of the instrumentation, to run.

That was a bridge too far for GM.  In addition to ceding control to a third party, their view apparently is that an over-reliance on Apple (or Google) would hamper their internal ability to onboard technology to create new and different experiences, combining feature sets in new and interesting ways. By reasserting their own prowess at the point of contact, they apparently think they can create a different kind of differentiating competitive advantage. Few customers care who made the tires, ignition parts, or seats. But the engagement point for actually controlling the vehicle is something they see as different.

It will be interesting to see if this is an anomaly or a trend setting event.

Back in the world of life insurance carrier IT, we have had several pointed CIO discussions recently. Notable numbers of key solution providers have been acquired, putting future state roadmaps and ownership structures in question. Having a critical ecosystem supplier whose time horizon doesn’t match a carrier’s should, at the very least, be a cause for pause.

An immediate consequence?  Some carriers are starting to rethink their own buy-versus-build calculations. The middle part of the decade is getting more interesting by the day.

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Rob McIsaac // Rob McIsaac is the President and CEO of RPM Ventures NC, LLC, an organization focused on developing deep and actionable insights that are specific to the insurance industry in North America. Prior to creating this, Rob served as an Executive Principal at Novarica (now Datos Insights), a technology research and advisory firm, where he leveraged his expertise in IT leadership and transformation as well as technology and business strategy for life, annuities, wealth management, and banking. He has broad experience in IT strategy and management in the insurance and financial services industries. Prior to joining Novarica, he served in a series of senior technology management positions including leading the Business Transformation Office at Nationwide Insurance, and as the Enterprise CIO for First Citizens Bank. Rob spent the majority of his earlier career at Guardian Life, where he was the Divisional CIO responsible for annuity, distribution and broker dealer operations, and at Prudential Insurance, where he held a variety of positions including leading e-Business development efforts. Rob holds a BA in Economics from Montclair State University, an MBA in Information Systems from Seton Hall University, and has received a number of business and technical designations from both LOMA/LIMRA and MIT. He can be reached directly at rob@RPMVenturesNC.Com.

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