The digital transformation needs digital designers
Customer Experience // All too often, engineers are looking for a problem for their solution. If you want to shape the digital transformation, you need deep knowledge of customer needs and product benefits, development expertise and a good set of soft skills before you even get to a broad understanding of technology.
“The industry is too slow. Others are already much further ahead.” If you ask around the insurance sector, you’ll quickly come across a fairly pessimistic picture. The opinion that it is a decidedly slow and clunky industry is widespread. Insurers strive for stability and reliability — so reforms and innovations are surely their natural antagonists? But in fact the sector isn’t lacking for good intentions. Quite the opposite. For decades, every new technology trend has been carefully discussed, tested and, not infrequently, implemented (at least as a prototype). Many insurers offer Alexa skills, the App Stores are full of insurance apps. Even in the old “WAP” days of mobile internet, the sector had something to offer. Insurers were amongst the first to use the new identity card for online logins and was also ahead of the curve with “DE-Mail”.
Good ideas often fail in the implementation
Did you snigger when I mentioned “WAP” and “DE-Mail” in the same breath as “innovation” there? Well, from a modern perspective, I don’t blame you. And I’ll admit that even back then there were voices that warned that these technologies might not have been quite thought through completely. But there were also legions of technology evangelists and innovation consultants who talked up the predicted opportunities of these technologies. However, there are still a great number of technologies that have become successfully established and that insurers have used for years (apps, cloud computing, customer accounts, online customer self-service), although here too, the usage rates are substantially behind the expectations and promises.
“There is rarely a lack of bravery or ideas, more a lack of a format that works for the context.”
Of course, good ideas often simply fail due to mediocre implementation or half-hearted marketing. A deep understanding of technology was particularly important in the early stages of digitalization, when it was still worth optimizing the last flops and bytes. Modern technologies use abstraction to take care of a lot of this. To design the current digital transformations, a healthy knowledge of “how things work” is more important. This understanding must go deep enough to provide a general direction and to recognize when the plan isn’t being implemented in the right way. Everything else can be outsourced.
InsurTechs have not achieved a real breakthrough yet.
One common theory on this is based on the Innovator’s Dilemma. Established insurers, by their nature, often find it difficult to break out of the Innovator’s Dilemma. Local optimums for needs coverage will not go away. New and different ways to cover these needs are very difficult to implement from this starting point. So the disruptive innovations have to come from outside, as big companies can only successfully implement linear innovations internally. Many InsurTechs have been founded in recent years knowing this. But apart from some impressive investment rounds, the big breakthrough is yet to be made.
In some cases, that can be explained by the enormous complexity of the insurance industry. The tight legal frameworks, heavy pressure from the competition, low margins and unique product features slow down market newcomers too. Disruptive new companies sometimes lack the understanding of the depths of the business model, while technology evangelists are sometimes so taken with the elegance of their preferred solution that they drastically overestimate how suited it is to solving real problems. In some cases, you might question whether the innovations are aiming to disrupt the business model at all, or whether it is more of a linear development within the industry. Established companies can manage this type of innovation better than newcomers due to their scale.
To summarize, the digital transformation, especially in service sectors such as insurance, requires a new breed of digital designers. These designers on the one hand need a very broad understanding of the needs and realities of life of their customers, and on the other a sufficiently deep knowledge of the business model and all of its constraints — if only to combat obstacles that may come their way. A good set of soft skills and a broad understanding of technology in terms of how things work round out the new profile.