Interest and enthusiasm at board level for technology data-driven innovation has never been higher. At a Post interactive roundtable in association with Crowe, participants analysed how to generate tangible business benefits from a technical and operation platform.
Using the hypothetical launch of a health and wellbeing monitor, Post, in association with Crowe, gathered a group of experts to address the key questions a business should be asking before implementing any new technology.
The scenario for the session was for the experts [acting as non-executive directors] to go through the lifecycle of product development for a traditional insurance company that sells life insurance, including healthcare products and general insurance.
Having set up an innovation hub, the insurer decides to investigate the option to use a wristband - devised by an external start-up as the supplier - that measures facial expressions to understand the wearer’s happiness. The theory is that actuaries can better price a health insurance product correlating happiness and health.
What topics should we be raising as non-execs at this starting point in the process?
Nick Hartley: What has been tested to date, what evidence do you have to support the request for the funding? It depends on the customer desiring it, how the business model and technology works, those three areas. What have the team done to demonstrate that this isn’t going to be a white elephant – something that nobody wants to use.
David Richards: Aligned to that, what else is in the market? Potentially a super idea, but [what] if there’s competition developing something even more advanced?
Mike Downing: What would be the target market for this? Is it younger people, older people?
Richards: How are you going to manage the data and all the regulation that sits around that? Also much as it rewards good behaviour, if what makes you happy is doing slightly, you know, ‘interesting things’?
Charlie Blackburn: It’s not my area of skill but there must be some question around the brand promise? There’s all kind of other players who are in the wellness industry, not just the life industry.
Nick Hartley: It will be interesting to know as well about how the business model’s going to work, is the customer expected to pay for these bands? Is it subsidised by premium saving? How’s the cost of it all going to bear out?
Blackburn: Too often you go for marginal gains and it gets eroded by the extra timelines, the extra cost, the cultural complexity, the stuff that gets in the way. Whereas if you’ve got something that is an outsized gain, then … the board should say, ‘I’m not just prepared to fund the proof of concept and the setting up the unit, I’m prepared to fund it in year two, I’m prepared to fund it in year three, because the problem is a 10x problem that is strategic to us to solve’.
Downing: You need a three-year, five-year plan rather than just launch it and see what happens.
Angela Moran: You should be thinking about the regulators. You’re asking customers to give over information to change their behaviour, regulators will want to know that you’ve given this proper thought.
Richards: You’re thinking about all these things, but actually what is the overall running cost that’s associated with that? Who’s going to manage the relationship and integration with this bit of technology? Are you managing it particularly as a good legacy estate?
Blackburn: Why is the insurance band going to be the band you wear? If that ecosystem’s going to evolve, why do we want to waste our money at this stage, rather than let some venture money burn their way through it and then, two or three years down the line, we can jump on to a far better data stream?
Have insurance companies got the balance right between answering all those questions and speed to market not hampering innovation?
Hartley: The innovation strategy that set this running should be aligned to the business strategy. One of the dangers with labs is they go off and create some wonderful gadgets or bit of technology and then the business says ‘well that’s not what we want’ but they’ve spent months and a lot of money on it. That’s the integration.
Richards: Being integrated is really important. If it’s done over there by the ‘cool people’ and it’s not part of the overall strategy then you may generate lots of interesting ideas, but it’s got to be operationalised. I’ve seen organisations where that’s the case, and some super ideas that people get very excited about but the ability to put them into business as usual is a real challenge.
Hartley: It is really hard the other way as well. You have to really change mind-set and culture just to get some of the smallest things over the line.
Do companies define their appetite for failure in this space? If they are not used to failing will they fail to kill something off that is not working, in the hope it eventually succeeds?
Blackburn: If you’ve got the right timeframe and you’ve got the right problem set, any setback is just a learning towards success, but if the thing was a tenuous proposition, any setback is terminal.
Moran: You have to have an exit strategy sorted. At what point do you say, ‘no this isn’t working’? Technology has a tendency not to go quite as planned.
Hartley: What you tend to see is if they invested a lot of time and money very quickly before the concept had been properly validated when it fails, it fails big and it fails hard. That then sets the whole culture up about recriminations and someone has to be at fault.
Richards: You can get carried away with a super bit of technology here, but you really don’t have the experience right the way through the stack, and that includes at the kind of executive level, to be able to opine and oversee this.
Moran: You can bring in new people who understand this new technology and you’ve got people in the business who understand the old, but actually you’ve got no way of understanding how the two actually come together and then you can have issues there.
Imagine that the wristband is approved to move to the next stage. The board undertook an assessment exercise. Most areas are scoring highly but there’s clearly a red flag for governance and risk. Moving into proof of concept what needs to be considered? What are the pros and cons of dealing with third parties and how you’d manage that?
Moran: If they’re bringing external expertise then it makes sense. But you need to make sure that you’ve really thought about the relationship [with the start-up that developed the band], what steps have you put in place to protect yourselves? How new is this relationship? Have you done business before? You’re going to have to have a really in-depth risk analysis conducted on this piece in regards to every aspect.
Blackburn: On the governance and risk is it consumer outcomes we’re worried about? Is it consumer data? Is it adverse consumer outcomes in terms of misuse of the data and the rating algorithms, or whatever? You’d need to understand more about what that problem is.
Hartley: It is a challenge working with third parties, especially start-ups, because you might have an organisation that is used to dealing with Microsoft, IBM, and then all of a sudden you have a start-up whose balance sheet will look nothing like it. But then the potential power of their idea could really impact the business in a positive way. What happens if they go bust?
Are people good enough at defining success at the proof of concept stage?
Hartley: It comes back to the point of what is your vision? Where are you going to be in five years? Because that’s where you then work backwards and say, well what does success look like?
Moran: It starts with what problem are you trying to solve for the consumer? Does the POC prove that you are solving the problem?
Hartley: And having a real insight into the true metrics, not just the vanity metrics. What are the true metrics that are actually going to propel the case forward and make it work?
Downing: It all leads back to our strategy for doing this, the why are we doing this? What do we expect short-term and longer-term?
If these were addressed, what might cause issues at launch stage? What challenges need to be met to ensure success?
Richards: It’s multifaceted. You’ve got to make sure that, when something’s alive and working, you’ve got the ecosystem around it to make it successful. How do you make sure that it elegantly becomes part of your business as usual and it’s integrated into your overall roadmaps? Whether that be budget, support, how the product is going to evolve. What does the competition look like?
Blackburn: It’s very hard to transition these. If we don’t have an organisation that’s happy passing the ball from team to team successfully, you’ve got a real challenge.
Moran: It needs to be that you’ve got everything set up so that a new team could take it over. If you’re reliant on a single product owner to keep this going, then you could very quickly fail.
Hartley: If it comes out the lab and there hasn’t been proper stakeholder management into the wider business, and it drops on somebody’s desk, right, now you’ve got to launch this, or you’ve got to scale it, and they will just instantly say well no because this is my job, that’s a distraction, I’ll leave it, and then all of a sudden you don’t have growth.
Blackburn: And if it hasn’t been done properly no one’s going to want to touch it with a bargepole, it’s a poisoned chalice, it’s going to kill someone’s career.
Moran: Then you’re going to have customer harm, because you’re going to have given them a product and it’s not going to be supported within the business and they’re going to get poor service, which is going to get you a bad reputation, it’s not going to look good with the regulators.
Hartley: I’d say if you’re steaming ahead into launch and you haven’t worked out what channels you should be using, there’s a big red flag there.
Blackburn: We all know, these organisations are political, competitive, and executives have sharp elbows, and if you haven’t worked your way through this stuff, there’s just no way this thing’s going to go anywhere.
Richards: If there’s a new vendor that’s much more important in your ecosystem how are you going to manage that relationship? Maybe it was great during the project, but how do you maintain that? What’s actually happening with this organisation?
Moran: One of the biggest risks is you launch and you think then you’re done. You’ve got to continually review and update. Have a think about the exit strategy, it might work for a couple of years but then not be relevant any more, you’ve just to constantly be on this.
Blackburn: Our poor external vendor here probably needed this project to stay alive. Now you’ve got a double bind, for them to really add value you need to keep them on, but if they’re about staying alive how are they investing in these capabilities?
Let’s extend the scenario. Your supplier has its global data centre security hacked. You are getting calls from colleagues and the press and customers are concerned. What would you do at this stage?
Richards: It comes back to the point around operational resilience. Ahead of anything new going live, you need to play through all the different scenarios. This goes off, you’re in a crisis. Are you able to manage that effectively on the PR and technical side? If that hasn’t been done, you’re going to have to think very quickly.
Moran: The key is communication to make sure that you’re telling your customers what’s going on. I’ve seen examples where companies haven’t been very forthcoming. The regulator isn’t going to like the fact that you’re keeping quiet. Customers need to trust you and they won’t trust you, or continue to trust you, if you’re withholding information from them.
Hartley: Having a response plan about how to manage this type of failure is critical.
Crowe’s Helen Tedore shares her reflection on the points raised in the roundtable
Hopefully you will agree that there is a lot more to consider when looking at these types of projects, than tech itself.
Actually, it’s the wider implications, the new skills, the third and fourth parties, the new risks it might introduce, the change in your business demographics and so forth that need to be thought about.
It’s really key that we spent a lot of time on [making sure the wristband project] actually delivers towards the company’s strategy and objectives.
People get carried away with – this is really exciting, it can do this. So what? Why do our customers need it? How does it help us achieve our company strategy and objectives?
A number of different stakeholders need to be engaged in these types of projects. There’s a real fine balance in getting all the opinions and getting the right people involved to progress forward.
Success criteria is key. If we decide to stop that isn’t necessarily a failed project, that’s a successful project that we’ve identified at the right time, that it’s not going to deliver what we need.
A failed project would be something that isn’t fit for purpose, or has adverse consequences when it gets launched, not one that we actively stop or change course as we go.
You have to really think about who you’re working with and have a full holistic view of the network to understand the reputational impact that things like these events can have on a company.
We also need to be resilient looking at the good scenarios. If the launch goes really well, everybody takes up the product and our customer services are swamped with people ringing us up but we can’t cope, our customer service is bad, which is bad for our reputation.
In terms of governance and our existing processes, let’s not throw them away and start again. Potentially integrate on top with new frameworks to deal with the type of innovation that we’re looking at.
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