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Too many tech choices? Try success by failing.

June 11, 2013

“A cab driver once told me he wasn’t making money when he wasn’t moving, so I keep moving”, our most successful Sales Manager used to say as he ran up the main staircase. Now, speed is our greatest concern – speed to market, speed to process, speed to achieve ROI, speed to gain insights from Big Data.

IASA’s 2013 conference just ended, and the PAS, Claims and Billing vendors, suite and best of breed, licensed and SaaS, were all out in force, as were Analytics and BI vendors, to the point where it’s easy to become paralyzed by the range of choices.   Given the actual and opportunity costs of a wrong choice, what we heard too little of was ‘innovate’, with an emphasis instead on safety.  But why spend millions of dollars, still face potential implementation risk, and barely move the needle?

Handled properly, innovation can be far less risky than continuing with legacy systems, even those with several layers of tactical enhancements.  For the first time in 10 or more years, technology exists to transform  your end-to-end business and revenue models and, by using an innovation approach, you can do it faster, resulting in a better build/buy decision than under an extrapolation oriented process. Several times I heard companies ask vendors “here’s my problem, do you solve it?” But with millions of dollars of potential revenue, license/subscription fees and implementation costs all on the line, why do so many of us avoid innovating instead seeking a ‘solution’ to what may be an improperly stated or self-limiting set of requirements? For example, without innovative thinking, who would have included personal auto telematics growing from 5M users in 2013, to 100M users by 2018 in their technology planning, with the resultant changes in revenue and tsunami of structured data every second of every day?

We’re a risk adverse community and business, and so ‘innovation’ is splashed all over the banners and backdrops, but insurance tech is usually sold as being ‘your safe choice’, the silver bullet. Why would vendors use this defensive stance when selling innovative solutions is the stronger value proposition?   Historically, some transformation efforts have gone over budget or went too far or astray, becoming industry lore over time. Today, based on both experience and research, we use a more sophisticated approach, achieving far better results at minimal risk by building in early controlled failure, as odd as that sounds. We now know innovation has to allow for a few, fast, learning filled, mini-failures testing ideas at early-stage points when the Business is still deciding on their needed functionality for strategic and tactical fit.  At the end of this short process, surviving innovative ideas and related criteria will be sufficiently matured to be the basis for a fast and correct decision on approach and vendors.

How does this work in the day to day real-world? First is changing our thinking process, from confirming what we all know, to challenging assumptions. As Margaret Heffernan describes in her Ted Talk recorded in June, 2012, our assessment teams have to test everything, as anathema as it sounds at first. In our data rich world, we have plenty of details and experiences – the key is avoiding trying to describe and evaluate options through the safe lens of group-think and inattentional blindness.  In most companies, this is no easy request.  In that 2012 Ted Talk video, she cites a then recent study finding – 85% of US + EU executives have serious issues they were afraid to raise among their peers due to the potential conflict and political repercussions.  Clearly, openness, data availability and transparency are insufficient if someone isn’t able to say “the emperor has no clothes”.  More likely, everyone already knows this; they all need permission to test orthodoxy, create conflict, and be ready to embrace a better solution that is not an extrapolation of the present.  From experience, we believe the IT group should play a leading if not major role in innovation as technology drives execution and capabilities, and buying piecemeal solutions, installed or SaaS, significantly increases complexity and operational efficiency both initially and over the long term.

Secondly, based on our experience in Financial Services, and in particular with insurers and their vendors, use our 9 step adaptation of a controlled point of failure process based on NASA’s 8-Step Engineering Design Process to develop, test, weed out and then champion innovative ideas:

  1. Identify the underlying problem/current situation and the desired vision of Business driven success.
  2. Identify constraints and concerns. Is a root-cause a constraint or a element in the solution?
  3. Brainstorm possible solutions, resisting de-scoping, thinking small, over-compromising, or assuming only the C-level has the answers.  IT and Business tend to speak differently about the same idea – make sure you bridge the communication gap.
  4. Generate many ideas and options to be explored; using ’Mercury to Apollo’ leverageable building blocks.
  5. Use Big Data/BI in this process.  BI is now a SaaS end-user application, including machine learning and can be flexibly used by team members during the innovation idea generating process.
  6. Use constructive-conflict to create a narrowed down set of ideas worth pursuing, with a continual perspective on how these particular ideas contribute to Step 1, above.
  7. Test ideas in both a Whiteboard Pilot and in a Model Office environment.  Ask ‘what would be the consequences if my arch-competitor did XXX first?’
  8. Refine 1 or 2 finalist innovative ideas seeking simplicity. The clock is not your friend; you can always go back to re-examine parked ideas.
  9. Decide and organize the implementation strategy and sequence per innovation, looking at realities such as opposing needs for the same resources and end to end lifetime costs of ownership.

Controlled Points of Failure, fast and small, can occur at Steps 2, 5 and 7.

A note of caution here regarding Step 2: we all hear “find and fix the root-causes” during transformation exercises.  Quite often, whoever controls the means to fix a root-cause has their own reason for not doing so, or for not acting within your required timeframe. Given the inter-dependencies of  Front and Back Office  operations, fixing these obstacles at the Senior Team level can be contentious, at least over who pays, which gets us back to that 85% executive fear-factor statistic mentioned above.  For example, we once heard a senior person say, in response to an attempt on having an open post-mortem on the root-causes leading to a high profile failure, “We don’t discuss our problems with others around here”.  Employees close to the customer and distribution channels live in a world of constraints and root-causes and their inclusion on the innovation team always produces the best results. Another factor is when deciding on innovation vs.  enhancement as scope, we have seen enhancement initiatives often becoming exercises in walking through a tar pit of root-causes, with limited results.

We’re on the cusp of transforming how insurers, our customers and our partners all interact based on new capabilities, deeper understandings, and the Internet of Things; transformation won’t happen every decade or so going forward –  it will be ongoing through continuous innovation and periodic big leaps.   It’s time to innovate more like Silicon Valley, and not bring the past forward.  Mark Leslie, an entrepreneur and lecturer at the Stanford Graduate School of Business, said, “One of perhaps the most compelling things about Silicon Valley is that it is a place where you can fail, and if you do, you can raise money and try again.”  For insurers, it’s far better failing in Steps 2, 5 or 7,  small and fast, then it is to invest in a safe solution probably leading to a bigger failure later.

Richard Eichen is the Founder and Managing Principal of Return on Efficiency, LLC, http://www.growroe.com, focusing on companies, initiatives and products where technology is the primary means of delivery and revenue. He is one of their senior turnaround, transformation, Program Rescue and Process Rescue leaders.  As a Change Agent, Trusted Advisor, Program Leader and Interim Executive, Rich has over 25 years hands-on experience reshaping companies, Operations, IT/Systems Integration and strategic initiatives.  He can be reached at richard.eichen@growroe.com, and followed on Twitter, @RDEgrowroe.  

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