How to Quicken the Notoriously Slow Pace of Change in the Insurance Industry
Leaders establish the vision and direction of an organization and guide transformation according to culture, capabilities and resource allocation.
- Bill Pieroni
- August 2021
The market forces affecting insurance have been changing at an accelerating rate, across virtually every dimension – not just emerging technologies, but also consumer preferences and expectations, new and disruptive competitors, vast new data sources, and more. It is becoming clear that the key competitive differentiator will be the competency and capacity to execute change.
However, the insurance industry is often seen as—to put it bluntly—poor at addressing change. This reputation is not undeserved. ACORD studied over 600 change efforts across several years, and found that 65% of them failed to meet expectations in scope, time, and/or resources. Our analysis reveals that management issues and organizational culture were responsible for 70% of these failures.
It would be hubris to believe that a leader can snap their fingers and completely change company culture, or be everywhere at once monitoring the decisions of each mid-level manager. Instead it is the responsibility of leadership to establish overall vision and direction; realistically assess, understand, and guide their organization's culture and management; and ensure that strategy aligns with culture, capabilities, and resource allocation. Effective change leadership requires avoiding the common cultural drivers of change failure:
Organizational Slack is often a result of past success and a lack of visible crises. Leaders must establish a strong sense of urgency when appropriate, despite the temptation to maintain positive and congratulatory messages at all times. They must identify and communicate dangers, issues, and opportunities. They should avoid complacency by maintaining high standards, encourage risk-taking, and supporting non-traditional ideas and actions.
Incomplete Vision results in not only a lack of direction, alignment, and motivation, but more subtly, a failure to link actions to end-state goals. Vision is not complete unless leaders have developed specific strategies and tactics to achieve it, and allocated resources accordingly. Leaders must also anchor their approaches in organizational culture, identify any behavioral transformation imperatives, and clearly articulate these throughout the organization.
Weak Sponsorship is characterized by a lack of clear, public commitment across senior leadership, and an inability to cut through established structure and systems. Leaders must recruit a guiding coalition which includes not only those with formal power, but those with informal power as well—the expertise, recognition, and respect within the organization to lead by example. They must identify the cultural factors undermining change, and empower broad-based efforts to modify them.
Premature Victory can be declared by either over-optimistic idealists, or more insidiously by cynics who resist change by refusing to see it through. To avoid this, leaders must set measurable, explicit milestones. They must also demonstrate how change has led to improvement, and leverage that success to bring systems, structures, and policies into alignment with the overall vision.
Leadership, management, and culture must be aligned to support transformational change. In the near future, this will not be simply an enabler of success—it will be a prerequisite.