A Prototype of the Successful Innovation Leader

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Oct 21st, 2014

Innovation is all about building prototypes, making them fail, adjusting them, and moving on quickly. So, what is the prototype for the successful senior innovation leader? How can this profile be used to make better selections when hiring for these critical positions?

Continuing the Celent innovation research theme of how to make innovation work, we asked attendees at two innovation conferences to rank the critical success factors needed in senior innovation leadership positions. The purpose of this research effort was to assist with the “how” of choosing a successful innovation leader.
There were four areas in the on-line survey:
1. Technical business skills
2. Leadership qualities
3. Personal attributes
4. Previous job experience.

Ninety-one innovation professionals responded, 30% from financial services firms. Note that this is a very specialized respondent pool. These are the opinions of innovation practitioners about key success factors reflecting their experiences. Their outlook has been shaped by their own efforts which undoubtedly included both successes and failures. (The full report is available for download for Celent subscribers at http://celent.com/reports/leading-innovation-keys-success.)

The top items in each area are displayed below.

leader skills

The innovation conference attendees made some important observations about these results. First, the top ranking in the Technical business skills area was assigned to strategic planning. Innovation practitioners clearly value the cerebral activities such as reading the external environment, identifying patterns, and matching this analysis with company capabilities to determine a plan of action. In two other areas, Leadership qualities and Personal attributes, however, the more extroverted activities of vision and inspiration rose to the top. It is often difficult to find one person with such a broad range of skills and attributes. However, the conclusion based on the opinions of these innovation veterans is that the process should include an evaluation of candidates’ capabilities in both of these “head and heart” areas.

A second observation dealt with Previous job experience. Previous innovation leadership experience was ranked higher than start-up and operations management experience. Practitioners place high value on the practical wisdom about innovation which is learned “on the job”. Celent expects that the number of financial services companies implementing innovation programs will increase in the near term and, consequently, the value of professionals with successful, previous senior level innovation experience will also grow. Pay levels, work environment and other incentives must be calibrated accordingly.

How can these results be used in innovation programs? For individual leaders, this can be used as an input into their personal development plan. As an example, if they are strong in strategic planning, but weak in inspirational leadership, coaching activities may be worthwhile. In organizations with established core innovation teams, this can be used to evaluate the strengths and weaknesses of the entire group. For example, in situations where a leader lacks a critical attribute, the team may be able to compensate with increased contribution from other members. Finally, these results can be shared with a H.R. department to develop a data-driven selection process for senior innovation leaders.

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FYI — Topics such as innovation leadership development are discussed at our Innovation Roundtables. The next session is scheduled for November 20 in New York City. Senior innovation leaders from Banks, Insurers, and Security Firms are invited to join us. The registration details can be found here: https://www.regonline.com/builder/site/Default.aspx?EventID=1623753

 

How to Innovate in Financial Services Companies

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Oct 16th, 2014

‘Tis the season for vendor conferences and this year innovation is the hot topic. Many speakers are making a strong case for why financial services firms need to innovate – customer expectations being shaped by conveniences such as the Amazon One-Click, demographic changes bringing the millenials into the consumer age, opportunities emerging in predictive analytics, customer service capabilities using location sensing technologies, etc.

In some of the presentations there is even some recognition that innovating in existing (read legacy) businesses is much harder than in start-ups and greenfield operations. But, I have noticed that beyond the major themes, there is not much information about how established financial services companies innovate successfully – lots of why, but not much of how.

But, the “how” is of critical importance to innovators. Celent knows this because we asked. In order to build the agenda for four of our Innovation Roundtables, we asked the registrants to choose the topics they wanted to discuss from a list of 27 items. Thirty-four people voted, reflecting a very specialized respondent pool. These are all professionals who are charged with driving innovation in financial services companies. Their top ten areas are displayed below.

tis the season grphic

In looking at the data, over half of the items fall in the broad category of leadership / culture. Process is the second most frequent group and, interestingly, technology figures only once (in the category dealing with social technologies for innovation). This prioritization held up in the amount of time spent in discussion during the face to face sessions. The conclusion is that tech can be bought, but leadership has to be built!

But, getting back to the how, given that culture and leadership is so important, how does a company choose leaders which can successfully deliver innovation? What technical business skills, personal attributes, previous job experiences are critical in an innovation leader? Celent has also surveyed innovation practitioners about this and I will blog about these results next week.

By the way, our next Innovation Roundtable is scheduled for November 20 in New York City. Senior innovation leaders from Banks, Insurers, and Security Firms are invited to join us. The registration details can be found here: https://www.regonline.com/builder/site/Default.aspx?EventID=1623753

 

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From Her to Watson, and What’s Next?

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Oct 9th, 2014

Her is a 2013 American science fiction romantic comedy-drama film written, directed, and produced by Spike Jonze. The film follows Theodore Twombly (Joaquin Phoenix), a man who develops a relationship with Samantha (Scarlett Johansson), an intelligent computer operating system personified through a female voice. Jonze conceived the idea in the early 2000s after reading an article about Cleverbot, a web application that uses an artificial intelligence algorithm to have conversations with humans.

I spent an entire day with Watson last Tuesday along with my colleague Dan Latimore (should read his blog about it! http://bankingblog.celent.com/2014/10/08/spending-a-day-with-ibms-watson/) and I could not avoid the resemblance, though IBM’s Watson is much more focused on the business side of the machine/human interaction and collaboration.

Watson is a learning system that scales human expertise by extending our abilities to perceive, reason, and relate:

  • Perceiving: Watson understands the world as we do; it interprets sensory input beyond traditional data. Understands natural language; reads manuals, social data, blogs, consumer reviews, etc.
  • Reasoning: Watson thinks through complex problems; it deepens our analysis and inspires creativity. Makes inferences, evaluates pros and cons, and finds relationships between terms and concepts
  • Relating: Watson understands how we communicate, and personalizes its interactions with each of us. Responds in natural language, personalizes the interaction and provides reasons
  • Learning: Watson learns from every interaction, scaling our ability to build experience. Trains with experts and improves with feedback.

Imagine that you can take your best employee, your best agent, your best underwriter, your best adviser, your best risk manager and teach Watson, so it could be then supporting any other employee, business partner or even a customer,  24/7 across your organization. It is the most closer to cloning I have seen lately, without the moral dilemmas.  What if, based in its huge computing capacity and the ability to crunch and interpret TB of data in a very short time-frame it could provide you with more hypothesis and evidence than any human being you can hire? Imagine how accuracy and timeliness could save lives, assess risks better, lower your costs, provide a better understanding of what is going on, even under different circumstances. Watson’s aim is to become the best adviser to your employees, customers and partners while doing their job by leveraging the power and strength of search, analytic and cognitive capabilities.

There is a real opportunity here to:

  • Amplify human cognitive strengths
  • Enable a deeper level of reasoning
  • Make decision trade-offs with higher levels of confidence
  • Democratize experience and knowledge within your organization and value chain

Financial institutions around the world are already working with IBM to make Watson smarter, covering more use cases and more languages. IBM has already made available and continues to work on content and APIs business ready on the cloud to make it easier for its ecosystem and clients to embed Watson services in their applications. IBM is already working on having Watson available for Japanese, Spanish and Brazilian Portuguese natural language interaction, and we should be hearing soon some news regarding the 1st Watson Client Experience Center in Latin America, replicating the one IBM has just inaugurated in New York’s Silicon Alley. IBM plans to open these centers in Melbourne, Sao Paulo, Dublin, London and Singapore.

IBM’s Watson has already come up with a book of recipes and while I think it is true that the best way to a man’s heart is through his stomach, I don’t expect to fall in love with an avatar powered by Watson as in Jonze’s Her (I am happily married, thank you). I would like though to see soon how it helps me decide what are the best investments given my risk aversion profile or which is the best type of insurance (and coverages) I need given my needs and concerns. I would certainly love to see how underwriting capabilities improve and processes become more accurate and efficient, hopefully expecting better results for me, for the financial services institutions and why not expect to see some savings passed along to consumers?

Today Watson is here; what’s next?

 

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Data Initiation Helps Define Digitization in Insurance

Oct 9th, 2014

My colleague Karen Monks and I have published a report on digital transformation in insurance recently. The main objective of this report was to identify differences in terms of digital transformation in insurance between different continents. However we have quickly noticed that the term “digitization” can generate confusion in insurance professionals’ mind.

Celent defines digital transformation as the strategy of transferring as many manual tasks as possible into digital activities. This strategy can be achieved through different ways, including:

  • Process automation.
  • Selling products online.
  • Leveraging mobile devices and mobile technologies in general.
  • Dematerialization of documents and communication materials.

In addition, we believe that data gathering through all sorts of tools, and therefore data management and analytics, play an important role in digital transformation efforts.

This been said I personally think there is a priority insurers should define when embarking in digital transformation initiatives. First of all I recommend them to set up a basic constraint as the corner stone of their digitization initiatives portfolio prioritization: data must be entered into their information system only once (not two, three times but only once). With this in mind they should reexamine all their core processes and find out where data leading to the same information is entered more than once. When this analysis is done they can start defining initiatives that will reduce these repetitive tasks. You’ll be surprised to see how this simple principle can generate drastic improvements to processes and drive higher automation, efficiency, etc.

When doing this, I also advise insurers to question whether the unique initial data entry into their information system can be done differently. With this advice I am trying to get them think of what I call the second wave of digitization. Indeed, to me digital transformation initiatives nowadays assume that human action is the initial generator of new data within an information system. However with the Internet of Things concept that my colleague Donald Light explained in two reports recently (here and here), insurers can also automate the initial data entry by leveraging connected objects. No need for human action any longer then!

To me there is a digitization sequencing insurers need to respect between these two phases. Indeed I think it is easier to generate value from the Internet of Things concept if an insurer has already well thought how to minimize repetitive tasks consisting in entering new data within their information system. Therefore I do think that insurers who have already done a great job at minimizing these tasks initiated by human action and who have an appetite to leverage the Internet of Things will be the leading insurers going forward.

 

Vendors Embrace Mobile Technology

Karlyn Carnahan

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Sep 18th, 2014

The adoption of mobile technologies is accelerating. Smartphones rocketed from a 10% adoption rate to 40% in just two and a half years, faster than any technology except television, and tablets are moving even faster, blowing away all previous adoption standards. Carriers are increasingly turning to their software vendors to create mobile access to core functionality for employees, agents, and customers. But where are the vendors? Do all vendors have mobile applications? Are they aligned with carriers on the importance of mobile apps? What challenges do vendors face and what are their plans for the future?

 

I surveyed 39 vendors to provide answers to these questions as well as to understand pricing models, platform investments and their expectations of where the market is going. This report examines mobility attitudes among vendors, the status of mobile solutions, the methods and staffing models used for deployments, statistics around marketing including typical pricing models, and an assessment of the significance of the challenges vendors face as they move into the mobile market.

 
IT leaders at software firms clearly recognize the importance of mobility to drive their businesses forward. Almost 70% see mobility as mission critical or important to their organization today.

 
Today the majority of vendors do not generate revenue from mobile applications. Many are not yet charging for mobile solutions but include the product in the overall price of the software. Vendors clearly intend to change that practice. More than half expect mobile to generate 1-20% of their overall revenue within the next three years. This may be optimistic, but clearly, vendors see strong growth and market momentum for their enterprise mobility business.

 

However, the explosive growth in the mobile technology landscape has created unmistakable challenges for vendors entering this market. Challenges fall into three categories – those related to the technology and the devices themselves; those that relate to the organizational changes and cultural issues inherent in mobile such as obtaining staff and managing changing organizations; and challenges that are focused on market acceptance and pricing models

 

Increasingly, carriers are asking about mobile capabilities as part of their evaluation process when selecting new vendor solutions. Vendors looking to move into the mobility market can learn from those who have gone before them. Those who have not yet put their mobile plans together may want to begin to build a roadmap for the future.

 

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A Value Roadmap: Don’t implement a new core system without it

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Sep 16th, 2014

I’m sometimes asked, “What is the worst error an insurer undergoing replacement of its core solutions can make? And how can that pratfall be avoided?”

There are a lot of candidates for this honor: for example poor governance, inadequate project management, underestimating the complexity of data conversion and or integration, incomplete knowledge transfer—the list goes on and on.

My nominee is: Failure to define and follow a Value Roadmap as part of the implementation and near term post implementation process.

Conceptually, a Value Roadmap identifies the specific types and sources of value which the new system will provide. If the insurer has already developed a good business case for the new core system, the Value Roadmap will address many of the cost reduction and revenue enhancement elements of that business case. In addition, the Value Roadmap will place these benefits on a timeline which could start (to a limited degree) during implementation, and definitely starts when the new system goes live.

If the insurer does not have a reasonably complete business case for the new system (and yes that does happen); the Value Roadmap allows senior management (C-Suite and/or the Technology Governance structure) to:
**  Document for future ROI and performance analyses the business and competitive rationale for the project
**  Provide guidance for the remaining implementation period
**  Focus on realizing value through new offerings, processes, and organizational structures

Note: an earlier version of this blog appeared on the Insurance Technology Association website.

Is that a computer on your wrist?

tomscales

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Sep 16th, 2014

Just a follow-on to Donald Light’s post about the newly annouced iWatch.

I’m very curious to see if Apple can again legitimize a new market segment. They didn’t invent the wearable watch, but they have introduced a modestly attractive watch and have a market impact that is impressive.

As a part of Celent’s Life and Health team, I see so many uses for the information that could be provided by a solid entrant in the market.

I have personally been watching the space for awhile. There are many entrants in the space — Samsung alone has introduced four watches in the last year. I am also a true geek and love new toys.

But I don’t own a wearable yet.

My fundamental problem is that none of them are really very good watches. They fail every test I have, particularly the size test. I am old school and like watches, but I lean more towards a small, thin Skagen. Even the smallest of wearables, to me, would be like strapping an iPad to your arm and calling it jewelry.

We are starting to see some innovation here. The Moto 360 is beautiful, but still huge.

Let’s hope Moore’s law kicks into the space soon and we see a sleek, attractive, useful product. Maybe it is the iWatch.

We’ll see.

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Keys to Successful Policy Administration System Upgrades

Karlyn Carnahan

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Sep 15th, 2014

All IT professionals have a horror story about a system upgrade gone wrong. Since most policy administration systems (PAS) have a 12 – 18 month upgrade cycle for major releases, there are plenty of opportunities to misstep. To address this dynamic, a consistent claim of modern PAS vendors is that multi-tiered architectures and other technical designs ease the pain of upgrades as compared with legacy environments.

 

However, up to now, objective data concerning upgrade metrics was difficult to collect. How long does it really take to upgrade a PAS? Do modern systems live up to the levels of ease that vendors cite? Historically, have insurers experienced any difference in outcomes when using vendor or third party system integrator staff versus internal staff to execute the upgrade?

 

In order to close this gap, Mike Fitzgerald and I surveyed 44 North American insurance carriers to provide answers to these questions as well as to understand major challenges faced and overcome. The report reviews carrier’s experiences in policy administration upgrades. It examines reasons for doing upgrades, staffing strategies, scope, time and budgets inherent in upgrades and provides advice from carriers on challenges to prepare for and advice to assure a smooth successful process.

 
Here are some of the key findings from the report.

  • Most carriers doing upgrades do a point upgrade and generally, these are successful.
  • All upgrades to modern systems in the survey group were successful, supporting the expectation that these platforms reduce the pain related to ongoing updates.
  • The most frequently reported reason for taking an upgrade is “to gain new functionality” and the second most common driver is “current version no longer supported”.
  • Only 10.7% of insurer respondents used their own employees without assistance from vendors or third party companies. The most common uses of vendor services for upgrades are for coding, configuration and testing.
  • Most upgrade projects (64.3%) meet their delivery deadline.
  • Some carriers actually came in below budget on their upgrade, but the vast majority, 60.7%, came in on budget.

Many carriers report that they have not upgraded their PAS either because they are homegrown, or, more frequently, because these are new installations. This places a particular importance on the lessons that can be learned from other carriers’ experiences as the new installations prepare for their first upgrades.

 

For many carriers upgrades are a big deal. They take months of effort, tie up a lot of staff, and can frustrate business partners. However, done well, they go smoothly and can add new functionality, upgraded configuration tools and deliver significant benefits.

Watch out. Apple with Mayo is heading your way

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Sep 10th, 2014

Hmmm . . . That combination is pretty tasty in a Waldorf salad, but it’s a bit hard to think of other recipes that do appeal.

The Apple Watch is very attractive—one analyst hoped it would be stylish enough to wear to the Oscars. (I’ll let everyone know what I decide to do next year).

But from a healthcare and health insurance Internet of Things perspective, questions still remain. Early information is that the Apple Watch’s biomonitoring functions are pretty modest: pulse and movement (and distance?). Did anyone say fitness band?

Somehow “killer app” doesn’t sound quite right in this context, but that is the real question in terms of making people with serious medical conditions (or serious medical vulnerabilities) want to buy the Apple Watch. In roughly ascending order of technical and ergonomic challenges—temperature, blood pressure, glucose levels, blood chemistry of all different types, urine analysis, and (why not?) genome-driven personalized medicine—are off in the future, in some cases well beyond the horizon for a wearable (time telling, messaging, location-revealing) device.

Meanwhile there is always next year’s Oscars.

btw: about the Mayo:  https://www.apple.com/pr/library/2014/06/02Apple-Releases-iOS-8-SDK-With-Over-4-000-New-APIs.html

 

 

Risk, reward and cyber-scurity

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Sep 3rd, 2014

For most people the amount of time, skill and effort required to get access to our family photos far outweighs the possible value someone would find there in. Thus, security measures based on making it really quite difficult to get to the data while at the same time not too hard to use have become increasingly popular. I would file username and password security in here.

Occasionally, the digital assets on the other side are valuable to the right group. Banks use 2 factor authentication and a variety of non-digital schemes to ensure security. Even World of Warcraft where rare digital swords and armour carry their own value offer broader measures of security to protect accounts. The recent leak of a number of celebrities private photos shows that there are other assets worth the time and effort required to break this level of security.

The risk associated with the data insurers hold has to date been quite minimal. There are health, specialty lines and large commercial lines where this isn’t the case, but for most people the data held by insurers and available through portals is largely innocuous and available through other means. As insurers start to tap into wider data sources and the Internet of Things it is imperative that the industry considers how it protects it’s customers.

A simple example from products available today: some insurers likely hold the real-time location of the car driven by celebrities and millionaires children, thanks to the increasing popularity of telematics based car insurance. This brings with it increased security, the opportunity to recover the car if stolen and the opportunity to bring much needed assistance swiftly if the car and driver suffer an  accident. In the wrong hands this data is sadly highly valuable and thus worth the time, effort and risk to assault and try to recover.

Whilst the details around the leak are still emerging it is clear that it is incumbent on the providers of these services to offer sufficient security in the first place and to educate it’s users on appropriate use.

To insurers looking at cloud and portals, I say consider the edge cases – the celebrities using your security for instance, those for whom there are organised groups who would be rewarded for getting the data.

Take into account the type of data available through various security schemes and portals, some information is naturally less sensitive. No one will read a story about a film star’s driving score and premium due next month, but where they drove and when – well maybe that’s a headline you don’t want your name associated with.