While innovation is hardly a mature discipline in the insurance industry, it's no longer in a crib. In fact, it's walking on two legs, drooling and cranky because it's busting out some brand new teeth.
This is a delicate, vulnerable stage.
From where I sit, this makes me feel proud and encouraged. After all, this is how innovation grown-ups are made. Even better, on the far end of the bell curve there are companies that are about to enter innovation adolescence. Leaders are no longer worried about keeping their efforts from falling flat and are now feeling discomfort as their new initiatives enter the belligerent, rebellious phase. That is when they try to move some of the more disruptive ideas from the fuzzy front end to the back end for launch in market, which is akin to the nightmares experienced by parents whose teens are wielding fresh driver's licenses.
By far, the biggest concern of the innovation leader is trying to convince the CFO (aka 'the parent' with the power of the purse) that a disruptive, complicated idea is not only worth investing in but is also measurable from a returns point-of-view.
We've seen the gamut of responses from innovation leaders to this issue. Many are similar to how teens respond to their parents. These responses include lying to their CFO by filling out some prefab business case template with fake numbers just to get that executive to say yes, rationalizing or trying to reason their way past financial shackles to prove worthy of an exemption, and even quitting to go to another company that "gets it."
None of these things work.
What does work, as our team has learned through more than a decade of innovation cycles, is creating a new set of measures for financial accountability. After all, accountability is what your CFO is ultimately looking for. However, the blunt instrument of ROI doesn't work for this purpose.
Instead, we suggest a "JOI" mentality. JOI means justification of innovation. It is first applied when a new idea is moving from the front end to the back end.
While there are volumes that can be written to explain all the details, the upshot is that we must shift from returns to measurable, mandatory milestones. Here are five of them:
-
-
-
-
- Confirmation of the market opportunity, with quantified interest and clear description and sizing of the new buyer universe
- Ensuring that the company is prepared for the changes that includes an agreed-upon strategic fit of the new innovation, funding and top-down support
- Being prepared to address obstacles, not just point them out (e.g., regulatory or technology)
- Team readiness (i.e., having the right skills, buy-in, resources, etc.)
- Having the right rigor around refinement of the concepts, specifically, feeling confident that they know what's most important to the buyer, and it's front and center in the offering
-
-
-
The company just has to have sufficiency versus abundance in these five areas. If even one area is insufficient, the chance of success drops dramatically. As such, it would be irresponsible to advance an innovation to the back end if one link is missing.
