Our world is becoming progressively more digital, and today’s consumers are increasingly comfortable using new technologies. In fact, they expect these digital experiences in every interaction in their lives, including their interactions with insurers. This means that the future of insurance needs to become much more digital. Insurers can either prosper by becoming digital insurers or continue along the same path and watch their customers migrate to companies that offer more innovative products and services that better suit their needs. In a highly competitive industry that is not traditionally known for innovation, changes in demographics, technology, channels and business models are creating significant new opportunities for insurance companies to defend market share and increase revenue and margins. The need to innovate, and to do so quickly, is now deemed critically important by 88 percent of insurance companies. But innovation can come in different forms.
But it is not always necessary to come up with a grandiose silver bullet idea in order to innovate. While insurers should test disruptive ideas, they can also deliver business value quickly by focusing on adjacent product innovation. Simply put, adjacent innovation includes taking existing products into new markets and digital channels or creating new digital products for existing markets.
The Benefits of Adjacent Innovation
Adjacent innovations keep one area stable, like the product or service, while focusing on creating a new and innovative go-to-market. By minimizing the number of completely new areas for a program, insurers can focus on creating value in one area by leveraging existing assets.
Adjacent innovations also tend to scale faster because you are not creating everything from scratch, meaning it is a low-risk, high-value innovation. This allows you to rapidly create a minimum viable product (MVP) that shows quick impact and value that executives will want to champion. This type of innovation will ultimately change the culture of your organization for future innovation projects. The sooner you can show value and generate internal PR and executive buy-in, the quicker you can scale.
Adjacent innovation in action
There are many insurers who are already practicing adjacent insurance innovation to deliver business value.
One such is selling directly to the customer. Therefore products could be offered at a lower, more competitive price. This being a high transactional model, products could reach the consumer through self-service and fast.
Yet another innovation could be using small teams to deliverproducts fast leading to frequent market feedbacks and allowing the team to hone their product portfolio with additional releases.
Key Takeaways
The important thing is to have a properly balanced innovation portfolio. Alongside experimenting with transformational ideas, think about processes to support rapid time to market for adjacent product innovations.
Your process for digital innovation should be all about speed, agility and low cost. Fostering a culture that supports a test-and-learn, fail-fast approach will get new ideas into the market quickly and at low cost in order to see what works.
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