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PERSPECTIVES


Erik Sandquist Q&A: Leading the digital insurance organization

The digital insurer will require a different kind of leader who is ready for a complex, connected, AI-augmented environment.

To gain a better understanding of leadership in the digital environment, researchers at the Accenture Institute for High Performance interviewed 37 executives charged with leading their companies beyond the digital frontier. We speak to Erik Sandquist, managing director in Accenture's Insurance practice, about the findings and what they mean for insurance leaders.

How might disruptive technologies change the nature of leadership in the years to come?

Given that digital technology is changing all aspects of the insurance business, from internal operations to consumer behavior to value chains, it’s no surprise that the research shows that many elements of leadership will change dramatically in the years to come. Consider the fact, for example, that a more fluid and distributed workforce may mean that people work together but never encounter each other directly. They might work on the same projects with the same goals, but never be employees of the same organization.

And they’ll work alongside artificial intelligence (AI) and machines so smart that it will be difficult to tell human and machine intelligence apart. Crowdsourcing and the gig economy are beginning to redefine the relationships between, and definitions of, employee and employer.

These shifts are quite profound for the insurance industry, which has historically relied heavily on third parties – agents, brokers and financial advisors – to distribute its products and provide advice. It has also employed a large number of people to handle claims, provide customer service, and manage the distribution channels. And being in a highly regulated risk management business, it has historically been risk averse and at times slow to change and innovate.

Our research points to three master trends that will redefine what it means to be an insurance business leader: networks connect, talent fragments and organizations open.

Let’s pick up with the first trend—networks connect. How will it apply to the traditionally hierarchical and process-focused insurance workforce?

New technologies such as AI are rapidly changing the structure of the insurance workforce from the rigid hierarchy of old to a more dynamic pool of talent. As more and more of the routine aspects of work are automated, the work left for humans will become disproportionately creative, judgment-oriented, and social in nature.

So, we’re seeing insurers lean more heavily on new communication tools and data sources, for collaboration within the enterprise and with ecosystem partners. It’s quick and easy to spread information and connect with others, thanks to mobile technology and the latest collaboration tools.

Thus, despite the fact that insurance organizations traditionally have tended to be structured around specialist disciplines such as underwriting and claims, and have retained their line-of-business siloes, the insurance workforce is becoming more like a network than a hierarchy. A network is suited to discovering patterns and connecting dots, rather than searching for familiar signs that trigger practiced responses. And as the hierarchy continues to break down, the leader’s job becomes about encouraging the optimal interactions and intersections between the organization’s people.

Insurance leaders must prepare for profound changes here—for example, getting underwriters to team with data scientists to leverage new and broader sets of data from both within and outside the company. They may also need to prepare for new workforce roles, such as ecosystem architects who facilitate external collaboration around disruptive new business model ideas and potential collaborations.

New structures and managerial principles will emerge, which will mean playing by different rules and rewarding different behaviors. Talent practices will evolve, such as performance management systems based on real-time data, onboarding processes that help employees develop and connect with personal networks, and machine intelligence and analytics that reliably screen for people who thrive in highly networked organizations.

How are we seeing the fragmentation of talent play out in insurance?

The research pinpoints four ways that digital technology is fragmenting talent. Firstly, we’re seeing organizations use specialized talent exchanges to access new talent pools including remote workers, those in rural areas, those with talent but without formal credentials, workers over 65, part-time working parents, freelancers, and even volunteers from the crowd.

Secondly, digital advances are disrupting conventional notions of how work is organized and accomplished. For example, we’re seeing jobs split into modular tasks that are then digitally stitched together into a large, unified project.

Thirdly, workers are seeking rewards beyond a pay check. Many hold employers to a new and higher standard; sometimes the standard is environmental, sometimes it is aesthetic, and sometimes it is cultural. Insurers are competing for rare but essential skills against employers from other industry segments.

When it comes to data and analytics skills, for example, data scientists expect to have access to large quantities of data, sophisticated tools, and interesting problems to solve that are critical to the success of the organization.

Pulling this world of fragmented, contested talent together demands more agile and collective leadership. Insurance leaders must master the art of coordinating teams to come together to solve problems or exploit opportunities and then to disband just as rapidly. And they will find it essential to have a clear and strong organizational purpose that resonates with employees if they are to secure the best talent.

For many insurance leaders, addressing the ageing of the workforce and gaps in succession planning is becoming increasingly urgent. Insurers often struggle to attract top young professionals and, as I mentioned, they face competition from other industries for digital, analytical, and entrepreneurial skills.

What does the third trend, organizational openness, imply for insurers?

Many traditional organizations have been plagued by a lack of accountability and slow decision-making. Now, there is a trend towards more rapid, transparent and democratic decision-making that engages employees further down the hierarchy. This shift is inevitable in a world where humans and machines leave a digital trail that is easily followed and where it is difficult to keep big news secret.

This is mostly good, since research shows significant benefits for insurers that embrace openness, including more positive customer relationships, increased employee productivity, and a more positive, trusting employee culture. But there are also drawbacks that need to be managed—increased defensiveness, for example, as well as privacy and data security risks.

To make openness work, insurance leaders need to have the courage to try new things and even to fail publicly. They will need to develop very high emotional intelligence—to set aside hurt feelings, to use feedback for honest self-examination and to participate in dialogue in which they might not have all the answers.

Please sum up the competence and capabilities an insurance leader needs for the digital age.

In a digital enterprise, an environment of dynamic complexity, leaders must distance themselves from the operational bustle and find big-picture patterns and opportunities. They must look beyond their current expertise to develop new capabilities that will be critical to their future success.

And they need a strong ability to think systemically—to account for feedback loops, delays, reinforcing and constraining forces—so they can separate signals from noise and provide guidance with a measure of confidence. The ability to combine ideas—rather than insist on a division of labor—will be an essential quality.

The good news is that leading in the digital enterprise will become second nature, with practice. Many basic skills and expectations will remain valid. Others, however, will need to be discarded and new skills acquired. This evolution will require looking at leadership in an entirely different way—and it is not too early to start learning how.

To discuss these issues in greater detail, contact Erik Sandquist at erik.j.sandquist@accenture.com

To read more of Erik's views on the transformation of insurance, visit his blog.