If insurance were a map, we would be surveying a whole new world. The fences and boundaries of tradition have fallen. The snow-capped mountains of certainty are melting away. The rivers of market share are changing course and streams of data are coming directly to our doors. We know there are still products to plant and fields to harvest, but how will our planting change in the months and years to come?
Many insurers will be looking at greenfields for the answer.
Greenfields, startups and incubators are different ways of looking at the same essential concept — starting from scratch. Each is a new beginning. Greenfields are new initiatives often aimed at developing new markets. Startups are most often new initiatives that will reach existing markets. Incubators are designed to test new products within new or existing markets. For our purposes, we will lump them all together under the title of greenfields, because from an organizational perspective, the need for them and preparation for them are similar.
Cultivating the soil
Think about how insurance has grown, just based on the questions we have asked ourselves over time. Insurers used to ask, “How do we do what we do better?” They were thinking of underwriting, selling and meeting market demand.
As the Internet and the digital realm arose, they began asking themselves, “How do we do what we do differently?” They needed to know how to reach the same people with better channel management and improved customer service.
Now, they are asking, “How do we do what we don’t currently do at all?” They want to know how to identify, build and capitalize on new risk needs, new markets and social networks, how to use technology to its fullest, how to become a trusted resource for services outside of insurance and how to reinvent the organization and brand so that it is prepared to be profitable no matter what initiatives lie on the horizon.
It is the preparation that is an important first step. A great idea can’t take root in an organization that won’t support it. How can insurers prepare for greenfield development?
Greenfield insurance companies that are starting outside of a traditional insurance organization and those that are starting under the umbrella of traditional insurance companies both value “fresh air” and an environment that is unclouded by tradition.
Starting from scratch allows them to think without constraint, test without constraint and operate without constraint. They do have barriers. Most are operating within a window of opportunity and all are operating under the assumption that investments need to pay off. But for the most part, greenfields take advantage of the fact that organizational politics, processes, traditional technologies and time-honored ideals are all open to reassessment, replacement or removal.
Organizational silos need to be bridged, if not completely abandoned. The new opportunities where greenfields will work best will be created by cross-functional teams that understand how to integrate new technologies with the best ideas. This is one reason hackathons have recently grown in popularity. They are simply borrowing a common concept from ad agencies, TedX events and jazz musicians…the idea that walls and ideas aren’t compatible. The best fertilizer for ideas is a diverse set of perspectives on how the idea will be constructed and how it will work in practice. Teams need functional area experts, but they also need general leadership with a holistic perspective as well as input from technology partners who grasp what is technologically possible.
Investing in seeds
Seeds are investments and most investments have phases. The greenfields in insurance are ripe for these investments and they are bearing fruit. But those that will be most successful will pay close attention to planting methods.
For example, farmers don’t take the newest seeds and plant 1,000 acres. They test them in plots. In insurance, our ideas need to be cultivated quickly, first in small pots, in our incubators and centers of excellence — we can call these our insurance greenhouses. If they appear to be working, we test them in small geographies then roll them out to larger segments. Seed planting is speed planting. The idea works or it doesn’t. We scale up quickly or toss the idea out. We invest wisely by investing small, until the investment proves itself and then we invest more.
As we watch SEED money flowing into InsureTech, we know that some of these investments won’t pay off. Many venture firms will have invested more in a proof of concept than they should have. Some will attempt a rollout before the concept is mature. The best growth will happen through organizations that know how to phase greenfield investment.
Greenfields will be capitalizing on technology to save investment funding. This includes reusing technologies and sharing systems. Cloud platforms with a “pay as you go” pricing model are PERFECT for greenfield development because they answer the demand for agility, innovation and speed (low implementation time, quick speed to market, light or no customization) with lower investment and maintenance costs … allowing the investment to focus on the business not the infrastructure. Greenfields are creative pursuits to new opportunities. Their back-end solutions will require just as much creativity as their front-end marketing, but they will want solutions that don’t require massive customization.
Greenfields will therefore capitalize on what they don’t need to build from scratch. Modern core platforms will allow them to use pre-built, integrated content and data sources, pre-built best practices and products and pre-built channel options. They will use their creativity to build new business models around pre-built infrastructures, instead of building new systems from the ground up.
The passion for planting
In the coming weeks, we will take a more in-depth look at greenfields, startups and incubators. We’ll look at the surprising growth of insurance innovation investment and what it means to existing businesses. We will discuss how deeply the choice of platform can affect insurer preparation and we’ll also look at the greenfield spectrum that includes new value-chain technologies, new aggregator channels and completely new types of insurance.
Our goal is not to gawk at the high number of entrants into the market, but to glean a whole new perspective on opportunities. You may find that your unique position will allow you to have market-capturing ideas ahead of others. And you may develop a passion for planting your own seeds in the greenfields of opportunity. Is your organization ready for your team’s next great idea?