Embrace the Power of Open Innovation, Collaboration
Denise Garth | June 12, 2014
Innovation ecosystem. Open innovation. The combination of these two empowers the collaboration and sharing of knowledge, information, and ideas that are accelerating innovation today, helping to reimagine industries and companies.
Why is an ecosystem so powerful and so critical? Due to day-to-day operational demands, insurers often lack the time, expertise, and resources for tracking, assessing, and putting the implications of the influencers of change for insurance into context. An ecosystem can enable the generation and integration of new ideas and thinking.
With the help and input of an ecosystem—particularly one with outside resources—a much needed, outside-in perspective is provided that helps to break down legacy assumptions. In today’s hyper-connected world, companies are transitioning from managing value chains to managing ecosystems for powering the business.
What is open innovation? Henry Chesbrough, author and academic, originated the term open innovation as “the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.”
Chesbrough also notes that open innovation “is a more distributed, more participatory, more decentralized approach to innovation, based on the observed fact that useful knowledge today is widely distributed, and no company, no matter how capable or how big, could innovate effectively on its own.” Or how powerful as a market leader, for that matter, because no singular person or entity possesses all of the knowledge, insights, ideas or creativity. This is why crowdsourcing, a means of open innovation, is crucial for all companies to embrace.
Since the 20th century, with the dawn and the potential of technology starting in the industrial age and continuing into the information age, companies seeking market leader status through technology innovation developed internal, large, and impressive R&D departments. Iconic examples include Bell Labs, Xerox, IBM, HP, Ford, BMW, BP, AT&T, and GM. The advent of the Internet and new technologies enabled collaboration with people and resources around the world, dramatically changing how companies did R&D, internally and externally.
By embracing open innovation and ecosystems, leading technology and start-up companies formed co-creation environments that embraced technology. Examples of these include Linux, Google, Apple, and Cisco. Today, companies across all spectrums, even those with historically iconic R&D departments, see the power of open innovation and ecosystems and are embracing the concepts, including Ford, Heineken, Procter & Gamble, BMW, Dell, and Starbucks. And there are start-ups that are using crowdsourcing to crowd-fund investment resources to bring new, innovative products to market.
The powerful combination of these two concepts, innovation ecosystem and open innovation, can be formidable for companies in positioning, retaining, or more importantly, leap-frogging market leadership status. And it creates a powerful chain reaction of innovation and success. Just consider Linux and Apple. Linux was created in 1991 by Linus Torvalds as a new operating system to use the capabilities of his new PC. Once he had his first version, he posted it online to a group of developers for feedback. The rest is history.
Today, Linux is managed by a community, thousands of programmers around the world that use Linux are sending their suggested improvements to the maintainers, and new companies have emerged that benefit from Linux. Likewise, Apple’s development of the iPod, iPhone, and iPad has changed industries and created new companies, changing market dynamics in the process. Now, through open innovation and collaboration, whole communities of developers are creating new apps that engage and change the customer experience daily.
And then some companies that are not considered predominantly high-tech, like Proctor & Gamble, Starbucks, BMW, Heineken, and Ford have embraced ecosystems to fuel innovation and keep them relevant in a fast changing marketplace. P&G’s Connect+Develop open innovation, with an ecosystem of over 2 million relationships, is a powerful force of collaboration, innovation, and change. It has been stated that P&G’s launch time for new products has been halved and the innovation rate has increased by 75 percent through this powerful combination. Imagine the potential for insurance.
The potential and value of an environment of open innovation with access to a robust ecosystem is broad and transformative. It provides a “safe sandbox” innovation environment where you can discuss, debate, and incubate ideas to then cultivate and mature uniquely inside your organization. This type of co-creation allows companies to expand their business ideas and use of technology quickly and cost-effectively.
While keeping competitive information confidential, companies can discuss ideas, challenges, and opportunities to leverage the breadth and depth of expertise and collaboration of the community. In essence, the community becomes an extension of your company’s innovation, strategy, and R&D efforts that can inspire and activate change within your organization.
Even more exciting is the possibility of open innovation leveraging a broad ecosystem of inside- and outside-the-insurance-industry participants to set in motion a chain of transformation and success, for an individual company and the industry as a whole, letting us as an industry define our own future, rather than letting it be defined for us.
For those insurers that are wary of this level of open innovation and collaboration, just look at the market leaders in other industries to see the powerful impact. These companies embraced open innovation and built ecosystems of inside and outside relationships—with customers, suppliers, partners, industry leaders, academia, technologists, and others—to help them transform and gain or retain market leadership.
Ignoring this powerful approach and trend can seriously impact the future relevance and success of the insurance business as we know it. At the recent MIT CIO symposium on innovation and the digital revolution, panel discussions of leaders across different industries emphasized this well:
- The ubiquitous connectivity of people via the Internet and emerging technologies such as social media, the Internet of Things, crowdsourcing, mobile, and cloud are disrupting traditional, historical business assumptions from how to engage customers, to the products and services offered, and ultimately, to revenue models.
- There is a disruptive, foundational change taking place in the way all businesses are approaching value creation.
- Operational excellence is table stakes. The barrier to entry for all industries has either already fallen or is falling now.
- Modern technology and digitalization must change how companies see themselves—no longer as value chains, but rather as enterprise ecosystems that must be connected.
- The collective intelligence of ecosystems promotes an entrepreneurial spirit, provides a greater understanding of new technologies, and stimulates creativity and lifelong learning that together are key characteristics for future success.
- The price of solving problems is innovation.
Insurance industry disruption has begun and will tear down the business assumptions and paradigms of the last 20-30 years, or more. Don’t protect and cling to those assumptions. Re-envision, reinvent, and change the business. And most importantly, embrace open innovation and an ecosystem of outside-in thinking and collective intelligence to inspire and accelerate your transformation. Be a disruptor and an innovator.
Contact Denise Garth at email@example.com if you’d like to learn how SMA can help you on the innovation journey and discover new opportunities for the insurance industry. Click here to learn more about SMA’s research.
- ITA Pro Magazine May/June 2019
- Spotlight on the 2019 IASA Conference
- ValueMomentum Selects Erie as Site of Regional Development Center
- Capgemini and Majesco Become Alliance Partners
- Electronic Chat with Dr. Dan Shoham
- Electronic Chat with Todd Greenbaum
- Martha Notaras: The “Outsider” with an Amazing Inside View
- ProSight Direct Offers “Effortless Insurance for Today’s Professional”
- Electronic Chat with Larissa Tosch
- Martha Notaras Will Join ITA LIVE 2019 as a Keynote Speaker
- Five Things to Consider When Evaluating Your Cyber Risk
- ITA Pro Magazine, January/February 2019
- Major Ransomware Attack Could Hit U.S. with $89B In Economic Damages
- ITA Announces 1st of Three Keynote Speakers at ITA LIVE 2019
- Electronic Chat with Jeroen Morrenhof
- Legacy Systems Are Dead. Really? Don't Count On It.
- Now Accepting Nominations for the 2019 ITA Bridge Awards
- It's time to register for ITA LIVE!
- Registration is Now Open for ITA LIVE 2019!
- What to Expect from a Digital Experience Platform Implementation
- ITA Pro Magazine September Edition is Now Available
- It's National IT Professionals Day
- Save the Date for ITA-LIVE 2019
- OneShield Software and UrbanStat Work Together to Improve Real-Time Analytics and Risk Decision-Making
- ITA LIVE 2019 - SAVE THE DATE!
- Insurance Technology Association Announces New Editor-in-Chief
- August 2018 Edition ITA Pro Magazine is Now Available
- Enterprise Architecture in an Agile World
- Top 10 Tips for Securing Your Mobile Devices and Sensitive Client Data
- Industry Insight: 4 Global Insurance Trends in Digital, Data, Content Services and Security
- Diving Deeper into Prioritizing Your Strategic Digital investments
- Why Content Rules
- How Mass Personalization Will Open the Small Business Benefits Market
- At Year End 2017, Will Your Organization Be Protected from Cyber Risks?
- Do Insurance Bots Dream of Mitigating Risk?
- Conditioned to Respond
- Managing & Mobilizing Insurance Data in a Connected World
- Race to the Finish Line
- New Tools, New Opportunities in Claims
- ITA LIVE: Reaching Insurance Industry Crossroads
- Advice to Insurance IT Leaders: Keep Your Eye on the Ball
- New Date, Venue for ITA LIVE 2017
- Guidewire Makes Major Push to Small and Midtier Market by Acquiring ISCS
- Insurance Disruption is Happening Right Now
- Insurity Adds Strategic Investment Partner, General Atlantic
- Beyond Transformation: The Convergence of Finance, Risk, and Actuarial Functions
- The Rapid Evolution of Consumer Protection Regulation
- Talent Hunt: Finding, Attracting, Retaining Top People
- Insurers Flexing Their Distribution Models
- Technology Driving Disruption in Insurance
- Fear of ‘Next Bubble’ Challenges Life, Annuity Carriers
- Technology Allows Commercial Lines Insurers to Stand Out
- Single Sign-on Viewed as Biggest Tech Challenge for Agencies
- ISCS Observes 20th Anniversary; Scurto Predicts Major Changes Ahead
- Policyholders and Their First Impressions
- Progressive Making Progress on the UBI Front
- High and Dry: Insurers Search for Disaster Recovery Plans
- Insurers Sign The (Un)Dotted Line
- Reflections of a Retired Insurance CIO
- Mobile Device Management Just One Answer to BYOD Issue
- Lessons from GEICO and Progressive on Winning the Critical Buying Stage
- You Are a Target for a Cyber Attack
- Web-based Systems are the Next Evolution in Claims Technology
- Gaining a “Wow” Experience from Web Users
- Time to Shift from Business/IT Alignment to Business/IT Alliance
- Healthcare Insurers Changing to Consumer Model
- Organization is the Key for Selecting Software Vendors
- Analysts Expound on the Needs of the Mid-tier Insurance Market
- Finding the Cure for Obamacare’s Website
- New Software Solutions Benefit Insurers on the Inside and Outside
- Products, Market Impede Investment in Systems for Life Insurers
- Combatting Cyber Threats: Predict, Prevent, Persist
- The Future of Telematics Heads Beyond Insurance
- The Shame in Cyber Security Lapses
- Building Policy Administration Systems for the Future
- Insurers Look Into The Eyes of Their Policyholders
- It’s a New Dawn for the ITA
INSURANCE IT NEWS
- Zywave Expands Commercial Content Offering in Flagship Product
- Insurance Technologies Partners with Fiduciary Exchange, LLC (FIDx) to Deliver Seamless Annuity Illustration and e-Application Capabilities in the Envestnet Insurance Exchange Platform
- Equisoft Acquires Grendel Recognized for its Premier Wealth Management CRM Platform
- Distribution Connectivity Options for Insurers Proliferating and Improving, Says Novarica
- Noblr, the New Car Insurance Company, Launches in Colorado
- Mitsubishi Motors North America, Inc. Named OEM of the Year at 2019 TU Auto Awards
- Leading Roadside and Transportation Networks Partner to Transform the Breakdown Experience for Consumers
- Insurers Leveraging Emerging Tech, Analytics, Third-Party Data in Loss Control, Says Novarica
The Email Chat is a regular feature of the ITA Pro magazine and website. We send a series of questions to an insurance IT leader in search of thought-provoking responses on important issues facing the insurance industry.
ITA LIVE 2019
The tide is up! It's time to register for ITA LIVE 2019, our annual educational and networking conference! Our theme is "The InsurTech Revolution: Cutting Through the Hype." and we'll be bringing in a torrent of industry thought leaders, amazing insight and wonderful perspectives on the world of insurtech and its impact on the insurance landscape.
ITA LIVE 2019 will present real-life examples of true startup technologies that are helping insurers gain real advantage -- and a competitive edge -- in the marketplace. We’ll highlight the more successful InsurTech partnerships, while offering case studies that demonstrate exciting innovation and cutting-edge techniques impacting all aspects of the insurance ecosystem.
Ride the wave to LIVE 2019. Sign up today! We look forward to seeing you in May, 2019!
BLOGS AND COLUMNS
You have surely heard it said that small businesses are the growth engine for America. Today, the phrase has a special ring to it for benefits... READ MORE
With stagnant growth and lingering low interest rates, the life insurance industry faces a challenging future... READ MORE
Finding insurance carriers willing to write commercial lines risks has always been a challenge for producers... READ MORE
As Guidewire Software prepares for the start of Connections, its 11th annual user conference that begins on Nov. 2, Brian Desmond, chief marketing... READ MORE