Radical transparency. Innovation is hard enough as is, so a lack of clear expectations and communication makes it near impossible. In many brokerages, the transparency and accountability required for innovation is not discussed nearly enough.
But it needs to be.
Accountability is nothing new to insurance. Ultimately, an insurance company’s success or failure depends on adherence to strict underwriting guidelines, defined sales metrics, and risk mitigation practices. As margins continue to thin, ensuring targets are being met has become more important than ever.
When it comes to innovation within the industry, however, many organizations are at a loss on how to quantify results and justify continuing investment. For companies who commit to innovation as a function and cultivate the innovation mindset, learning how to establish accountability will serve as the fuel necessary to keep pressing forward.
As you may already be aware from our articles on innovation as a business function and innovative mindsets, definitions matter. Most of us have a firm understanding of what accountability entails. After all, from the moment we took on our first childhood chore, we quickly learned the word’s meaning.
Accountability is the assignment of responsibility and consequences for the outcome of a specified action or task.
The term rarely conjures up any sort of positive sentiment as it is often linked with images of punishments for not meeting an objective. In a culture of innovation, then, it is better to redefine the term as Henry Evans did in his book Winning with Accountability.
In his book, the author defines accountability as “Clear commitments that, in the eyes of others, have been kept.” His redefinition encompasses two critical concepts to promote a team approach with clear goals. First is the need to have clear commitments and second is ensuring transparency through the eyes of others.
Visions and Challenges
For an organization to achieve exceptional growth, innovation must come from all levels. This includes the visions of the C-suite on down to the challenges faced by the greenest associates. Input from all departments, from sales to human resources, is also critical to infusing the impactful change necessary to increase margins and market share.
Executives are charged with looking ahead five or ten years. Often even longer. Their visions often manifest themselves in generalities such as:
- Diversify product offering
- Increase account rounding
- Reduce client acquisition costs
Individual employees, with a more granular view of an organization’s operations, may see opportunities to:
- Enhance the customer experience
- Develop comprehensive training programs
- Improve communication between departments
Accountability begins here. Organizations must install processes to harvest the ideas and dreams of all employees. Additionally, processes need to include methodologies to determine which concepts will be further investigated, when they will be explored, and how much time and resources will be allocated to each.
Establishing Team Objectives
Company goals typically do not come with the goalposts necessary to make them actionable. To meet the aspirations of C-suite executives and employees alike, establishing objectives will build structure and provide direction for your innovation teams.
One of the most common approaches, and one you may already be familiar with, is to use SMART. The five-letter acronym breaks down as follows:
Specific – Objectives must be specific and include at least one definable metric and a deadline. For example, “Reduce underwriting turnaround by 10% before July 1st.”
Measurable – Each objective must have the ability to be tracked. By measuring objectives, teams see if progress is being made and results are being achieved.
Attainable – Objectives that seem out of reach will not garner the necessary attention or enthusiasm from your innovation team.
Relevant – Act only on objectives that, if successful, can move the organization toward the greater company vision.
Time-Bound – Deadlines create urgency and focus. Realistic, yet aggressive time targets can quickly produce positive change.
The SMART approach, as simple as it is effective, will help your innovation team take a relatively obscure goal and break it into actionable steps. As your team embarks on exploring ways to solve challenges and achieve goals, management will continue to want hard data to back up their investment in innovation is paying off.
What Gets Measured Gets Managed
The adage “what gets measured gets managed,” often incorrectly attributed to Peter Drucker, very well could be the insurance industry’s mantra. And whether you personally subscribe to this philosophy or not, there certainly is a need to evaluate the outcomes of any innovation initiative.
To accomplish this requires three primary elements. The first two include:
#1 Critical Success Factors (CSF) – High-level goals, visions, or objectives that are critical to a company’s success. An example could be to increase market share through account rounding.
#2 Key Performance Indicators (KPI) – Quantifiable targets used to measure the progress toward an intended result or serve as a baseline to determine the performance of anything measured.
Both CSFs and KPIs serve as guides to assist organizations in achieving successful outcomes. Coupled with hard metrics such as gross margin, EBITA, and net income, management teams can quickly determine if the goals of shareholders are being met.
Innovation, on the other hand, can be more difficult to quantify. However, by adding a third measurable element, there are ways companies can feel justified in their investment of time and resources.
#3 Innovation Conversion Ratio (ICR) – The combined investment of time and resources into innovation divided by the quantifiable return of the resulting outcomes.
More simply put, we want the revenue or savings brought upon by innovative projects to exceed the cost of research, implementation, and execution. The hesitancy for many executives to commit to innovation as a function is positive results often take much longer to realize when compared to implementing off-the-shelf solutions.
Companies reluctant to adopt innovation as a core function will only continue to struggle as new technologies, digital-first competitors, and rising customer expectations further pressure the industry. But, for those who truly embrace innovation, the rewards to be had are profound.
To win today and down the road, ensure every level of your organization understands its accountability for digital transformation.
CFOs of Mid-Market Enterprises Spend Too Much Time Buying Insurance
If you’re a commercial insurance professional, you’re part of an industry that has mastered time...
How to use your data to successfully innovate
High-quality data is a critical factor in innovation success
If you’re like many commercial...
Igniting Innovation: Why Mindset is the Key
Think about the most innovative companies in the world. Names like Apple, Amazon, and Tesla likely...