Get your Organisational structure and culture right first
Insurance innovation is attracting huge attention but there has to be a real appetite to change before innovation can flourish. This subject is tackled an the article CIO’s will steer cultural change to drive digital transformation which covers a recent study from Gartner and includes statistics such as:
- 80% of medium to large enterprises will change their culture to increase the odds for digital transformation success.
- In 50% of cases, transformation initiatives are clear failures and CIOs report that the main barrier is culture.
- 67% of organisations surveyed have completed cultural change as they identified the previous culture as a barrier to digital transformation.
The article concludes that the right culture and organisational structure must be in place before any company can hope to innovate and gain the benefits of new technology.
Change is rarely easy
The insurance market is used to their business model remaining the same for decades, so change does not come easily. There are increasing challenges in the sector however, so accepting the status quo is no longer a viable option. Challenges include higher customer expectations, rising capital requirements, new regulatory burdens and low interest rates. This new landscape means that last century’s ’business as usual’ model will no longer work. As discussed in our blog The challenge to be different – it’s all about the people , industry leaders need to be bold and brave and it appears this message still needs to get through.
Axa XL show the way
In 2016 we cited Axa as an example of A joined up insurance strategy. Axa XL now continue this journey with the process of integrating Axa Corporate Solutions, Axa Matrix, Axa Art and XL Catlin. A unified Group will be a huge cultural change for staff as Departments merge and teams will have more diverse responsibilities.
This transformation should dramatically improve the way Axa XL can support their customers. It should also drive cost savings and efficiencies into the business. But this move puts jobs at risk. Axa XL have confirmed 711 people across Europe are at risk of redundancy, with a potential loss of 275 roles in the UK. The headline Provider proposes to cut 711 roles across Europe as integration process continues portrays a negative spin on cultural change. To re-iterate, change is rarely easy.
Minor tweaks are not an option
Axa XL have recognised that their current organisational structure no longer works. A company can’t complete in the 21st-century market without modernising its 20th-century (or in some cases even older) structures. Minor tweaks are not a viable option.
The right culture must be in place to support successful Organisation change. A new, streamlined operating model designed for cross-functional collaboration won’t work if the culture encourages employees to focus on narrow functional priorities. The ‘siloed’ mindset has no place in a unified Organisation. In many instances, change will be essential to deliver sustained and profitable growth. The biggest challenge is ensuring the company culture and structure are fit for the needs of today’s environment. Only then should the technology conversations commence.