How To Digitise: McKinsey's Stairway to Digital Excellence and Other Signs You Should Take it Slow
I get it, it's tempting to rush into digitisation, especially if you're feeling enthusiastic or even just behind. But there's no doubt about it - taking a slow and steady approach can lead to more sustainable and successful outcomes. Speed may deliver in the short term but it's the consistent long term benefits we should be interested in.
I'm not just saying this because I want to slow you down - quite the opposite. There's copious amounts of research on why slow and steady is best. Drawing insights from McKinsey's research on achieving digital excellence, let's explore how their four essential steps can relate to successful digitisation of claims in reinsurance.
Step 1: Grassroots Agile
McKinsey explains Grassroots Agile by saying, “As teams embark on their agile journeys, they begin adopting behaviours conducive to an agile way of working”
Thus, the foundation of any successful digitisation effort lies in developing a culture of openness and experimentation within the organisation. This is not something of the norm for re/insurance. The industry tends to stay more traditional. However, in the face of changing digital expectations, it's understandable to see some loosening up.
In claims processing, for example, this could mean empowering claims teams to adopt agile principles and practices. Now, this does not mean that everyone must know, or try to know, everything. What it does mean is that cross functional collaboration is greatly encouraged, which also requires investment into collaborative tools, and teams of people, all of whom will have their areas of expertise, will have autonomy to make decisions.
Step 2: Basic Agile Fundamentals Established
Once the agile culture is ingrained within the organisation, it's time to focus on establishing basic agile fundamentals. These are best built upon slowly. Some typical characteristics of agile working are to work in sprints, establish daily meetings and run retrospectives. Let's think about how this looks in reinsurance.
The Actuary explains how in traditional renewal processes, accounts awaiting pricing are assigned to actuaries. In agile environments, underwriters act as subject matter experts, creating detailed "stories" for pricing tasks. Weekly sprints, daily check-ins and pricing meetings are signature of the agile methodology and, while not an obvious application of the agile approach, can help to streamline the process. Tasks are divided, time estimates given and team capacity tracked automatically, improving prioritisation and efficiency.
Step 3: Technology Investments
Note how technology implementation is not step one in McKinsey's stairway. Nor is it step two. No, the optimal time to introduce technology is after cultural changes have been implemented and time has been given for it to become familiar to the people within the organisation. After all, for many organisations this will be a big change and it has to be carried out incrementally.
Hence, with the groundwork laid and established, it's then time to invest in the tools that are going to support digitisation efforts. When looking at claims processing, Blue Prism suggests that you'll want to find a solution which spans over multiple processes. They go on to advise, “Depending on your business operations, you’ll likely start small with inefficient individual tasks and move toward end-to-end digital transformation.”
Again, it's not just McKinsey's research that suggests it; being incremental with change is advised across the board.
Step 4: Key Mindset and Structural Shifts
As technology continues to evolve, reinsurance leaders must not overlook the importance of mindset and structural shifts in driving digitisation. Put simply, this step is all about consistency.
As McKinsey warns, steps two and three can take a lot of time and some leaders may lose the vision during the process. Please, from one reinsurance specialist to another, do not lose the vision. Leaders being continuously and actively involved in their company's digitisation efforts leads to it being around 6 times more likely to succeed. If you feel the hope or enthusiasm slipping, it may help to get in touch with a digitisation consultant to help keep you motivated and on track.
The journey towards digitising claims in reinsurance is not a sprint but a marathon. Here, I've talked you through what it could look like in reinsurance when following McKinsey's four-step approach to digital excellence - grassroots agile, basic agile fundamentals established, technology investments and key mindset and structural shifts.
Remember, the goal is not just to digitise claims but to transform the entire claims handling experience for the better.
If this sounds like what you want but you're still unsure quite how to get there, you can visit my website for more resources or to get in touch (https://www.buondrius.com/).
https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/stairway-to-digital-excellence
https://www.theactuary.com/2022/12/01/agility-trial-how-can-agile-methodology-benefit-insurance