You Can Innovate Anywhere – Even Insurance Companies!

A Conversation with Mick Simonelli, of Simonelli Innovation

Recently I had the opportunity to have an insightful conversation with Mick Simonelli to talk about innovation challenges in the insurance industry. Mick is a dynamic thought leader on innovation in large organizations. Mick is an independent consultant for large companies; and leads Simonelli Innovation LLC, a lean, agile, consulting firm that uses proven, practical financial services industry experience to achieve groundbreaking, multi-year results.

Prior to Simonelli Innovation, Mick served as the senior innovation executive for USAA, where he built and drove the enterprise-wide innovation program to world-class status. During his tenure, USAA received numerous awards and accolades including InfoWeek 500’s most innovative, BusinessWeek’s #1 customer service, and people’s choice awards.

Before that, Mick served as a lead innovator in multiple positions within the Department of Defense where he helped digitize and transform the US Army. Mick is a certified management accountant and possesses advanced degrees in business and psychology. A change agent, Mick is an executive innovation practitioner with his work appearing on NPR, American Banker, Harvard Business Review, Workforce Magazine, Fast Company, and academic articles.

Given differences in business and government cultures, how did your experience with the Department of Defense help with your innovation focus at USAA?

MICK – If you can innovate within DoD, you can innovate anywhere, including financial services (which has its own set of complex challenges). DoD is a large, complicated organization. If it were a Fortune-ranked company, it would be Fortune 1. It is also hierarchical, old and conservative, traits it shares with many financial services companies.

In your view, what is the biggest challenge for the insurance industry with innovation?

MICK – Recognizing the urgent need for change, and being able to make the requisite leadership and organizational moves to succeed in this hyper-innovation environment.

Why do you think the insurance companies are lagging behind banks in innovation of the financial services industry?

MICK – I think one of the main reasons that banks are ahead of insurance is that banks have received more of a “nudge” from external disruptions. Banking and insurance have a lot of the same barriers to innovation, but a few years ago the emergence of mobile wallet and various disruptive payment and loan methods shocked the banking community. They have the benefit of seeing their disruption coming quickly and have started to react. Insurance companies haven’t had an “aha” moment like mobile wallets/disruptive payments. Although they’re definitely there for insurance companies, a single disruptive threat hasn’t emerged to scare them in to innovation. That has been my perspective. And, I also think that banks are a bit more progressive than insurance companies.

What major changes do you believe insurance companies need to undergo to achieve breakthrough innovation?

MICK – Transformational leadership. If I had to pick one thing to change I would get rid of the transactional, risk-averse leaders that occupy most insurance Board seats and senior positions and replace them with transformational leaders. Leaders who understand their dual role of running the company (transactions) and also shaping the strategic future (transformational).

Which do you see as the most critical to innovation success in an old, bureaucratic industry such as life insurance: Leadership, Culture, Risk Taking, Process, or Team?

MICK – Hmmmm..I would say culture encompasses all the other categories so I’d pick culture. I very simply define culture as “the way a company does things”

In the book “Innovation Alchemists” you say “Culture Eats Innovation for Lunch.” Is culture that influential in achieving innovation success?

MICK – It is the single-most important factor in how ideas are grown within an organization. It is also a big, scary topic that can be hard to influence.

What best practices do you believe insurers should strive for to establish and build on innovation?

MICK – Regarding culture, work within the culture and capitalize on its strengths. Don’t start by fighting the culture. Identify its strengths and build your initial efforts around them. i.e. if the organization is really centered on revenue and ROI, build your innovations around revenue and ROI; if the culture is built around data, use data as your driver for new ideas, etc.

Regarding people, they are the most important aspect of innovation. Empower them, find the most innovative spirits in the org and let them loose. People, people, people

Build an innovation program over time. Don’t try to be Google out of the gate. Too many companies think they can become world class innovators from nothing. They really have to learn how to exercise those muscles over time by building capabilities. See my evolutionary stages of innovation chart below, which is a model for organizational development of innovation.

Did your innovation projects at USAA have anything in common?

MICK – Yes, they all placed the customer at the center of the innovation. The culture at USAA was customer-centric, so to build the innovation program there we capitalized on that culture and placed the customer’s needs at the center. We were even able to get a special cost-benefit analysis for innovations so that if we were able to do something that saved the customer time or money or effort, we could count is the same as a benefit for the company. That kind of customer focus enabled us to create big and small ideas that truly benefited the customer.

What was the most successful innovation you accomplished at USAA?

MICK – Most might say “deposit at mobile” which was the ability to take a picture of a check and have it deposited, but I would say it was the cumulative effect of over 500 new innovations that together created a wow effect for the customer.

What steps can insurance companies take to progress from a product centric focus to a customer-centric focus?

MICK – That’s a tough one. Lots of organizations use customer service as a buzzword (as well as innovation), but few are able to make the long-term commitment to CX excellence. In my field innovation, placing the customer throughout the entire development process helps using something like human-centered design or design thinking is a nice start.

What types of innovation do financial services and insurance customers expect?

MICK – I am finding they expect massive change and customization. More and more, the consumer isn’t differentiating between financial services and the rest of their life. That means they are demanding solutions that meet their needs
when they want them and how they want them. Financial services companies can no longer hide behind bureaucracy or regulation for protection from change. It’s coming whether they are ready or not!

In what aspects of the insurance industry do you see breakthrough innovation starting?

MICK – There are so, so many areas of disruption: Connected cars, connected homes, autonomous vehicles, user-based insurance, sharing economies, new technologies such as blockchain, etc. Companies need to have viable and active listening posts and be testing and learning these emerging areas. Companies that currently own the market are in the best position to capitalize on new ideas if they’re “in the game.”

Is there a specific insurance company you see achieving real innovation?

MICK – Hmmmm….there are a number of insurance companies that are making exciting moves towards the future. I love John Hancock’s Vitality initiative, I’m a fan of Friendsurance in Germany and talk with their CEO occasionally, Progressive has of course owned user-based car insurance, and I’ve recently worked with a couple of companies that have some incredible game-changers in their labs (can’t talk about those yet, but they’re close to launch!)

Do you find insurance or other financial companies seeing innovation as a project or event versus building real, sustainable innovation capabilities?

MICK – Ha, yes, see my evolutionary stages of innovation chart, above from best practices discussion. Most companies start off with innovation as a project or event, but they need to rapidly move up the ladder to create a real, tried-and-true organizational capability, and ultimately a systemic capability across the organization.

What are the key reasons you see some financial companies have difficulty creating real innovation?

MICK – Most of the financial services orgs my company helps are having some sort of difficulty. Some of the major barriers to innovation I witness are:

• Lack of organizational commitment
• Not enough human or fiscal resources
• Misaligned programs (wrong people or wrong place in org)
• Risk aversion of the organization
• Lack of expertise and experience

Many companies have a focus on ROI, which gets in the way of innovation progress. I read that at USAA you were able to utilize customer savings as a key driver. How important was this?

MICK – Critical, but that was for USAA. Each program needs to be tailored to their specific company’s cultural biases. If they are focused on data, then lead with data, if they are focused on agents, then build ideas that involve agents, etc.

Is there anyone you would enjoy discussing innovation with? If so, who would that be and what would you ask or tell them?

MICK – I love discussing innovation with everyone. You can have the most inspired conversations with people who are not experts or are outside the industry. Sometimes the industry leaders are too encumbered with their perceptions of what is possible. I always try to get non-experts involved in my ideation sessions. Go get the corner musician and invite him into the idea group!

If I could talk to anyone, I’d love to ask Einstein some questions about his thought experiments. I’m a fan because he was obviously on a different level of thinking from anyone else, so why not talk with the master?

What career path did you following to bring you to an innovation career?

MICK – I was a trouble-maker/change agent. Within DoD I sought out change jobs and anything to do with new ideas. I early -on became a “Transformation” officer as a captain within DoD where I had a small part, and saw the power of digitization of the US Army, and was hooked. I later helped develop and launch a major weapons system called SLAMRAAM, and led innovation functions for Army transformation.

You now are an Innovation Consultant, what type of companies do you work with and what is your focus to help their innovation?

MICK – I focus on medium and large financial services companies. They are in the best position to capitalize on their market strength to create bold, new innovations; but also frequently need practical expertise to realize their potential. I concentrate on the strategic aspects of their programs and help them focus on those areas that will rapidly accelerate their results.

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Celeste-150x150Celeste Bevilacqua is the Financial Services contributing editor for Innovaiton Excellence. She has been in the financial services and insurance industry for over 20 years with top insurance and financial companies. Currently she is a Financial Advisor with Edward Jones as well as an advisor to the town of Pawling, New York and the Chamber of Commerce on Economic and Business Development.

Celeste Bevilacqua




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