In today's fast-paced and ever-evolving insurance markets, innovation is essential to reaching new buyers and thriving in the face of increasing competition.
Larger carriers may have a resource advantage, but to reach innovation objectives and drive transformative change, partnerships have become the norm for carriers of all sizes. For small or medium-sized carriers in particular, it can be the best way to enter a new space or gain an edge in an existing one.
Choosing the right partner is therefore crucial, as missteps can be costly to both the bottom line and an insurer’s reputation. To navigate this critical first step, the following 10 considerations for evaluating potential innovation partners provide a useful guide. They can be the key to minimizing risks and maximizing the potential for a successful, game-changing collaboration.
1. Look for cultural fit.
This requires a strong sense of self-awareness, but every company has its own unique way of doing things. In your exploratory meetings with the potential partner, do the people you meet with feel like they would be comfortable working with your staff? Do they have the same focus on the customer? Do they treat each other and you with the same level of professionalism? Remember, successful partnerships can last a long time. No matter how brilliant their solution or capabilities, you want to avoid choosing partners your team will feel they have to battle every step of the way.
2. Screen for strategic alignment.
Maybe even more than cultural fit, you also want someone whose strategic goals align with yours. This isn’t to say they need to have the same goals. For example, a technology company and an insurance carrier will likely have different business goals and express them differently.
You need to assess whether both organizations respect each other’s goals, whether the goals are in conflict or synergistic, and whether both sets of goals can be achieved through a successful partnership.
Remember, you are not seeking to create a one-sided partnership. While you’re evaluating a potential business partner, that partner should be evaluating you. If goals are misaligned, it is best to part ways sooner to avoid long-term roadblocks.
3. Clarify the problem statement.
A vital first step in innovation is to ensure you are solving for a clear problem based on a validated client need. You must be able to clearly explain it to your executive management so they understand it and buy in to the project. You should expect no less from a potential partner.
If a prospective partner isn’t grasping the problem you’re looking to solve, it could be worth running your problem statement by other industry outsiders who don’t have a vested interest in agreeing with you. This will help you refine your explanation and messaging. If the prospective partner clearly understands the challenge but doesn’t see it the same way, this could be a sign of lack of commitment required for project success.
4. Listen to how the solution is articulated.
Sometimes a new technology solution is still in development when you are talking with a startup. The company may also be targeting more than one use case. This might lead to varied terminology being used to describe the innovation, so it becomes critically important that all parties are aligned and can clearly articulate what the solution is, the capabilities it delivers and its key attributes and benefits. Test yourselves by asking: What exactly does the solution do, and can everyone understand and restate that?
If something is not clear, ask questions. Don’t assume you know the answers, especially when it comes to the solution’s availability and capabilities.
5. Determine the amount of change required to fit the use case.
Significant change isn’t always a deal breaker but could signal challenges ahead. Few solutions will have everything you need, so in addition to looking at current capabilities, you’ll want to assess if the solution mostly fits your use case or if the potential partner has the ability to tailor the solution to meet your needs. If the solution and its capabilities are not fully shaped, the carrier can be essential to helping refine the solution and bring it to market.
Remember to consider the resources and technical know-how required to make necessary adjustments and the partner’s ability to meet the desired timeline for delivery. Above all, be honest about the capabilities of both the solution and the partner. Don’t force a partnership where one may not be suited.