When I ventured into the garden section at my local Wal-mart last week, I saw they hadn't just been preparing for Halloween by setting up alluring candy displays throughout the store. They were already getting ready for Christmas, setting up displays for decorations, lights and even fake trees.
Those displays reminded me that we are, in fact, in the fourth quarter of 2023 and that, while I'll still probably start my Christmas shopping on roughly Dec. 23, it's not too early to begin planning initiatives for 2024. And it happens that a smart analyst I follow on LinkedIn posted a list last week of what he sees as the 10 trends that will dominate next year.
They are: generative AI, the human touch, the solution to the skills shortage, sustainability, personalization at scale, the data economy, the customer service revolution, remote and distributed work, diversity and inclusion and resilience.
I think some of those are more important than others and have a suggestion or two of my own, but that list is a good place to start. Let's dig in.
The article by Bernard Marr opens with generative AI, which I agree should be a major focus but which I won't go into here, because I wrote about it last week and have gotten into it extensively in other pieces, including in this interview with a longtime friend and colleague, John Sviokla, who said generative AI will be bigger than the internet.
#2 on Marr's list is "Soft Skills and the Human Touch." He writes:
"As it becomes increasingly feasible to automate technical aspects of work - coding, research or data management, for example - the ability to leverage soft skills for tasks that still require a human touch becomes critical. For this reason, in 2024, we will see organizations increasing their investment in developing and nurturing skills and attributes such as emotional intelligence, communication, interpersonal problem solving, high-level strategy and thought leadership."
I agree and, in fact, have for many years been pushing the idea of "bionic" processes and employees, who take advantage of the efficiencies of digitization, including AI, while maintaining that human touch. Here is a recent piece on how to combine digital efficiency with human empathy.
#3 is the "Skills Solution." Marr writes:
"We’ve been hearing about the skills shortage for several years now. Changes in hiring practices that emphasize selecting candidates with the specific experiences and skills needed for a role, rather than qualities such as educational attainment or age, are a part of the industry's response and will continue to be a strong trend."
Again, I agree. While universities increasingly offer risk management and insurance programs, we can't expect them to produce such a steady stream of graduates that they will fill all the industry's needs. Instead, the insurance industry will need to get creative in finding talent, as explained in this piece on winning the war for talent.
#4 is "Sustainable Business." I'd say insurance is still finding its way on how to support sustainability. If you're interested in a more detailed analysis of where we stand and how we can progress, I'd suggest you listen to this webinar I recently conducted with Sean Kevelighan, president and CEO of the Insurance Information Institute, and Francis Bouchard, managing director, climate, at Marsh McLellan. I found the discussion exceptionally informative and think you will, too. I'd also recommend the interview I did recently with Alex Wittenberg, a partner at Oliver Wyman, on resilience.
#5 is "Personalization-at-Scale." I've long identified with this approach. Part of what attracted me to Diamond Management & Technology Consultants after a long career at the Wall Street Journal was the startup's alliance with Joe Pine, who pioneered the idea of mass customization. That was in 1996. The possibilities have only expanded since then. But insurance starts at the opposite end of the spectrum, focusing on pooling of risks, so I suspect the personalization emphasis will lag in the insurance world.
#6 is "The Data Economy," which is a massive opportunity for insurers. Marr writes:
"Data is an increasingly valuable business asset. By 2024, more companies will have streamlined their operations and improved their customer offerings by taking a strategic approach to their data. As a result, they will be ready to take the next step - monetizing data itself to drive new business opportunities. Leading the way are companies like John Deere, which has pioneered the model of selling data from its sensor-laden farm equipment back to farmers as insights to improve productivity. As access to large-scale data collection and AI-driven analytics becomes increasingly democratized, we'll see this trend adopted by smaller companies in niche and diversified sectors."
Insurance is the ultimate data business, and companies have a huge opportunity to turn data into revenue. Some of that opportunity will arise because insurers will go beyond "insure and pay" and shift to a "predict and prevent" business model, as described in this recent piece. Some will come because companies find creative ways to gather and process data, then sell it to others -- a la Allstate's Arity.
#7 is "The Customer Experience Revolution," which is desperately needed in insurance and which we've published about extensively.
#8 is "Remote and Distributed Work," which seems to be here to stay and which insurance seemingly could benefit from as much as almost any industry.
#9 is "Diversity and Inclusivity." This is another topic that feels like it's especially important in insurance. We serve a diverse population. Shouldn't we have a diverse work force, including leaders, who empathize with the needs of those diverse customers?
#10 is "Resilience." Marr writes:
"[That means] ensuring an organization is protected from whatever threat is around the corner. That could mean cyber attacks, economic downturns, environmental events, war, global pandemics or the emergence of a disruptive new competitor."
We've certainly had plenty of recent lessons about the need to plan for resilience, including the attack by Hamas on Israel over the weekend and, just a year and a half ago, the Russian invasion of Ukraine. Both are having massive, unpredictable effects not only on geopolitics but on business. Just imagine what will happen if China follows through on threats to invade Taiwan.
To Marr's list, I'd add two sorts of skills that I think many businesses will want to develop.
First are partnership skills. We talk a lot about ecosystems and about using technological capabilities such as application programming interfaces (APIs) to plug into what partners are doing, but being a good partner takes practice. Companies shouldn't assume they'll be great at partnerships, or even adequate, in the first go-'round. Companies should engage in a number of low-level partnerships, to understand what they do well and what they do poorly, before attempting any partnership that could be game-changing. Develop those partnership muscles before trying to use them.
Second are M&A skills. These aren't necessary for many in the insurance industry but are required by many others, especially agents and brokers, lots of whom are aggressively expanding. Historically, the rule of thumb was that only about one in three acquisitions succeeded. More recent research suggests a higher success rate, but only because acquirers are making a steady stream of smaller purchases and developing M&A skills rather than swinging for the fences with a massive takeover by a first-time buyer.
So I'd suggest you start planning for 2024, even as you accept that geopolitical events such as the Hamas attack on Israel could derail some of those plans.
Cheers,
Paul