In the first two entries in our series on product agility, we discussed what product agility is (Product Agility – Part I: Agility is Key to Competitive Success) and the challenges P&C organizations have in achieving product agility (Product Agility – Part II: Challenges in Achieving Product Agility). We’ve defined product agility as the ability to react quickly and flexibly to consumer needs and market demands with relevant and profitable products. Product agile organizations react better and faster to competition and regulatory pressure while utilizing data to make informed decisions. Although achieving product agility is not easy, these benefits return measurable results to carriers who can get there. In this post, we will discuss key drivers of agility as well as a framework for where to start creating a product agile environment.
WHAT DRIVES A PRODUCT AGILE ORGANIZATION
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In our experience, we have observed six key drivers of product agility. Each one is important and all work together to create an unbeatable organization. The top-half of the Product Agility framework focuses on the ‘what’ and the ‘where’ associated with product manufacturing:
- Presence describes a carrier’s channel approach; Directed capabilities define a carrier’s competency to sell and service through Direct Channels (internet, phone, etc.) while Intermediated focuses on abilities to expand distribution and offerings into emerging channels (i.e. 3rd party, affinity groups, etc.). A recent Diamond blog addressed questions about the pros and cons of web versus agent interaction and a carrier’s challenge to balance investment across channels. Regardless of the mix of channels, an agile organization is able to quickly roll out products through their existing and emerging channels and do it in such a way their messaging and image remains consistent.
- Offering focuses on how a carrier creates new and expands existing product lines. Capabilities in offerings are marked by the ability to drive significant quantities of new products to the marketplace within existing product lines such as offering new product bundles or by creating new coverages needed by a new market. In response to the current economic environment, Allianz now provides an Unemployment Protection product, new to Spain and Austria. Also, the first large carriers to turn climate risk into opportunity, Allianz, Travelers, Aon, AIG, and Chubb created groups to develop new products and identify investment trends related to climate change.
- Consumer Focus is the interaction a carrier has with its customers offering opportunities of service differentiation. Consumer Breadth and Depth describe the ability to expand to new customer types and to increase penetration and market share within the existing customer base. Customer Experience focused capabilities provide the ability to drive innovation based on changing customer markets and to continually respond to customer’s needs and desires. EBay, for instance, famously received more than 70 percent of its ideas for innovations through interactive dialogue with its users. Given Microsoft’s monopoly of “office” tools, it hasn’t been known to proactively solicit customer feedback. However, for the Office 2010 Team, product innovation begins and ends with the customer.
The bottom-half of the Product Agility framework focuses on ‘how’ a company delivers to customer/ market needs:
- Platform broadly describes both technology speed and flexibility across product enabling systems and the information management that supports product related decision-making. Technology Flexibility and Speed focuses on a carrier’s ability to rapidly move from ideation through technology implementation with significant changes to products and/or features. Product Information Management focuses on an organization’s ability to capture, aggregate, analyze, and share product related insight across the enterprise. CNA has tackled the technology and process complexity and is capitalizing on its benefits of lower data management costs, greater product reuse, and faster speed to market.
- Culture is characterized by the enterprise product strategy and the incentives and controls used to align the organization to that strategy. Strategy and Metrics include the ability to measure the effectiveness of the strategy across the enterprise. Incentives and Controls align rewards across both business and technology and implement controls to ensure investments are quantified and measureable. John Sviokla, Vice Chairman of Diamond, talked about common cultural challenges to innovation in a recent blog. Google, for example, has such a culture of innovation they go beyond rewarding innovation and expect employees to dedicate 20% of their time to create new things and ideas.
- Operating Model capabilities include the ability to manage the product lifecycle through a defined hierarchy allowing the enterprise to align resource needs cross-functionally. These capabilities also support processes that define, follow, and optimize how products move from ideation through prioritization, launch, and measurement. Sterling Commerce is an excellent example of a company that has built a strong operating model.
WHERE DO I START?
In order to begin tackling product agility in your organization it is essential that you begin by establishing a common understanding of your current and desired capabilities. This analysis is a critical step in gaining organizational alignment about where you want to go and how the organization will get there. This analysis is typically performed in a three-step approach that articulates a fact-based understanding of the Current State, describes a cohesive view of aspirations for the Future State and clearly defines the Gaps between current and future states and the steps required to close those gaps. The order of the work (current state or future state first) depends on the unique situation of each organization and the clarity of the higher-level enterprise strategy and strategic goals. Regardless of the sequence of analysis, we recommend that you leverage the organizing framework outlined above to structure this analysis. In addition, to effectively complete this analysis there are three critical success factors:
- Be Comprehensive – the analysis must cover all aspects of the organizing framework above
- Ensure Strategic Alignment – the desired future state must be aligned to the broader organizational strategy
- Gain Cross-Functional Buy-in – product agility requires an organizational commitment extending beyond the product organization (e.g., information technology, distribution, operations, etc.)
Now that you have the foundational analysis complete you will be in a great position to understand your respective roadblocks. With this common understanding you are now ready to define the work required to transform your organization and gain a competitive advantage in the marketplace. How committed are you to becoming more product agile?
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