The diagram is based on the idea of three high-level forces that are driving the change in the industry (source):
- People includes trends covering demographic changes, shifts in needs and risk profiles and changing customer expectations. Collectively, these forces exert pressure on the industry by creating disconnects between what insurance customers need and want and what the industry is currently able to provide to them, in terms of products, services, experiences, and more.
- Technology includes new capabilities being created by emerging technologies (especially digital) and the exploding availability of data and analytics capabilities. The existence and continued refinement/development of these capabilities puts pressure on the industry to leapfrog or at least to stay even with current competitors and new ones entering the market. Technology provides both the pressure to innovate and the opportunity to compete in products, services, experiences, offers, cost efficiency and innovation.
- Market Boundaries reflects the rapidly changing competitive landscape in insurance, brought about by the emergence of new competitors from both within and outside the “traditional” industry. It represents the blurring and removal of the lines between insurance and other industries, and the expansion and blending of channels for researching, buying and using insurance products and services. Each of these forces puts pressure on the traditional insurance industry players by creating and offering innovations and alternatives for insurance customers that traditional players must match or exceed in order to continue to win and keep customers.
The authors of the report are summarizing the key trends from this diagram in the following (source):
- The generational, socio-economic shift from the silent generation, through baby boomers, Gen X and Millennials, all the way to Gen Z is fundamentally changing business. In Growing up Digital, Don Tapscott identified the net-generationii . They represent 88M offspring produced by 85M baby-boomers, eclipsing their parents in terms of both size and impact. Millennials were the first to grow-up surrounded by digital and Gen Z were “born digital,” with technology incorporated into all aspects of their lives, changing their behaviors and expectations. Furthermore, they “live and breathe” innovation.
- The shifts from the Industrial Age to the Information Age and now to the Digital Age are underpinned by technology that influences new business and economic trends. The industrial age saw the transformation of businesses and economies due to inventions and innovations such as steam-power, railways, the telephone, the automobile, and engineering (electrical, chemical, civil and naval). The Information Age with telecommunications, mainframe computers, personal computers, client server technology, the Internet, and Service Oriented Architecture (SOA), is now followed by the Digital Age with mobile, social, cloud, Internet of things, autonomous vehicles, wearables, artificial intelligence, drones, apps, and block chain technologies. Technology is now an embedded, foundational layer across our economy and society.
- The new market dynamics like the sharing and platform economy are rapidly shifting market boundaries, disrupting and transforming businesses and industries, while reshaping our economic foundation away from a focus on ownership and towards a focus on access. Access is all about collaboration, sharing, renting, or subscribing — not owning. As a result, customer expectations, experiences, loyalty, and relationships are rapidly changing. Long-held business assumptions and models are being dismantled and replaced with new models, more appropriately aligned to this shift. The traditional boundaries between industries and companies are also being dismantled by technologies that have created platform-based economic shifts. The result is a porous market, where engagement is everything and the relationships between business, customers, channels and partners are, collectively, the new chemistry behind marketing glue.
These drawbacks are resonating very well with the ideas that we are up to discuss at the Enterprise Digital SUMMIT: After a evolutionary periode by advancing and enhancing the existing systems of business and organisation with the possibilities of social technologies, we are now heading into a revolutionary era at which we have to rethink the operating models of the existing businesses and organizations to move a step further.
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