Digital transformation is often most challenging when it comes to scaling change, reinventing processes, and choosing a relevant approach. Mark Drasutis, chief digital officer at IAG, spoke with McKinsey’s Jonathan Michael and David Pountney to discuss how he has been thinking about, influencing, and implementing change to overcome these challenges and transform a legacy business into a digital one.
Organizing for transformation: Customer journeys and business goals
Mark Drasutis: Over the past 15 years, the business has been transforming itself, and there was an ambition to change the business model from being purely insurance to aligning with our purpose: “To make your world a safer place.”
It’s no longer about the insurance products; it’s about predicting and protecting the world around customers. Digitizing the business means that we can actually interpret the right signals for our customers to predict and protect their world.
We started with the motor-recovery-claims journey, as this was where there was the most benefit for the customer. In addition to standing up a journey team, we also set up a “journey accelerator,” a small central team focused on codifying the methodology and setting the program up to scale.
That accelerator function was really critical. We were learning from our past and how we tried to do transformations previously, moving away from a project-, product-, and brand-specific approach to a horizontal customer approach.
It started slow, as is common with many of these changes. You have to get the right people in the right room. There were a lot of questions from the business: Is it the right thing to do now? Is it part of our simplification journey, or is it part of our growth journey? And could we really achieve the projected financial benefits? This is the critical thinking required to ensure we’re on the right path.
The accelerator: Traffic control for a successful transformation
Mark Drasutis: The accelerator is a vital team that sits across all the journeys. It operates like a control tower at an airport, looking across all the activities to understand and direct priorities. It brings together expertise across the business to deliver on its objectives.
It owns and codifies the 20 journeys that we are embarking on within the business. They look at the benefits, which journey is next on the runway, who in the business is best to lead (the business sponsor), and how best to deploy the playbook.
It’s not a traditional project-management office (PMO). It doesn’t operate within tight guardrails. It’s a lean, fluid governance model, which means it can move quickly and still manage risk, tracks all of the data reporting, and has the ability to quickly escalate for resolution.
The accelerator also owns the communications for each of the journeys to the wider business. Overcommunication is never really an issue on digital transformations. Consistent and constant communication is required to take people on the journey, which plays an important role in creating the mind-set shift and buy-in to continue the momentum.
A repeatable process for transformation at scale
Mark Drasutis: Scaling and codifying are the two principles that underpin journey transformations. We’ve created a repeatable, 16-week process, with teams located across all our journey points, that can be scaled across all brands in Australia and New Zealand. For each one, we also have a clear value proposition for the customer.
We are building these journeys using APIs [application programming interface] to connect them to core insurance technologies. We build customer technologies and the platform once for the whole business, but we’ve included the ability to configure the front end instead of building it new every time. These are the principles we’ve applied to all the journeys, and the first journey is already seeing the benefits materialize.
We had a number of releases recently from our first journey team, which was focused on tracking and managing motor repair and digitally lodging a single-vehicle claim end to end. We launched this on one of our brands in Australia, and within four weeks we had configured it for New Zealand, which is on a different core-insurance platform tailored to local regulations, rules, and systems. We did it within a number of weeks, where it would’ve taken us a number of months in the past.
As digitization produces results, trust in the process grows
Mark Drasutis: Part of the challenge and part of the opportunity within the digital transformation was to look at how we were changing the mind-set of a traditional business. We wanted to move people who were operating in an assisted-first way to a digital-first business—and eventually to a business driven by cognitive capabilities. We needed to provide proof of trust. Embedding experts from key business areas into these cross-functional journey teams built that proof of trust.
Leaders in those insurance businesses have embraced this journey approach, because it’s changing their processes and they are seeing the benefits grow. It’s making them more efficient. It’s basically driving their change.
We are tracking the benefits with a regular cadence to ensure that, if we are using digital to reduce, for example, the touchpoints with a customer for a single-vehicle motor claim, we’re reflecting those back into the budgets and the impact on the operating rhythm of the business.
Leading a digital transformation starts with understanding your people
Mark Drasutis: You have to tailor your leadership style based on the people you’re working with. Someone coming to the table who’s been an actuary for 25 years requires a different approach than someone who is a digital native. I think we need to have empathy and a level of emotional intelligence to understand that this is a fundamental shift in the way we do things. A whole business transformation can’t be done within a quarter. Persistence and strong leadership are required.
We try to have diversity of thought among our leaders. For example, the leaders on our customer-labs team are more than traditional financial-services people. Our CMO comes from Saatchi & Saatchi New York, our chief analytics officer has a background at Ford and Walmart. We’re bringing a lot of different thinking to our business because we want to move beyond insurance to making the world a safer place for our customers.
Key elements in accelerating a transformation and making it stick
Mark Drasutis: I think having the full business view right from the start sets you up to understand the ground. You need to also have a clear line of sight around the economics, benefits, value, and which direction is the north star.
Be prepared to break the rules, but for the right reason. If there’s a sacred cow in the business, make sure you challenge it thoughtfully and with data. I think also that driving results and showing benefits to illustrate traction are important.
But I think finding the best people to build the right team is the main lesson. Don’t be afraid to have diversity of thought in the team. Ensuring everyone has an equal voice regardless of their area of specialization is key.
For us, having some industry knowledge was vitally important, because you can’t transform without knowing the current state. But you also need to balance this with having experience outside the industry to ensure you encourage the expansion of people’s thinking.