nottheaverageactuary

Actuarial news and views from Cape Town and beyond

A Transformational Thinking (Out of the box) Approach to Product Design and Development

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I have found an interesting blog written by Sam Medina who is involved in advising insurance companies on how to implement transformation. Here is the link to his post on transformation in the product development process  http://www.insurancenetworking.com/blogs/transformational-thinking-in-product-development-tcs-33843-1.html. The article as a whole is not entirely applicable to the product design process but he raises some interesting points. Medina claims that insurance companies are not meeting consumer demand through their more traditional products. He defines two thought processes, legacy thinking and transformational thinking. He classifies legacy thinking as situations where the company uses and drifts towards ideas that have been proven over time to be successful. Essentially the company has found a safe zone where they know they can succeed and they do not want to leave this safe zone. Where as, transformational thinking focuses on how the company can be changed for the better e.g. can we improve our systems to meet the demands of the consumer. My view is that transformational thinking is essentially thinking out of the box to meet the consumers needs. The image below is how Medina explains the two thinking systems: TCS-Blog-1-FinalArt.jpg

I think that it is important that insurance companies adapt to meet the needs of consumers as these needs change but it is still important to maintain the traditional products both as this provides familiarity for some customers and as they have been proven to be profitable and can be used to support new products. An example that we have seen recently is Old Mutual’s burial society plan (details can be found here:  http://www.oldmutual.co.za/personal/funeral-cover/burial-society-support-plan.aspx ) Old Mutual recognised that a portion of the funeral cover market still chose to self insure and instead of trying to move them into existing traditional funeral policies Old Mutual created a platform which they could use to formalise their existing arrangements. In the discussion in the tutorial we recognised that these self-insurance groups exist to fill a need greater than just the insurance role (e.g. burial societies would provide support for the family and help the family organise the funeral) and that Old Mutual benefited in recognising that this need existed. This is just one example but I’d be interested to hear of other interesting insurance product designs that may be around, has anyone found any recently? Also, in the South African market, are there any needs that insurance companies are completely over looking that a new product design could meet?

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6 thoughts on “A Transformational Thinking (Out of the box) Approach to Product Design and Development

  1. I liked the blog post because it did touch on the profitability, which is an important factor to consider in product design. As mentioned in the article, to stay relevant insurance companies need to produce products that are relevant, add value to customers and in line with their needs. I mean what’s the point of having new technology, if you’re going to keep developing same old traditional products and not something new? This is where transformational thinking comes into play, coming up with viable ideas on what products to design.

  2. So this is not about insurance, but this idea of transformational thinking applies across the business world (and everywhere else). To me, it’s about the ability to realise that there are assumptions you are taking for granted and then examining them and realising those assumptions are wrong (maybe because technology or society has advanced, maybe because they were always wrong).

    An example for me (Intros tutors, you know this one) has been the Intros Fin Maths syllabus. I reviewed the whole syllabus 3 years ago, being as careful as possible to examine my assumptions and not take stuff for granted. But this year, I needed to look at it again and there were parts of the syllabus that are not actually useful for what I am trying to teach (loans – it does not actually have much to do with what actuaries do!) or no longer relevant (interpolation!) which I kept there because they had always been there. And now I’m going to throw them out, but it’s hard to realise that this is even possible until you force yourself to examine your assumptions.

    Another example was when I was talking to a friend of mine who has just started on a project for a big international bank. The project is basically: “Online banking sucks. Redesign online banking.” And their approach is to start by getting rid of all assumptions of what it “should” be like. Their first ideas were “let’s get rid of passwords”; “let’s get rid of account numbers”. Big ideas – and not all of them may survive – but’s it’s how transformational thinking works.

    • Yes I agree. And its specifically relevant to the South African market where there is such a big difference between the needs of the population (there are some who don’t even trust the insurance industry.)I think you need to be quite creative to make flexible products which meet the range of needs.

  3. I’m curious about how much transformational thinking gets put into practice in traditional actuarial fields. There is a lot of “legacy thinking” to be learned from studying and passing the board exams. Then what happens after we qualify? To what extent will there be repetitive application of things that has been done or what we learned from the ActEd notes? It will probably depend on which industry one is in and how established the organisation is. But I wonder which actuaries get to do the most “out-of-box” thinking and which ones get to do the least.

  4. I’m curious about how much transformational thinking gets put into practice in traditional actuarial fields. There is a lot of “legacy thinking” to be learned from studying and passing the board exams. Then what happens after we qualify? To what extent will there be repetitive application of things that has been done or what we learned from the ActEd notes? It will probably depend on which industry one is in and how established the organisation is. But I wonder which actuaries get to do the most “out-of-the-box” thinking and which ones get to do the least.

  5. umm… good question. the best would be to become a senior person and get involved with company strategy, then you can effect really fundamental change. Then, product development requires out-of-the box thinking. Another one is consulting (management consulting type of work, like Anderson etc) – those people get called in to solve unsolvable problems 🙂 so that’s very much like that too. Not necessarily actuarial though!

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