Or are old techniques simply tapping into high levels of underinsurance in emerging economies, asks the head of Lockton Singapore
New markets require a range of bespoke products and services, says Manan Sagar (pictured), and the more ‘emerging’ markets often require particularly innovative products to sustain growth.
“However, are insurance companies and intermediaries operating in Asia still applying old formulas and techniques in new markets and simply reaping the benefits of the vast levels of under-insurance in the developing economies?” Sagar asks.
Sagar, who is a member of the GR Asia Broker50, has been in charge of Lockton’s Singapore operations since August 2012, and in that time he says he has observed a “push across Asia to increase business innovation, both at national and company levels”.
“The trouble is, everyone is playing the same game,” he says. “Business parks, government support, mentoring programs and export assistance are all common-place.
“All of these support networks have one purpose: to encourage innovative ideas and to increase high-value business.”
Sagar points outs that for countries like Australia, Japan, Singapore and South Korea, competing on price is no longer a viable option.
“Low-value mass production is a race to the bottom,” he says. “Innovation, however, drives high-value business growth.
“Without new ideas, companies will stagnate, employees will feel disenfranchised and quality will slip.
“This is the same no matter what business you are in. Core values are important, but they must ultimately support new business.”
Sagar says that in a role such as his, it is particularly important to look at possible impediments to innovation within the organisation.
“In my opinion, many of these impediments boil down to individual attitudes and opinions of how teams and the company can and should operate,” he says.
“It is the role of senior management to identify where these barriers can appear in the management chain and that company processes are put in place to break these barriers down.
“Some of these may be more common in our line of work – but I suspect the same issues are present in all organisations, big or small.”
Impediments to innovation
Sagar lists some of the major impediments to innovation in the Asian insurance business as a view that innovation is not needed; internal protectionism; an overly controlling environment; and a lack of understanding and fear of the unknown (see box below).
“From what I have seen throughout my career, there is no shortage of things that will kill an innovative idea,” Sagar says.
“Individual managers should take a step back and consider what they are doing to stop good ideas from rising to the surface.
“Only once this has been done should a company look at how it can effectively drive a culture of innovation.”
There is nothing worse than a senior manager calling for a culture of innovation when his or her organisation is structurally set up to kill new ideas, Sagar says.
“Insurance is no different from high-tech,” he adds. “We need new ideas to continue to grow our businesses, as without them we will stagnate and eventually wither away.
“I believe that the insurance companies and intermediaries who do something a little differently in Asia, will succeed, and the rewards will be great indeed.”
Impediments to innovation in the Asian insurance business
A view that innovation is not needed
A successful business, or business unit, may not see the need to change the way things are done – or to develop new products or services when times are good. Success can kill innovation. In this scenario, innovation is only seen as a priority when markets change or business starts to decline. By then it’s too late, and no one likes having to attend the ‘we need an innovative idea and we need it now’ meeting.
In any organisation or culture with a strict or well-defined hierarchy, it is not necessarily in a manager’s best interests to see someone else’s ideas pushed forward. Ego, pride and jealousy can all get in the way. This is, perhaps, one of the quickest ways to kill innovation within an organisation. For management, this can be the worst type of problem, as ideas can be killed without senior leaders being aware that this sort of behaviour is going on.
An overly controlling environment
Businesses need control, and that is the role of management. But control can also kill innovation. There are plenty of good ideas out there, and most people like to think they have something new to offer. An overly controlling environment and a lack of time and space for staff to actually think can turn an innovative employee into a corporate drone. The ‘being seen’ culture in many business operating in Asia does not help to create an ‘ideas’ environment.
A lack of understanding and fear of the unknown
Know what you don’t know. It never ceases to amaze me how corporate leaders – mostly men of advancing years – believe they fully understand the potential and usability of innovative ideas, most notably those involving new technologies. Management’s own views on the use of social media, for example, must reflect their clients’ wishes, not their own. Sometimes management needs to sit back and trust their people, and possibly accept the outcomes may not be fully understood (by everyone involved). There is no sure thing when it comes to innovation and there is always a possibility of encountering some turbulence… you just have to buckle-up and enjoy the ride if you want to achieve exponential growth.