381: Sequoia Partner Roelof Botha and Ethos Life co-founder and CEO Peter Colis dive into the major issues with life insurance and how Ethos Life can make a difference. A great life insurance company has not been built for 150 years, and while the existing players have massive amounts of capital, Ethos is relying on their speed of execution and digital advantage. We also discuss how Ethos is using behavioral science and product testing for ease of use, how Ethos is able to overcome the faster process, Roelof’s take on AI and voice technologies, why Roelof was determined to immigrate to the United States, among other topics.
Podcast: Play in new window | Download
Subscribe: Apple Podcasts | Spotify | Amazon Music | Android | Podcast Index | Deezer | Youtube Music | RSS | More
Technology is transforming our world at an unprecedented rate. New technologies like virtual assistants and augmented reality are changing consumer expectations faster than ever. The impact of cybersecurity breaches is intensifying. And digital enablers are allowing upstarts to steal market share from incumbents in a matter of months or years, rather than decades.While it is tempting to believe that these disruptive times will eventually stabilize, our analysis suggests that the rate of technological progress will only accelerate. If this year indeed represents both the fastest rate of change we ever have experienced, and the slowest rate of change we ever will experience—as many experts have posited—then this raises a critical question for executives in all industries:How do I understand the consequences of accelerating technological change, and position my company to capitalize on the opportunities presented by emerging paradigms?To accomplish this, companies can develop innovation systems that consist of a variety of methods and processes, ranging from strategic foresight to a portfolio of corporate innovation programs. One such program — innovation labs — is gaining steam in corporate America, with some of the biggest and best-known companies opening new outposts focused on developing and scaling breakthrough technologies, processes, and business models.Through Metis Strategy’s work with Fortune 500 companies and rapidly growing businesses alike, we have identified seven critical factors to consider when creating such a corporate innovation lab.
The charter is a concise description of the innovation lab’s objectives and its method for achieving them. But a charter is not just lofty PR: many of the best innovation labs use their charter as a guiding light that provides a deeper sense of purpose and direction. Subsequently, the charter should also clarify what the lab is not focused on.Consider the differences between the charters of Lowe’s Innovation Lab and of Bayer’s U.S. Innovation Center and Science Hub:
Lowe’s Innovation Lab
Understand how new technology may play a role in the future lives of customers and employees by thinking about potential applications for disruptive technologies to build an innovation roadmap and rapidly prototype new ideas.
Bayer Innovation Center & Science Hub
Enable our scientists to reach out to academic institutions and life-science firms to forge new drug-discovery collaborations.
While Lowe’s focuses on identifying and utilizing new technologies to enhance the retail experience, Bayer’s priority is forming partnerships to accelerate drug discovery. Given their differences, it should be no surprise that these innovation labs utilize different metrics, governance models, funding sources, and innovation ecosystems to accomplish their objectives.When defining the charter, the first step is for stakeholders, including the executive sponsors from the core organization, to define the goals and/or strategic challenges the lab is designed to address. Based on the objective, consideration is then given to the attributes of the innovation ecosystem, governance model, process, budget and metrics best suited to enable the lab to execute towards its goal and measure its progress.
Large companies thrive when business conditions are certain, and their targets are clear. While execution metrics can measure the performance of existing business models, they are less capable of accurately quantifying progress at innovation labs, where the work is sometimes less precise, longer term, or more conceptual. Kyle Nel, Executive Director of Lowe’s Innovation Lab, has noted that “it does not make sense to apply mature metrics to something in its nascent form.”Innovation labs can develop a portfolio of innovation metrics to measure not only the results of the innovation effort, but also the preconditions and innovation process itself.
Sample Innovation Metrics | Source: Metis Strategy, Strategos, Bearing Point, Future Think
With this focus on measuring both process and progress, innovation metrics help labs assess their innovation maturity, but may also bolster the support of their executive sponsors, especially in the early days. For example, Harvard Business Review notes that “revenue generated by new products,” an output metric, is the metric most commonly used by senior innovation executives. By establishing a portfolio of innovation metrics that also includes input and development metrics, the conversation can shift from focusing solely on results to focusing also on the maturing evolution of the innovation capability. This ability to develop unique innovation metrics has helped Nel push back when Lowe’s executives expect significant revenue growth from new and disruptive products.
Innovation is as much a cultural attitude as it is a business process. A generic approach to innovation may begin by defining the customer and uncovering their unmet need, formulating a hypothesis on what product or service the company can offer to meet that need, and validating the hypothesis by using customer feedback to rapidly experiment and iterate. Further, to foster the right mindset, innovation labs should:
That said, many of the best labs develop unique processes influenced by their charter. Consider Lowe’s Innovation Lab (LIL), which uses a narrative-driven approach to identify and articulate opportunities. First, LIL conducts market research, compiles trend data, and collects customer feedback on unmet needs and pain points. Next, LIL shares this information with science fiction writers who create strategic documents in the form of comic books, which follow characters through a narrative arc that illustrates a new solution to the character’s problem. Then Lowe’s executives use the comic books to make prioritization decisions, and, finally, LIL works with its partners to create the solutions introduced in the comics.
Another example of an organization employing a unique process is X, Alphabet’s “moonshot factory,” which is charged with creating world-changing companies that could eventually become the next Google. X adheres to a three-part formula for identifying opportunities: (1) it must address a huge problem, (2) it must propose a radical solution, and (3) it must employ a relatively feasible technology.Using this formula, X has spun out numerous subsidiaries under the Alphabet umbrella. One of those companies is Waymo, the autonomous vehicle pioneer that Morgan Stanley recently suggested could be worth $70 billion.
If companies believe an innovation lab will help them more effectively navigate the waters of disruption, it is essential that they recruit for passion and cognitive diversity, rather than just skill. Labs often include a wide range of technical and non-technical roles, from data scientists and designers to experts in anthropology and psychology. Breadth and depth of both skill set and mindset are essential components of a successful innovation lab that creatively explores new technologies and business models.Ideal job candidates should be innate risk-seekers, strong questioners and connectors, and comfortable with failure and restarts. Deloitte Center for the Edge Co-Chair John Hagel described people who have these traits as personifying the “passion of the explorer.”
Source: Deloitte University Press
Organizations searching for these passionate explorers will find advantages and disadvantages in looking both internally and externally. Internal employees may more deeply understand the customer, but they also may have difficulty looking at problems from a different perspective. External hires may bring new viewpoints and skills, but recruitment may prove challenging.Companies can use several tactics to attract talent. Buzzfeed’s Open Lab for Journalism, Technology and the Arts, for example, targets specific individuals and groups based on their past projects. Recruitment efforts have been successful, in part, because Buzzfeed offers company resources that support their creative freedoms. Alternatively, companies can be deliberate in how they share their innovation initiatives with the public. For example, Airbus has a blog that reports news from the company’s A3 innovation lab, Airbus Ventures, and from other teams across its innovation ecosystem. This type of focused communication both targets and attracts an audience of individuals who are the most knowledgeable and interested in innovation currently taking place within the industry, and, in so doing, Airbus can create an informal pool of potential new hires. Like Airbus, Target also public about its numerous innovation programs. Some of these programs include (1) a partnership with Techstars for a retail accelerator, (2) an Entrepreneurs-in-residence program, (3) LA25, which they test their top innovations in 25 stores in LA, and (4) Target Open House, a public lab for experimenting with the IoT. As a result of their open approach to innovation, Target was recently ranked the 10th most innovative retailer by Fast Company, which increases general awareness and aids in recruitment.
The process for establishing a funding source will differ depending on the company. For example, Allstate CIO Suren Gupta has described how a formal Innovation Council evaluates ideas and allocates funding. At other companies, if the innovation ties closely to a particular business unit, then funding may come from that group’s budget.Though the specifics will vary, a generic process for establishing funding may include:
The actual size of the budget depends on whether a lab is building the technology itself, partnering with other organizations, or acquiring a company, product or talent. Amazon and Google have spent millions of dollars developing parcel delivery drones. Meanwhile, companies like UPS and Daimler AG have opted to partner with—and make strategic investments in—established drone makers. This lowers both the risk and the cost of innovation while still allowing the company to develop new capabilities.Regardless of how funding is established—or the size of the budget itself—it is critical to measure how much money was spent at each stage of the process: preparation (i.e. percentage of capital budget allocated to innovation projects), development (i.e. R&D spending at each phase of development the innovation process), and results (i.e. percentage of sales from innovation projects). As with the portfolio approach to general innovation metrics, the use of financial metrics across the innovation lifecycle reduces the focus on ROI, which can cripple innovative projects in the early stages.
Silicon Valley is the quintessential innovation ecosystem. The region’s unique characteristics undoubtedly make Silicon Valley the right innovation ecosystem for many labs—particularly those charged with discovering and/or acquiring startups, or gaining business and technical intelligence about emerging technologies.
Example Innovation System | Source: Metis Strategy
Other locations should not be overlooked, however. Cities such as New York City, Austin, and Chicago in the U.S.; London, Paris and Berlin in Europe; Tel Aviv in the Middle East; and Singapore, Shanghai and Tokyo in Asia all offer rapidly maturing innovation ecosystems, each with their own unique advantages and disadvantages.To determine the ideal location for an innovation lab, consider which ecosystem characteristics (such as those highlighted in the adjacent visual) best support the objectives defined in the charter.For example, former ADP CTO Keith Fulton (now CIO of Bank Systems with Fiserv) has described how ADP’s innovation lab is focused on creating “best-in-class user experiences.” Accordingly, ADP opened its second lab in Midtown Manhattan, since the proximity to top visual design and creative firms provide high concentrations of the right skill sets.Similarly, Staples Lab runs a lab in Cambridge Massachusetts focused on creating mobile applications, digital platforms, and in-store technologies, a lab in Seattle Washington focused on building next-generation e-commerce platforms and exploring data engineering, and a lab in San Mateo California based lab that has a similar charter to its Massachusetts lab. According to Staples, not only do the multiple locations diversify the talent they are able to attract, but it also allows for close collaboration with a wider range or partners.
There is one final challenge, even for innovation labs that successfully deliver results in accordance with their charter: integrating the innovation with the core organization. From Kodak’s invention of the digital camera to Xerox pioneering the GUI, there is no shortage of companies that failed to capitalize on their innovations.To be sure, innovation integration is the culmination of an innovation lab successfully delivering on its charter, so the way in which the company captures the value of the innovation very much depends on decisions that were made along the way. We recommend that executive sponsors and innovation leaders discuss early and often what successful innovation integration looks like. Here are a few key questions to consider:
While there is no set template for innovation integration, a definable, well-articulated vision of what the desired success will look like should be a primary priority, not an afterthought. In the “scaling at the Edge” framework championed by John Hagel, risk is reduced by innovating at the “edge,” and only high-impact innovations that have demonstrated significant growth potential begin impacting the core of the organization.
Source: Metis Strategy interview with John Hagel, Co-Chairman of Deloitte’s Center for the Edge
More than ever before, established companies are struggling to keep up with both the deployment of new technology by their competitors and consumers’ rapidly changing expectations. Careful consideration of these seven factors can empower companies to build an innovation lab that fosters energetic challenges to preconceived notions, creative experimentation with new technologies and business models, and thorough exploration of potential products and services that will enable it to survive—and thrive—amidst the accelerating forces of disruption.
Among other topics, Julia discusses the following issues with Metis Strategy:
Julia Davis is a Senior Vice President and the Chief Information Officer of Aflac, a $22 billion supplemental insurance company. Since joining Aflac in 2013, Julia has overseen the day-to-day operations and strategic initiatives of Aflac’s Information Technology Division.
Before joining Aflac, Julia served as Chief Information Officer at American Safety Insurance and held several IT leadership positions at GE. Julia began her career in the U.S. Air Force as a software engineer, and rose to the rank of captain.
In 2016, Julia was awarded a CIO 100 Award and was named as one of Computerworld’s Premier 100 Technology Leaders.
Julia received a bachelor’s degree in engineering physics from Lehigh University and a master’s degree in system administration from St. Mary’s University.
Among other topics, Mike discusses the following issues with Metis Strategy:
Mike Keller’s Biography
Mike Keller is Executive Vice President and Chief Information Officer at Nationwide, a $43 billion insurance and financial services company. He is responsible for the prioritization and delivery of Nationwide’s strategic business transformation program, technology strategy, and IT capabilities.
Prior to joining Nationwide in 2001, Mike was Chief Technology Officer for Corporate Infrastructure at Bank One and held leadership roles at IBM in a number of areas including global services and industry solutions.
Mike is on the Board of Directors for Columbus 2020, a public-private partnership designed to position Central Ohio as one of the nation’s leaders in economic development. He is Chairman of the Board for the Columbus Collaboratory, whose initiatives focus on delivering business value through advanced analytics and cyber security solutions. Mike also serves on the IBM Board of Advisors and McKinsey’s Global Insurance COO Roundtable.
Mike earned a bachelor’s degree in mathematics from the University of Michigan.
I recently caught up with Mike in his office in Columbus, OH. Our conversation covered World Class IT Principle One, People, as Mike discussed how he recruits, develops, and transitions talent in an evolving organization; Principle Four, IT &-Business Partnerships, as Mike discussed his team’s role in Nationwide’s ongoing transformation; and Principle Five, External Partnerships, as Mike described Nationwide’s relationship with its three global service providers. We also covered Mike’s long tenure as CIO of Nationwide and a variety of other topics.
Among other topics, Tom discusses the following issues with Metis Strategy:
Tom Miller’s Biography
Tom is the Chief Information Officer for Anthem, an $85 billion health benefits company, where he is responsible for all enterprise-wide information technology initiatives with the focus on delivering high quality, secure, compliant and cost effective technologies that enhance Anthem’s business capabilities. Tom is leading the technology innovation efforts around Anthem’s push for consumer centricity.
Prior to joining Anthem, Tom served as the senior vice president and chief information officer of Coca-Cola Refreshments, a company formed by the merger of various North American businesses including Coca-Cola Enterprises, Coca-Cola Foodservice, Minute-Maid, Glaceau (Vitamin Water) and Odwalla. His primary focus, leading a team of 1,000 IT professionals, was the integration of all businesses into a single IT platform to drive operating efficiency and provide improved customer service.
Tom has more than thirty years of information technology, management, global initiatives and operations experience.
Tom has bachelor’s degrees from Northwood University in Computer Information Management and Business Management. He earned an Executive MBA from Emory University.
Among other topics, Steve discusses the following issues with Metis Strategy:
Steve Betts’s Biography
Steve is the Senior Vice President and CIO of Health Care Service Corporation, an independent licensee of the Blue Cross Blue Shield Association and the largest customer-owned health insurance company in the United States. Prior to joining Health Care Service Corporation, Steve served as the Global Chief Information Officer of Aon Corporation. An organization he joined in 2003. Steve serves as a board member of ACORD Corporation, the British American Business Council of Chicago, and Lumity (a non-profit IT resource center). Steve has also previously been awarded a CIO 100 Award from CIO magazine while at Aon Corporation. Steve graduated from the University of Manchester in the United Kingdom with a Bachelor of Science Degree in Mathematics and Management Science.
Among other topics, Suren discusses the following issues with Metis Strategy:
Suren Gupta’s Biography
Suren is the Executive Vice President of Technology and Operations for Allstate Insurance Company, the United States’ third largest personal lines insurer. Suren is considered an innovative force in enhancing delivery capabilities that support a 24/7 global operation, a topic we cover in some depth in this interview. Among other responsibilities, Suren leads a global organization that delivers innovative and transformational technological solutions for Allstate’s customers, agency owners and employees.
Prior to his tenure at Allstate, Suren served as Group Chief Information Officer and Executive for Wells Fargo, the American multinational banking and financial services holding company, where he was responsible for the re-engineering of the real estate lending division’s service delivery. Under his leadership, new delivery capabilities enabled the field sales force to serve customers more effectively with just-in-time information.
Prior to joining Wells Fargo, Gupta also served as a founding member of the corporate executive team of Airclic Inc., a start-up wireless Internet venture and was senior vice president, informational technology and operations for GMAC Residential, a division of General Motors.
Suren is a graduate of the Advanced Management Program at Harvard Business School and received a master’s degree in computer engineering from West Virginia University, as well as an MBA from George Mason University. In addition to these accomplishments, he serves on the Chicago Public Library Foundation Board as well as the board of the American chapter for Pratham, a nongovernmental organization that provides pre-school education to children in India’s slums.
Bill is the Senior Vice President and Chief Information Officer of Time Warner. In that role, he leads the execution of Time Warner’s enterprise-wide information technology strategy. He also oversees the Corporate Information Technology Group and is responsible for a shared services initiative that provides IT support to all Time Warner businesses in order to improve the efficiency of the company’s investments in information technology.
Prior to joining Time Warner, Bill served as the first ever enterprise CIO for Marsh & McLennan Companies, a world leading provider of advice and solutions in risk, strategy and human capital. His responsibilities included developing and implementing a firm-wide technology strategy, as well as leading the effort to reduce the technology run rate through shared services.
Previously, Bill was CTO for Thomson Financial, a leading provider of financial information. He also spent time as CTO for Citigroup’s Global Investment Management SBU , and as CIO of several GE Capital companies.
Bill started his career by spending eleven years as a consultant with Andersen Consulting in the Advanced Systems Group.
Bill graduated from Princeton University with a Bachelor of Science degree in computer science and electrical engineering and received his Master of Science in computer engineering from Stanford University.
Ben is the Chief Information Officer and the Chief Innovation Officer of Marsh & McLennan Companies, a global professional services firm providing advice and solutions in risk, strategy and human capital.
Prior to his current role, Ben was President and Chief Executive Officer of Kroll, Inc., an operating unit of Marsh & McLennan Companies, until it was sold by Marsh & McLennan Companies in August 2010 to Altegrity, Inc. Prior to his appointment as CEO of Kroll, Inc., Ben was COO of Kroll, and prior to that President of Kroll Ontrack, Kroll’s legal technologies and data recovery subsidiary. Additionally, Ben headed Kroll’s Technology Services Group. Prior to Kroll’s acquisition of Ontrack, he served as president and CEO of ONTRACK Data International, Inc.
Preceding his appointment as president and CEO, Mr. Allen served in several other international roles for the company, including Chief Operating Officer and General Manager of theU.K.andFranceoffices.
Ben has a BA degree in Finance from Washington State University.
Jim is the Executive Vice President and Global Chief Information Officer for Chubb & Son. Jim provides vision and leadership to maximize the usage of information technology to create and maintain leadership for Chubb worldwide. He has more than 29 years of experience in the delivery and management of information technology mostly in the property and casualty insurance industry. Prior to his time at Chubb, Jim spent time at Home Insurance Company and at Utica National Insurance Group.
Jim serves on the boards of the Society of Information Management (SIM)-International, the SIM New Jersey Chapter Foundation, and the Association for Cooperative Operations Research and Development (ACORD).
Jim has a B.A. in computer science from Utica College and a Masters of Management Information Systems from Kennedy-Western University.
