Learning about large scale disruption from incumbents

By Kevin Gaut | 5 December 2017

Innovation is not the prerogative of start-ups – indeed many of today's incumbents were the start-ups of yesterday. With disruption being the focal point of the numerous digital initiatives that we are seeing across a number of industries, incumbents are taking steps to revolutionise our world.

So what does it take to innovate with the times? Incumbents are applying the concepts of originality, longevity, game/market changing and enhanced user experience to emulate the agility and disruption associated with start-ups, and are achieving success in a number of different ways.

Being original without reinventing the wheel

While it may seem that innovation is all around us, very little innovation originates from truly new ideas. Often it is simply a case of improving on something that already exists.

The efficiencies that result from technological changes to existing ideas often lead to the product becoming so commonplace that it is considered a commodity. The stages of this process are highlighted in the commoditisation curve, moving from the genesis of an idea through to a custom-build, then a defined product and finally a commodity as the demand and number of suppliers grows.

A high profile example of updating an existing product to great success is Facebook. Although it is now the social network of choice for many people, it was by no means the first.

Following the early days of Bulletin Board Systems, there were another 14 predecessors before Facebook came to the fore, including Six Degrees, Bebo, Habbo, Friendster and MySpace. So what made Facebook stand out from the crowd and enabled it to steal most of the market?

Firstly, its open API meant that third-party developers could create applications that worked within the platform itself. Furthermore the popularity of its Like button has seen this feature being adopted across the internet, enabling users to share any content that interests them at any time.

Longevity – standing the test of time

A series of management studies in the nineties and turn of the century by Jim Collins defined how good companies become great ones over time, and continually outperform the market. Yet, as longevity is being redefined for modern times, some of what were once considered great companies have struggled, with others affected as the dot-com bubble ruptured.

As we have already seen, Facebook has disrupted the social network market to now become an incumbent. It is one of the social networks that has stood the test of time, powered by its ease of use, knowledge of what we want and money.

Additionally, Amazon has developed staying power by becoming more than just a bookseller, having diversified into DVDs, CDs, downloads and streaming, software, video games, food, toys and furniture – the list is endless. This is a model that Amazon is replicating across the globe to great success.

Developing game changing solutions

Amazon's diversification into new markets and territories has enabled it to become the fourth most valuable public company in the world. In 2015, it surpassed Walmart as the most valuable US retailer, so changing forever our definition of what a retailer is. Amazon is an incumbent, but no one could accuse it of not being innovative.

The company has certainly lived up to its "Work hard, have fun, make history" slogan, and is now the first place many of us look when considering potential purchases.

Amazon also changed the game further by pioneering the smart speaker market with the launch of the Amazon Echo in November 2014. After being largely a solo player in the sector for a couple of years, it is now facing competition from Google Home and Alibaba Tmall Genie, as well as the forthcoming Apple HomePod.

Revolutionising the market

When Apple introduced the first iPhone in 2007, it changed the mobile industry and what we expect from our phones. Steve Jobs described the iPhone as a "breakthrough internet communications device", and the resultant explosion in mobile internet traffic shows how we have gone from simply making calls to having the whole world at our fingertips.

Now with just one device, we can find out the latest global news, check our finances, listen to music and take pictures wherever we may be. Moreover, these pocket gadgets have taken the place of many other everyday items – including torches, stop watches, dictaphones and calculators – and so have disrupted a number of markets in the process.

Perhaps one of the most surprising casualties of this revolution has been sales of gum, which have declined by 15% since the iPhone was launched. Our phones take away the tedium of supermarket queues and so restrict our impulse purchases.

Creating a superior user experience

One of the key points with smartphones is the great user experience they offer, and never more so than with the iPhone X. Although it has a price tag of nearly £1,000, it comes with a whole host of new capabilities and is more powerful than the MacBook.

Such enhanced user experiences have now extended to our homes and the relationship we have with our thermostats. Now I can talk to it to change the temperature, as well as to my car, kettle, lights and radio.

Bringing all of this together at SSP

SSP is an incumbent too, having been at the heart of the UK insurance industry for the last 33 years.

Just like the companies above, SSP too is changing in a disrupted market. So how have we embraced these concepts to enable our customers to gain agility through technology and to drive out inefficiencies in the value chain?

SSP started out as North Park Computer Services in 1984, which emphasises our longevity in the industry. From the first comparative pricing and broker systems, our originality led to Polaris being conceived out of a pilot between North Park, Sun Alliance and Eagle Star. The resultant standardisation of electronic trading has led to millions of EDI transactions being processed each day.

Just as Lemonade didn't create claims payments, but simply changed the market by doing it faster than anyone else, so SSP has been a game changer in a number of ways. We recently partnered with Legal & General to launch the award-winning SmartQuote – an innovative new digital solution that enables consumers to quickly receive a binding home insurance quote simply by entering their postcode and the type of cover required.

This is possible due to the ability of SSP Intelligent Quotes Hub to act as a single point of data integration for the internal and third-party data sources needed to streamline and simplify the customer journey. As the information used comes from official sources, rather than customer estimates, the price accurately reflects the real individual risk posed.

In 2007, SSP software powered the launch of Direct Line for Business's products. Now in 2017, Direct Line Group has once again used SSP's software to relaunch its commercial proposition. The new SaaS platform underpins agility, allowing insurers to focus on being insurers without having to worry about the burden of traditional IT.

One of the biggest innovations in insurance from a user experience perspective in recent years has been telematics. Now how I behave directly influences my insurance.

BIBA research showed that, in 2016, the number of live telematics policies exceeded three quarters of a million for the first time, representing an increase of nearly 25% year-on-year. Yet this still is a fraction of the more than 25 million cars on the UK's roads. Telematics is a great user experience for the insurer; however, the slow uptake shows that we as consumers remain unconvinced.

SSP launched SoteriaDrive, the first whole of market telematics app, in the UK, where telematics has been targeted at reducing premiums. With more than three million motorists having been involved in accidents on Australia's roads, there has been a particular focus in Australia and New Zealand on road safety and accident prevention.

This is great technology, but it still needs a great end-user experience through making it relevant to the audience.

Conclusion

As we have seen, disruption is not just the prerogative of start-ups, and incumbents have revolutionised a number of industries from mobile technology, retail and communication right through to how we insure these products.

I am passionate about the insurance industry, which is an exciting place to work as it embraces digital initiatives. I love seeing all the new innovations all around us, and look forward to more exciting developments as we continue to evolve with the times.

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