EP252: Why Innovation in Large Organizations Has Almost Nothing to Do With Ambition
Jens Heitland and François Jacquemin explore how innovation actually works within large insurance organizations, from legacy systems and edge teams to the trust networks that enable change at scale.
Youtube Podcasts
Why Innovation in Large Organizations Has Almost Nothing to Do With Ambition
A conversation with François Jacquemin on the real mechanics of change inside complex systems
There is a version of the innovation conversation that happens in boardrooms and on conference stages that sounds roughly like this: the organization needs to move faster, think differently, and embrace disruption. The language is confident. The direction feels clear.
Then someone goes back to their desk inside a company that has operated successfully for forty years, and none of it is quite as simple as it sounded.
In a recent conversation with François Jacquemin, who has worked inside and across large insurance organizations across Europe and globally, we spent time on a question that rarely gets answered plainly: what does innovation actually look like inside a large, complex organization, and what really drives it?
The answer is less romantic than most accounts suggest.
Innovation Follows Pressure, Not Vision
Change in large organizations clusters around problems that can no longer be ignored. In insurance, that might mean a shift from thermal to electric vehicles, changing how risk is assessed and how contracts are structured. It might be shifting customer behavior around digital access, or legislation that forces an entire market to respond at once.
When that kind of pressure arrives, focus follows. Budget follows. Brainpower follows. Organizations operating in the same market will often begin moving on similar challenges at roughly the same time, not because they are watching each other, but because they are responding to the same reality.
The organizations worth studying are not necessarily the ones declaring the boldest innovation ambitions. They are the ones who have built the internal conditions to respond quickly when pressure arrives.
The Edge and the Return
One pattern that appears across industries, and that François observed directly inside insurance, is the logic of the edge team. When a large organization needs to move fast, the answer almost always involves building something small and separate. A team outside the normal operating structure, free from the weight of the core business, with room to move in ways the core cannot.
What tends to be underestimated is what happens next.
At some point, the work built on the edge has to come back. It has to be absorbed by the same system it was designed to change. That transition, from the edge back to the core, is where most of the real difficulty lies. Not in the original idea, not in the prototype, not in the pilot. In the reintegration.
The organizations navigating this well are not the ones trying to replace everything at once. They are the ones that understand which parts of their value chain can move independently, and which cannot. And they tend to have people who know how to operate in both worlds.
Legacy Is a History Problem, Not a Technology Problem
Every system, every process, every layer of a large organization reflects a decision that once worked. Sometimes that decision worked for decades. The accumulated structure is not an accident. It is evidence of what kept the business alive.
When François described building a new global competency within a large insurance group, drawing on technical knowledge from one part of the organization and reinsurance expertise from another, the complexity was not theoretical. It was the product of years of decisions, each of which had made sense at the time.
The technical capability to do something new is rarely the limiting factor. The limiting factors are the data structure, the siloed systems that were never designed to communicate with each other, and the financial reality of how much it costs to bring those systems into alignment before anything else can be built on top of them.
The Infrastructure Nobody Puts on a Slide
When François talked about running global innovation networks across insurance markets, what made those networks function was not the sophistication of the agenda. It was the relationships that formed when people from different countries and parts of the organization were in the same room.
The colleague who reaches out years later because they remember a conversation. The team that moves faster because someone they already trust is on the other end. An idea from one country that sparks a different solution in another, not through any formal process, but because two people stayed in contact.
You cannot mandate this, and you cannot schedule it. But you can create the conditions for it to form. The organizations that consistently do tend to see things move in ways that are hard to attribute on paper but completely recognizable to anyone who has spent time inside them.
What the Future Requires
François closed the conversation with something worth sitting with. The future of insurance, in his view, is one where the product becomes even more invisible. Clients do not want to think about it. They want it to work, to be available at any moment, and to stay out of the way until it is needed.
Getting there, inside organizations carrying decades of history and deeply embedded infrastructure, is genuinely hard. It requires financial discipline, technical clarity, and the kind of human infrastructure that most organizations do not think to measure.
The organizations that figure it out will probably not be the ones that talked the most about innovation. They will be the ones who quietly built the conditions over time for change to actually move.
The Daily Hint with Jens Heitland is produced by Heitland Media Group.*
Guest Links
LinkedIn:https://www.linkedin.com/in/fran%C3%A7ois-jacquemin/
Website:https://www.jensheitland.com/
Business: https://www.heitlandmediagroup.com/
LinkedIn:https://www.linkedin.com/in/jensheitland/
Facebook:https://www.facebook.com/JensHeitlandofficial/
Instagram:https://www.instagram.com/jensheitland/
TikTok:https://www.tiktok.com/@jensheitland
X/Twitter:https://twitter.com/jensheitland
Newsletter:https://www.jensheitland.com/newsletter
YouTube:https://www.youtube.com/@jens-heitland
Subscribe and listen to The Jens Heitland Show Podcast here:
YT:https://www.youtube.com/channel/UCjuSGi1feauCNSER3IKuGWg
Web:https://www.jensheitland.com/podcasthome
Apple:https://podcasts.apple.com/us/podcast/the-jens-heitland-show-human-innovation/id1545043872?uo=4
Spotify:https://open.spotify.com/show/7H0GWMGVALyXnnmstYA1NL
Transcript
Jens: Okay. Innovating insurance.
François: Yeah, I mean, innovation and insurance is something maybe the public doesn't really link those two terms together simply because insurance is seen from the outside as a very traditional, very slow type of industry.Where, from the point of view of the client, nothing changes much as an insurance contract and some claims and some payment. So, the means of it are not changing. The basis remains the trust that people have to have with the insurer. And then there's a piece of paper, or if it's not a piece of paper, now you have all those an app, digital, et cetera.
Yeah, but it's pretty similar. You have the general terms and conditions that respect the law that has been unchanged for a long, long period of time, although if I say that, I'm sure plenty of legislators and control authorities will disagree, because the law changes a lot.But the basis from the client's point of view remains unchanged. And I believe this is why it's seen as an industry without too much innovation, but it's wrong. It's wrong. There's a lot of changes in this industry. If you look at, I'm going to take maybe the example of linking the technology and innovation
Jens: mm-hmm.
François: Maybe talks, but insurance is the industry that invests the most in digital technology. And it's always done with the purpose of improving the client experience, improving access to client or the client access to the insurer, and also improving the efficiency of the insurance services.
But it's step by step. So the real feeling or jump is very slow and, like how the human brain is working when there's a little change, one year later we forgot that this change happened, and everything is normal. Then a little change happens again, then it becomes the new normal.
The new normal. So it's very slow and the perception then is, uh, is, is somehow different.
Jens: But it's quite interesting. I have only things to do with insurance as a customer. It's a client from your side. But it's quite interesting. When you live in different countries, it's always different.
The system is different. It's sometimes hard to understand, but then technology is different. Some countries are super advanced, other countries are less advanced. It's quite, quite interesting. Do you see big differences if we just focus on Europe, on countries and the insurance companies inside of that countries innovating more or less?
François: Well, when I was with a big German insurance company, I was doing global steering. So I've seen a lot of innovative initiatives. They are different a bit everywhere. So you can't say that there is a country that is more innovative than another one. It depends on people. It depends also on the challenges they face.
So if the insurer there doesn't need to innovate, then usually they will just have a period of time where they will innovate very, very little because it's not the focus. But when there are some issues or challenges, changes in legislation, changing customer behavior, or changing the whole ecosystem.
What happens outside the insurance? So we can take self-driving cars, or let's not go there because that's quite far and then it's very specific to some locations. Let's take simply electric cars versus standard thermal cars, where you have
a change in the way the risk is assessed. And because it is a different type of risk, also the value of the car is different. So these are elements that will influence the way insurance will be driven or the insurance company will act in a certain way for insurance contracts.
It also reduces or lengthens contracts depending on the matter you have or the type of matter you have. So these are those challenges coming from something totally outside the insurance industry touching the clients and the potential claim amount that will drive the innovation to be under focus.
And therefore, if there's a focus, then there's lots of brainpower and money involved. So there are usually outcomes, and that is something that you see. Countries tend to react differently because the countries' circumstances are different. But insurance companies in the same country will tend to innovate on a similar type of issues because they face the same issues.
Jens: Yeah. So it always starts with the problem that they need to solve and then they're innovating. It's not for the sake of innovating.
François: Exactly.
Jens: Yeah,
François: exactly.
Jens: Good. It's quite interesting because as a consumer or customer of insurance, I wasn't even thinking about it. If I'm driving an electric car, that is different than a gasoline car.
Like these things are so far away from a just pure consumer. It's always what do I get and how much do I need to pay? That's what at least I care most about, mainly the payment, obviously. It depends on the value that you get for it. It's interesting to hear that the innovation cycle is different and though you are innovating internally as an insurance
industry, as consumers, we don't see it. And that's why it maybe seems to be slow because I don't care if I have an electric car, then I need insurance, and I have a gasoline car, I need insurance. There's no other way around, but it's kind of, and I don't care what's behind the scenes.
I, I care when something happens that I get help.
François: Exactly. But as insurer, this is what you want, right? Yeah, of
Jens: course.
François: You want that. The client is very happy with it, or the fee is less forced because you said that we have to have insurance for cars. But the smoother it is for the client, the better it is.
And if you let's take the analogy with online sales in insurance and the rest, it influences each other, although it may not always be on obvious things, but in the way of thinking. So if you online say that it has to be seamless and easy for a client, then it percolates also to the other part of the more traditional way insurance is driven, and there's certainly a demand for a seamless, quick, and easy-to-do-business-with type of approach.
Not only for the online, but also for the traditional one. What I always find very interesting is if you segment the people that are buying online and the people that don't want that and so on. But this is not just two very distinct segments. You have a lot of people, basically the majority of people not buying online insurance, who will
Look online for information.
Jens: Ah,
François: but it will not buy.
Jens: Yeah. That's interesting because I, I'm more the, the other side I would do a hundred percent online. Like when, when we moved to the Netherlands, for example, we now live in the Netherlands. I did a hundred percent online. I have never talked to a single person and I'm super happy with it.
François: Yeah.
Jens: Comparing that to Germany, when we moved to Germany in between, especially in COVID times. Like I needed to organize everything online, didn't work properly, and it, it was really hard to get things organized. I needed to have the physical card to be able to do anything.
François: Yeah.
Jens: In, in the Netherlands you have an app, everything is organized.
François: Yeah. It's
Jens: quite interesting
François: culturally.
Jens: Yeah.
François: Also, the Netherlands is more advanced in making things easy for the population, the clientele, to have basically a lot of freedom in the way they approach their own way of consuming, which in Germany is a bit more traditional; the French are more balanced.
It depends as the two types of population there are, and the way is very traditional. But on the other hand, the willingness is there to find new ways and innovative solutions. So in France, I find that also interesting when you are innovative. It's also a marketing tool.
So I I was just to contradict what I said earlier, like, um, that we insurer trying to make it as easy as possible for the client.
Jens: Mm.
François: And the least visible the innovation is, almost the better it is. But in France, innovation is a word that is almost used in advertising. It's something that differentiates or insurers are trying to use to differentiate themselves from the competition.
Jens: Makes sense. So they more see it from a business driving perspective rather than from a reactive.
François: Yeah, exactly.
Jens: Interesting. So you have worked in different countries, but as well in different organizations. How did you approach innovation in a group setting where you were not part of the country organization, but part of the group organization, if I understood right?
Right. How, how was innovation treated at that time, comparing it to when you were more entrepreneurial driving one unit as. As, as innovating the, the business
François: wait, in, in of the group, there were two, two period of time. There was one period of time, was very, um, global steering. So the group center and um, it sounds great, global steering.
It means that we have all the power, but basically we have no power whatsoever. So the key is to establish networks. So you would take those colleagues of Thailand, Malaysia, Spain, Russia, Germany, and all the other countries and bring them together into one room and let them speak about what they do, express their problems, their frustrations, and their solutions.
And uh, and then there was, uh, there was a lot of sharing. We tried and we hoped that there was going to be sometimes a solution, a solution built in the country could be used in another country. But usually that type of innovative solution that are actually great because if you, in, in one country that works, like even they, they became, you know, the, the first to launch that kind of approach on the market.
Couldn't use that in another country because they had to rebuild everything. Systems are different, the legislation is different. Although I hate saying that, the devil's in the details. It actually sometimes is. And if it's not thought through before, like something that has to be adaptable from one country to all the others,
then it's difficultly portable. But there were lots of things that we were doing, like giving ideas so that solutions could be brought back in their home country. And then they were talking about that, and then they were finding alternative solutions or copying those.
And usually it works rather well, but that was always collaborative. It was never a top-down approach because there was a very limited budget control. But people loved it. These network events we were doing twice a year. The people were coming and we had a very good and solid community. I still see some of those sometimes.
Some colleagues in Italy. So it was, it was really nice. Um,
Jens: It's quite interesting because looking back when what we did in IKEA, it was similar when I worked with sustainability and innovation around those topics. We did the same thing. As a global organization, we built an event which was kind of, let's put all the sustainability people together, the managers from the countries.
Yeah. And then let's work with them, workshop around certain problems to then find out solving things. Yeah. And then we built like smaller tech teams that were focusing on specific areas in their countries and then bringing it back to global.
François: Yeah.
Jens: Yeah. In the end it's, I, I think that's where if you work in a very large organization that's.
That's the way to do it. At least my, my view
François: It is. I think it shouldn't be only, it should be all companies. So you have, in insurance, basically companies are more similar in each country because things like your car or pension, though sometimes a bit more, sometimes a bit less depending on that.
But basically there could be potentially all lines of business. And it's, I think it's very important as well that these networks are happening not only for the people in a certain area, but it people should have their own, um, or digital or, or so, so the, the different tribes, uh, create a real matrix organization.
Jens: Yeah, yeah.
François: Like, uh, in a country in certain way and, and, and, and, uh, in, in globally or with, uh, region in a, in a different way. So. I think that's, that, that's very powerful to, uh, to, to create this link between people.
Jens: What, what is quite interesting, and you said that like you are still having the relationship with the people, that the relationship is kind of the driver.
Like the personal connection in the end when you put people from different parts of the organization.
François: Yeah.
Jens: Together in a physical room. Maybe have some drinks in the evening and some fun as part of it, as
François: part of it,
Jens: but in the end, the relationship is the thing that that makes things happen because. If you know each other, then you reach out to each other.
If you have a problem, you say, oh, there was Francois and he was in Luxembourg. I'll talk to him because he was working on a similar topic. And then you reach out. If you don't know each other or just online, you will not do that most of the time.
François: No.
Jens: And you don't have the trust and kind of I look bad when I'm not good in something.
François: Exactly. Because that trust is based on something different. It's not like your next colleague's trust, I trust you to do that so that I can do this. It's really built over a long period of time and repetition of meetings. It is also, as you said very well, there is no competition, but it could be after 20 years of career and they find themselves against each other for the top job.
It's, uh, it's, it's usually, uh, less the case. Um, what, what is usually a problem is that if a group expects to have immediately. Result from those events?
Jens: Yeah, very. And
François: I don't know how it worked with IKEA. Was it also that there was, step by step, the trust building and it created a flow, but a slow flow of movement?
Jens: Yeah, a hundred percent. So if you take a total organization, especially I worked a lot with the sustainability part, if you want to drive something in the total organization, then that's the way to go. If you want to drive speed, then you need something. What we did, we built a super small team with five to 10 people and they worked on the edge of the organization and then looked into how can we break it.
François: Yeah.
Jens: Really looking into how can we really do something that's extraordinary and completely different. That you cannot do in the normal part of the organization. You need to be somewhere invisible on the edge.
François: Yeah.
Jens: To really like do difficult things. So one example what we did was looking into how do we build the future sustainable IKEA store.
That was a very small project in the beginning, which then was later on a huge global project. Supported by the CEO and the global management team, everyone was aware of it, but it really started small. Let's look into how do we change the way we build IKEA stores.
François: That's interesting. I, I, in insurance, what I've seen, and, uh, I, I have, it was also something I worked on in my, in my latest job, it was.
Is the digital, the online sales management approach. What I was seeing is that they were building the online insurance company outside even the office of the traditional insurer because of the necessity to go faster. To have the right tone on the phone, the right training to get the right tone on the phone, I guess.
Uh, also, um, and, and so the organization was much small, much more agile and, and, and, and totally outside. Um, I've, I've seen that in, in numerous occasion. I, um. I had discussion to, to, to do some work with one, but finally I did not. I, I joined this company in Luxembourg and there we also had a, an online department.
It was outside the standard sales team, but because we were anyway a small team, the operational department was the same from one and the other one. And it brought us always some issues in terms of flexibility for testing some things and so on. So when you say it has to be outside, that's very good.
On the other hand, if you want to be scalable
Jens: and you need
François: You need to bring it back. So it's like this pendulum approach which is going to be at some point at one point and then the other point. I think it's also not only the structure that is very important.
It has to be thought through, but the structure without the people is not, is gonna work. So if you have the wrong people with the wrong structure is not gonna work.
Jens: Yeah.
François: And, and wrong in that sense means it could be right structure for certain type of people and wrong for others. And, and that's, that's a challenge is how, and finding the right, the right balance is, is, is not, is not that easy.
Jens: Yeah, and finding the right individuals as part of that structure as well that fit. If you build this on the edge, you need to almost have the people that go through the walls and figure it out. And others, you need more the diplomats that figure out the way how we influence the rest of the organization rather than going through the walls.
François: Yeah.
Jens: And that's the same. Um, and we talked about that in the past. Like the leadership approach is completely different in certain situations as well. Like the top leadership that is supporting, let's say this, this project or whatever it is, needs to be completely different if you are in certain setups.
François: Yeah, it's true.
Although my experience is that it, they need freedom and support more than, than, uh, in terms of leadership. It's more like, um. The vision they have the vision. I mean, they know the, the, the vision is very short term is, uh, I want this client now and then, oh, and I want this client now, and, and then five minutes later I want this one now.
So it's very, I found this hunger is a bit shark-like, but not in a negative way. Simply the shark has only one thing in its mind: eat. And that's also something that is driving. So they have a very, very strong drive. And micromanagement is not something that is normally working with those Green Berets or whatever type of people.
Um, that's, that's my experience. Freedom. And when there are some hurdles, really try to, to help them clear those hurdles.
Jens: Yeah. What I, what I've seen working well with really established senior leaders, they're. They're building trust with, with the team, and they're always so that the team feels like I, I have someone behind me.
I have someone who is holding my back. Yeah. Not nurturing, not direct management, detailed micro, but it's really, they know there is someone, and in worst case, the person is there for us.
François: Yeah.
Jens: And that's also trust kind of circle that you need to build up as, as a top leader or as a team with that top leader.
If you don't know each other, you don't know how to play the balls.
François: Yeah.
Jens: Especially in a, I mean, large organizations are always political. It's political ecosystem, so you need to navigate that in
François: Yeah,
Jens: in different ways, depending on what the goal is.
François: I was in that position in one of the, the job I've done in that big group was to, to create a new department.
So the competence is a scarce resource. And the bigger the organization, the more topics they have. So they have so much competence in so many topics. But in your topic or the topic you're focused on, it's a scarce resource. So there was the thought of using one of the biggest countries of that group as a basis or center of competence for a global program.
Jens: Mm-hmm.
François: So there were lots of technical competence in life, disability, accident, and some health as well. But no competence in reinsurance. So we needed to pull that from another part of the organization. And when I was leading the project to establish that innovative new approach,
The, uh, the beginning was. Insurance was not, was not part of that. I mean, at some point we realized, but, but we need that of course. Uh, it's very clear when you just map out your, at the beginning of the project, your, your value chain and where things have to been working, then you're like, okay, I need this.
So that's something that it was important. And, and, and although it's a very, um, it's a very large organization. We need to go there and, and build the trust. And so it was people, you know, we established this relationship with people and then the, the department convinced, uh, the, the, the top leaders and then bring all that together into, uh, into one of the matrix.
one piece of the matrix or the matrix organization, but bringing all departments together was also needing a lot of parley, like they say, but not like at war, but like bringing all the aligned interfaces together and carrying out the big duty. To get back to one of the points you just made, there were meetings with some of the board members of that organization in Stuttgart and in other parts.
And those meetings, usually it's not where we did any work. What was important is that the other team members from the various tribes saw that there was a very strong sponsor somewhere that said, "I want this, and I'm following up on that." The sign that the meeting was happening was much more important than the lack of progress we usually made in those meetings, but we were very friendly and so on.
But it's true.
Jens: We, we did the same thing. So we invited always the top dog that was the sponsor of the meeting. That he, he or she opened the meeting and then we're kind of in the back the whole two days. Yeah. But was just there to support and if something popped up where we needed kind of mental support or whatever, then they would jump in.
It was always the same kind of playbook. The big dog is there, opening the meeting, supporting everyone, saying, "That's the direction, that's how important it is." We really need this as a business so that everyone understands it.
François: Yeah.
Jens: It's kind of, this is the way we go. There's no discussion that we don't go.
So figure it out.
François: Yeah.
Jens: And then it always happen.
François: Yeah.
Jens: And the smart ones, and that's really something for those that are listening to us rambling here, the smart ones are joining the evening activities as well. The big dogs joining with the others in the evening activities.
Maybe not until the end, but at least in the beginning so that they're mingling. Because there are always, if the team is set up in that way, people who never have the possibility to have access to someone in that management team. Then they have the possibility to build that trust with this big dog as well.
And through that, then they as well trust themselves more and going a little bit further than they would normally do. And then, then go back and have the motivation and say, Hey, I met this person. Um, it's good for their own ego, but as well it's, it's kind of driving it. When I was young, I, I was always pumped after this kind of meeting when I was not leading them, but I was just part of the group.
It was. Amazing.
François: Yeah. One thing that worked well was far as that fireside chat.
Jens: Yeah.
François: It was, um, in the same setting. Exactly. It served the purpose that you just highlighted, but, um, it, there was structure to it, so it was less mingling, chit-chatting, and so on. It was more questions and answers. A very, uh, relaxed way.
That's
Jens: way's the difference between insurance and retail.
François: No. What do you mean insurance? We don't drink. No, no. I guarantee you there were lots of drinks as well.
Jens: We'll test later.
François: Yeah.
Jens: No, but, but I think there was more structure, more formality compared to, to retail. I dunno, at least. Comparing it to ikea.
Depends which retail company. Of course,
François: That was the big group here. In Luxembourg, there were lots of town halls, and after town halls, there was this sharing. What worked well was when the group CEO came and said hi to everyone sometimes.
There was a junior person there, and then he was asking questions, didn't introduce himself, and she replied to him and said, "Who are you?" That's cool. This is cool in the moment actually. She's fearless. It was a moment of surprise, but it was also a moment of showing a human side.
And really the, uh, the proof that the team can actually interact with each other and humans are, aren't just having a discussion without it being too formal or too artificial, you know? So that, I found that quite nice.
Jens: Yeah. Yeah. To, to your point, this, it's a small thing, but it makes huge difference to team members.
It's not just the manager presenting. It's enabling everyone to present something. It sounds so banal, but it's a huge difference. Not just in innovating, but in general. I always try to do that so that I highlight team members. When I needed to do a presentation, I did the opening, and then I tried to hand over because in the end, I was just the leader.
I haven't done the work. They have done the work, so they can present it as well. But it's so small but so important and it's not happening in a lot of organizations. Because now I've worked with a lot of organizations after I left big corporate, it's not happening. It's quite fascinating.
And you see the, the companies that are innovating more, they have a culture that allows this things to happen automatically.
François: Yeah. It, it, it joins back this the sharing element of the, of the network earlier. It's, uh, it's important. I don't know if I've realized it or if other people have realized it. It's, for me, it's something that goes without saying now, but I don't know if I was like that at the beginning of my career.
Probably I was sharing, but I was on the doing part at that time. But it's something that I always did. It's important that there is a message to show direction. But at some point, if you're too long, you put people to sleep.
Jens: yeah,
François: not physically.
Sometimes they fall asleep as well, but um, but they get bored and go on their phone and so on. So it's time, time to pack and, and, and, and somebody else has to, to, to, uh, to, to present another topic. Yeah.
Jens: And what, what is interesting, at least in, in my career over the last 20 plus years. I remember the leaders that empowered and that supported me in my journey.
And I remember as well those that put themselves first. Senior or junior leaders, it doesn't matter. I've had all of them. It's quite interesting. And then looping that back to innovation, innovation is only happening when you are empowered, when you get the trust of the people.
When you. Yourself, you feel well to do the extra step to say, okay, I take this risk. I will try this now because it's, it's an idea. I have no idea if it's going to work, but I will try it. 'cause I know I have the, the back.
François: It's, it's important to have the, the backing, especially when, uh, innovation is not always a, a one way road without, uh, curves, et cetera.
Usually there's plenty of hurdles and it's the hardest path. It's not like a stroll on the beach, it's more like mountains and valleys. What was the fail-fast factor? In insurance, sometimes fail-fast is challenging because you see only some elements.
After a long period of time, so fast is not possible in that sense, and sometimes you see it is a bit too late. So we tend to be a bit more risk-adverse and careful to re-address the situation. It takes a while. And there's plenty of elements that insurance companies have put in place to avoid an over-adventurous approach.
But in IKEA, what was fail-fast? How did that happen?
Jens: I mean, it, it really depends on where you are in inside of the business and how much you can fail. 'cause if you're a direct connection to the customers, then really depends how you, like, what are the thing we can fail with and how can we make it up if we fail.
Yeah. So if you test new things for the customers, which are services or something, then you have a direct feedback loop. So you can iterate way faster because if you have 20,000 customers every day, then you get a lot of feedback, positive and negative. So that's easier.
But when we work like building this future sustainable IKEA store, you need to build it to be able to understand if it's working or not.
François: Yes.
Jens: So. Like what you do in big companies, you build a pilot country, you select the store and then you built it. And that takes like five years.
François: Yeah.
Jens: And then, you know, and then you implement the changes.
But what was quite interesting when we did this, we looked into what are the different components and broke kind of the store down in, in smaller pieces. And then we looked into what are the things we can test directly in other projects with like small, small amount of risk. Then test that, test that, test that.
And one of, one of the like super basic examples when you come from construction or architecture, like if you place the store slightly in a different angle to the sun, then you have less heat in the store. Like, yeah, that's, that's clear. But. If you then look into, it's a commercial machinery. The, the Ikea store is placed at the motorway and it's placed in a way that you can see it when you drive, like you see the logo, either you see the blue box, so all of that is detailed in manuals, and then you change like, but no, we need to change the, the store by 20 degrees just so that we don't have so much heat in it.
Then someone in the top organization or franchise organization who is looking at the manual says, "Hey my friend, that's not going to work." So there were different iteration cycles with different risk appetite. This fail-fast really depended on what it was. Brand was non-negotiable; it was very hard to change anything when it comes to the conceptual branding of an IKEA store when it comes to service and small things in the store.
Then you could do that even as a store team and test iterate all the time.
François: Yeah.
Jens: If you, if you then have like the organization. The support from the leadership and, and the drive of, of the individuals. Then you have it every day, but then as further you go away from that daily business as, as less, it's, it's happening.
François: Yeah.
Jens: And then going back to your technology part, you have legacy systems in very large organizations because they have been successful for 40, 50, 70 years. They have old systems, so you cannot just patch on a new thing. And it works—we talk about AI today. If you have an old structure with a data structure, it doesn't work if you don't have the data structure.
If you have like 20 different silos and you want to put an AI on top of, it doesn't work. You need to integrate it first. You need to kind of bring all data into one. One pillar and then you can use it. Yeah,
François: yeah. Data in one pillar. And
Jens: that sounds easy.
François: Or at least to have a library of what data means in this context.
In this context. In this context. Exactly.
Jens: Exactly.
François: Data is not a simple topic. That's why so many organizations are struggling with that, legacy systems, and AI. AI—I wonder, of course AI can be used to program, right?
So to code, AI will do 80% of the job or the heavy lifting. But it has to be—AI cannot do it all by itself. It needs steering. Now coding is more steering still. Understanding code is very important, but I wonder if it wouldn't be more efficient to create an insurance solution from scratch rather than just updating and upgrading.
Uh,
Jens: most problem
François: Just don't know if it makes financial sense. So there's always the question: does it make sense financially? And then this is what is going to decide, not the beauty of art. This is not art, it is the financial element.
Jens: Yeah. For me there are two, two aspects. So one is the time aspect.
How fast can you generate the income so that it is paying back and, and the other part is how much do you need to put in be before you get to that point. And if you understand this too, then I think it is. Sometimes it's definitely easier technology wise. Yeah. 'cause if you, if you take a huge insurance group, a global insurance group to figure out how you can use all the newest of the newest technology across the whole company to make the whole company effective and efficient will take years.
If you, if you built a new digital first version of that, it takes you months.
Jens: not to scale, but I, I think to have the final solution, it, it will take you less than a year, I guess. Then it's more about how do you get that to adoption and to scale. That's then a different conversation.
François: Yeah, yeah. But the, the beauty of insurance is, it's super challenging.
Jens: Yeah.
François: Is, uh, intellectually challenging. Like, uh, the board member of of Ian said it's, um. You need to think a lot about what you're doing. Understand, um, memorize a lot of things because if you just have, you know, a little angle of vision without, you know, keeping in mind all the other elements, then you will be, uh, you will be making mistakes and, and, um, or you will lose yourself.
So you mentioned big insurance group globally. There's so many different, the, the, you know, you merging two, two companies that are similar. You know, at some point you just say, ah, well they solve this solution in this way and we solve this in that way. And the same program, the same product, but it's managed differently.
And to bring that together is super challenging. Yeah. It takes, it takes weeks, months to understand then getting the people then building solutions. So. We took, you know, although they're pretty similar, we talk about, you know, uh, one to two years, but then when you have all the type of business, which is different in 50, 60 countries.
Sometimes I think the big countries can have a system and small countries should have their own, their own system and more flexibility because they all, some work around that. That's what's happening. Yeah. The core will be kind of, could be similar or, you know, uh, similarities, but work around will be needed.
And I just say that and, and, and before we say, oh yeah, I would solve everything. But no, that, that's, that's something so. There's gonna be partial, but the, the, the, the complexity is what makes it, uh, dreadful and beautiful at the same time.
Jens: Yeah. I think one interesting approach the insurance industry as a whole could take is look at farmer and healthcare.
So what they shifted, first it was, you have a lot of. People working in labs and developing the drugs, developing the, the devices and everything. And then they, the big pharma owned all of that. So they, they had like the people in the universities working in the labs and doing the work, and now they shifted to a model.
'cause what they have seen is that startups are way faster in developing these things. And COVID was one of the, the driving forces of that. Yeah. So what they're doing is they're just investing early on in a couple of startups and then they're picking the best ones. And then they're buying them when they're at a certain point.
Yeah. So they put the stake in, in, in the beginning, and then they buy them later on and through that they get all the knowhow, all the speed. 'cause what they, what they did, they were analyzing the last. Couple of years and then what they have seen, the startups are like, if, if not at all, double as, as fast as internal because they don't have the boundaries of a large organization.
François: Exactly. Absolutely.
Jens: Yeah.
François: History is what makes insurance slow and heavy. If you don't have that, then a white sheet of paper makes a perfect starting point for a type of business. But insurers are doing that. There is a lot of philosophical approach in insurance.
There is the model where insurers want to control everything, including distribution—independent distribution, online distribution, salary distribution. So there's the interaction with the client and it shows also the level of vertical integration of insurers.
Sometimes they even have reinsurers as part of the group to centralize, although usually it's a bit more to optimize the situation. But they do that, they innovate via what they call innovation hubs, or they invest a lot in startups like you mentioned.
So what I see is that the successful ones don't keep those companies. They are an incubator. They know things, they can develop strategies. I think it's very financial in the approach. So they make money out of that. And often when they buy another company, it may not be from the pool of startups, it may be from somebody else or
an independent or VC or whatever. But also another element is sometimes insurance will also delegate part of the value chain to an external provider model. In France, or in the Anglo-Saxon world, they call them TPAs or third-party administrators.
That is going to take part of the administration of, uh, of, of the, the insurance contract. That means that there's a, a part of the value chain is outsourced to an organization that does it better, faster. So it can be because you want to acquire languages, a product that you don't have, you would like to sell.
There is speed to market. There is purely financial. You just look at financial reasons why you would do it in short and long term optimization, human resources, so many elements. But they do. There is this approach to a model like that.
Now, when you do that, there's a lot of questions about vertical integration because if you rely on a third-party administrator that becomes so big that it can say, "Well, you know what?"
Jens: Yeah,
François: "I want to distribute, I want to have my own contract." You're not an insurer yet, but some of those will be.
Some decided to stay insurers; some decided not to because it created more problems than solutions. But the bottom line is that you need to have a value chain that is flexible enough so that you can choose which model you want.
Jens: So if we, if we look ahead in the insurance industry, what do you think are the one or two topics the industry needs to figure out to innovate even more so in the future?
François: I think that insurance will become an even more commoditized industry very soon. People don't want to spend time thinking and discussing insurance. They just want to have insurance, like the swipe on Insta or TikTok. So it has to be quick and very transparent.
It has to be at any time. We don't want to bother taking an afternoon off because I need to meet my agent. That's just not working. And I know lots of agents want to have their own personal life. So the key is to create a model that respects distribution because it's a very hard type of work and it's a people business.
Online only will be happening, but usually there will be people involved. So that's something that needs to remain. But the availability must be 24/7. And the key there is to balance the impact and the usage of AI and to make it responsible. AI can tell you the truth, but can also start thinking by itself.
The avatar is going to give you wrong information, and the insurer that allows that to happen is responsible for it. So you need to be able to balance technology and responsibility so that insurance can be simple, faster, and always available.
Jens: Innovating insurance.
François: Innovating insurance.