“Dealing with digitization is like learning a new language”

How is one to succeed in making a 125-year-old, globally active large corporation fit for digital change? In her talk “How do win the America’s Cup with the Gorch Fock?” at solutions.hamburg on September 6, Bettina Stoob, Head of Global Innovation at industrial insurer Allianz Global Corporate & Specialty (AGCS), will share with the audience a part of her personal experience. This interview offers a foretaste of what to expect.

mgm: Ms. Stoob, you are Head of Global Innovation at AGCS. Which specific tasks do you face in this capacity?

Bettina Stoob: For a long time innovation was not institutionalized at AGCS. Instead, developments progressed more or less at random. If an employee had an idea along with the power to anchor it in the company something happened. Otherwise it tended not to happen. That is why my position was created. I defined the concept, staked out the organization, developed processes and hired staff. On this basis we defined the subject area of innovation for the company. At ACGS innovation is a customer-centered function. We deal with everything that happens on the product development side or that relates to the business model as a whole and offers the customer significant added value – either by creating something entirely new or by changing perceptibly some that already exists. So the items on our agenda are mainly the radical topics.

mgm: I assume that digitization is one of these radical topics.

Bettina Stoob: It most certainly is. After all, we don’t make automobiles or other physical products that roll off the assembly line. In principle we sell an undertaking to take a risk off the customer’s shoulders and stand by him in the event of loss. A piece of paper is all that reflects this process. So digitization is for us a central issue because we cannot undertake any innovation without involving the IT. At other companies you can, say, change the taste of a candy or the composition of a cream, but varying your product’s shape, size or color is pointless if the product is an insurance policy.

mgm: Are there areas at your company where digital change is especially apparent?

The customer now knows what it is like to be provided with a service immediately, to receive an immediate answer to his query or to be quoted a price instantly.

Bettina Stoob: In discussions within the company we frequently hear the argument that personal relationships with the customer are what drives our business, so digital change is less likely to be significant for us. What I then always say is “Yes, our business depends on a personal relationship, but for me that doesn’t mean we don’t have sufficient scope for digitization. Our customer, a risk manager with a large international enterprise, may also order books from Amazon or book his vacation apartment with Airbnb.” The customer now knows what it is like to be provided with a service immediately, to receive an immediate answer to his query or to be quoted a price instantly. At present we are not always in a position to fulfill these three requirements – especially because AGCS’s business is large-scale industry business that has to be hand-knitted for the customer. Yet I still believe that there is a large area, particularly in respect of the customer experience, where we could already do a great deal to make the customer’s work very much easier.

mgm: In the title of your talk you compare AGCS with the Gorch Fock – a very large ship with a big reputation but one that is probably difficult to turn around…

Bettina Stoob: I always say that we lie well in the water, are very stable and won’t capsize any time soon. The turning maneuvers of modern racing yachts look more spectacular, of course, but that kind of change of course is very difficult to accomplish with a ship like the Gorch Fock, where convincing the bridge that something lies ahead we would do better to sail around is a challenge in itself. The second challenge is to persuade the entire crew to go along with the change of course. The employees of a company like AGCS vary widely. Some are young people who were born with a cellphone in their hand, as it were, while others joined Allianz many years ago when we were still using punch cards. There are times when these colleagues simply no longer understand the world today. In my opinion, very few of them don’t want to understand it; most simply have no opportunity to familiarize themselves with it in their own way.

mgm: How do you succeed in getting them to go along with the change and not go onto the defensive?

Bettina Stoob: We are in the process of launching a Digital Literacy initiative based on the experience we gained in the early 2000s. That was when Allianz acquired many companies in other countries and integrated them into the Group. Suddenly we needed to change the company’s working language from German to English. Many employees had only learnt English ten or twenty years earlier at school. They were able to order fish and chips in a pub but were not accustomed to conducting a meeting or making a business phone call or writing a letter in English. This problem was solved by means of a large-scale program with the result that English is now the standard language across the Group. We will need to launch a similar program to deal with digital change because the topic extends beyond IT and affects all processes. That is something for which people must be prepared. In principle it is like learning a new language or acquiring a new skill.

mgm: To keep to the figure of speech in the title of your talk, you as the Gorch Fock are not the only competitors for the America’s Cup. The highly tuned racing yachts you mentioned earlier are also in the running. Who do you currently identify as your strongest competitors?

Startups – especially in the UK, the U.S. and Asia – are plucking up the courage to attack the traditional insurance business head-on.

Bettina Stoob: In our case the highly tuned racing yachts come from the startup world. Because the insurance sector is very strictly regulated we felt safe and secure for a long time. In the past, setting up an insurance company was extremely capital-intensive. Today it is different. For one, regulatory authorities now grant insurance licenses whenever they are credibly presented with a good business model. For another, venture capital companies are currently investing heavily in the InsurTech and FinTech industry. In addition, startups – especially in the UK, the U.S. and Asia – are plucking up the courage to attack the traditional insurance business head-on and not trying to position themselves within the bounds of the status quo. We are finding it hard to react to this trend because they can move much faster, make decisions much faster, raise funding much faster, and have enormous amounts at their disposal. Along with these competitors the big tech enterprises also play a part. Until now it has not been very noticeable, but I believe that a company like Google will at some time in the future rough up the insurance market significantly. Here we face the same problem as with the startups: these companies have other processes, a different approach, faster decision-making routes and more cash with which to fund them. They don’t experiment with 50,000 euros; it is likelier to be fifty million.

mgm: In view of this competition is there any chance of a company like AGCS holding its own in the market?

Bettina Stoob: I spend much of my time drawing attention to the subject so that at the end of the day the management levels will go along with it and be prepared to make some changes. As part of our digital strategy we have, for example, created a “bimodal operational model” with the aim of establishing two different speeds and styles of working within the company. One is classical operations to keep existing business up and running; the other is a kind of rapid deployment force with a slimmed-down governance to enable things to be tried out faster and more easily.

mgm: One last question about your talk: what is the core statement you want visitors to take home with them?

Bettina Stoob: In developing our digital strategy we learnt a number of points, both positive and negative, that I would like to present in Hamburg. It is best to avoid embarking on a project of this kind as an amateur yachtsman. In our case the people involved in discussing digital strategy took the project forward alongside their ordinary work. In retrospect it would probably have been better to release the core team from other duties for six months during which they could define a few milestones and present the finished strategy as the final objective at the end of this period. If the audience were to understand, by means of such examples, which points to bear in mind when pursuing a strategy process of this kind and were to leave with an idea or two for projects of their own that would be a good outcome of the talk.

mgm: Thank you very much for this interview, Ms. Stoob.

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