We’ve interviewed quite of few large incumbent financial firms about their innovation programs. They may be structured differently with different activities, metrics, and incentives, but they all generally have one thing in common: an attempt to combine the best internal and external resources to improve their evolving customer experience.
That’s true at Aflac, as well. The firm’s VP of US innovation Keith Farley joins us on the podcast today to talk about how the insurer defines innovation and how the structure of the program helps them achieve their objectives. We discuss the Hatch Lab that the company runs and how its relationships with local universities contribute to the innovation program. Lastly, Aflac has a corporate venture arm and we talk about its activities and the types of companies it invests in.
Before we jump into the podcast, we’re winding down submissions for our Tearsheet Innovation Program awards. We’re looking to hear about the best and most creative innovation programs that are more than just innovation theater. Does your organization have a good story to tell? Head on over to our website and click on the Awards button to let us know.
We look at innovation from two standpoints. The first is looking at things that accelerate innovation. We know there's something the market wants. Maybe our customers experience something in another industry and they want to experience it in insurance. We also think about incubating innovation -- where we have a new unproven idea and our team comes in to create a proof of concept, get it out to the market and test the response. If it's positive, we can bring it into the organization.
If it's something that goes live and into production, we look at KPIs that are directly tied to products -- downloads, workflow, etc. What's also interesting is the things that don't go into production. How do you measure the success of the learnings that you decided not to apply? We work around the organization to get the company used to taking more risks and doing more R&D and incubation.
Where to draw inspiration
We probably spend more time looking across industries and trying to bring things back to the insurance industry. When the Dominos Pizza Tracker came out -- where you could track your pizza all the way from order to baking to delivery -- we said as a team that we wanted to create something like that for our customers. We had a meeting where we ordered a pizza, tracked it and watched it come through. Meanwhile we were whiteboarding the whole process.
This lead to our Claims Tracker. Our customers can go online, either via desktop or phone, and track their claims at every stage of the process. That was an inspiration we took directly from the food services industry. And when we're thinking about inspiration, it's refreshing to think outside of insurance to what consumers are already experiencing.
Structure of the innovation program
We have a mixture of internal and external resources. We have the Hatch Innovation Lab. When we accelerate projects, it's something we know we need and we need it quickly. We sequester a team and don't have to worry about the BAU. We can take a solution and bring it quickly to life because we don't have the distraction of running current day systems.
An example would be our mobile app. It wasn't a shock that people wanted it. We knew they wanted it quickly, too. This was a heads-down project, let's get this done and out to market. We put it in the App Store and Play Store and didn't do any advertising for it. Sure enough, without promotion, our customers told us this was something they wanted -- it was just a matter of our team accelerating it into existence.
On the other side of the business -- incubation -- we look to work with a partner or a startup. In this case, we think there's an opportunity but we're unsure. It's unproven. We'll put this on the incubation side which has a high tolerance for failure, trying new things, and delivering learnings back to the organization.
So when we have an idea, we look whether it's low risk and we need it quickly (acceleration) or if it's higher risk and we want to answer whether it makes sense (incubation). Many times when we incubate, we can prove out something in six to eight weeks why something would or wouldn't work, saving the organization from investing time, money, and emotional capital.
Corporate venture capital
We have an Aflac Ventures team with a mandate different than ours. They look for startup or investment opportunities with new businesses that have something unique we can use. My team will come in and work with that partner to create a proof of concept and get that into market. If it's successful, we can operationalize it back to the organization on a large scale.
The investment team has an investment mandate and is going after ROI. But secondarily, if there's something adjacent to our space, we can invest and be a user of their products. In most cases, we're looking for companies within or adjacent to the industry. Aflac Ventures is constantly working across the US and the world, including Japan. As a 64 year old company, we believe we can still have the agility and open thinking that a startup can have.