USC Center for Effective Organizations Presentation 8 September 2017

1. 8 September 2017
Creating a Culture of Innovation @
CSAA Insurance Group

2. AAA WAS FOUNDED IN 1902
• Founded 115 years
ago in 1902 in Chicago,
Illinois
• More than 56 million
members in the
United States and
Canada.

3. CSAA INSURANCE GROUP WAS FOUNDED IN 1914
A A.M. Best
financial strength rating
$2.4B
Payments to policyholders in 2016
$3.4B
Capital to serve
AAA Members in their
time of need
~$3.8B
Direct premium written = 30% growth
since 2011
2.7M
Policies in Force
15.8% growth since 2011
Coast-to-coast footprint
of 23 States & D.C. =
12 million Member
households

5. $10Bx 10Y$1Bx 10Y

6. “Innovation has nothing to
do with how many R&D
dollars you have. It’s about
the people you have, how
you’re led, and how much
you get it.”

7. • The biggest threat to
innovation is internal
politics and an
organizational
culture, which
doesn’t accept failure
and/or doesn’t accept
ideas from outside,
and/or cannot
change.
2016 Gartner Financial Services
Innovation Survey

8. “Culture tells us what to do when
the CEO isn’t in the room”
Frances X. Frei and Anne Morriss

9. SIX QUESTIONS

10. Identify the forces shaping the industry.
Name the collective outcome, the impact.
Call out the danger, disruption and opportunity.

11. LOOK OUTSIDE TO IDENTIFY KEY TRENDS,
DISRUPTIVE FORCES
Marc Andreessen

12. Assess and understand the culture.
Be clear about the starting point.
What can and can’t we do, and how fast.

13. ASSESS THROUGH MULTIPLE LENSES

14. Executive team defines innovation.
Interviews with executive team & Board.
100% commitment, minimum 80% agreement.

15. DEFINE INNOVATION
Innovation at …. is the process of finding better, faster,
and cheaper ways to improve service, creating
outstanding member experiences (simple, proactive,
personal), creating new products and services, and
growing partnerships and revenue.

16. BUILD OWNERSHIP THROUGH
DIALOGUE

17. Think about innovation as a continuum.
One destination, different speeds.
Define non-negotiable leadership behaviors.

18. OrganizationalFocus
Easier & Lower Risk  Shorter Term  Smaller Investments New Capabilities  Longer Term  Harder & Higher Risk
Continuous
Improvement
Sustaining Innovation
/ Major Advances
Disruptive
Innovation
Continuous
improvements, to go
faster, better and cheaper
– with the customer
experience in mind.
Leverage our platform
investments and
capabilities to reinvent the
way we do business from
a customer perspective.
Develop disruptive new
businesses that (a) help
replace expected
decreases in auto
insurance premiums over
the next 1-2 decades and
(b) provide new growth.
ENSURE INNOVATION DOES NOT HAVE
ONE DESTINATION

19. CREATE STRONG ALIGNMENT
• To the strategy
• To the values
• To how you assess,
• pay and develop talent
Foster a Culture of Insight and Innovation

20. Identify what and who needs to change.
Build capability to drive transformation.
Define the priorities, and in what order.

21. BUILD NEW STRUCTURE TO DRIVE IMPACT

22. STRATEGIC APPROACH TO INNOVATION
Strategy & Innovation
Strategy &
Partnerships
Corporate
Innovation
Internal – “Invent”
Actively track trends and
competitor moves to inform
enterprise strategy including
themes for innovation and
investing. Design strategic
plan for partnerships.
Builds new revenue
generating ventures and
transformative cost/efficiency
plays. Tests new concepts
for strategic value.
Corporate
Venture Capital
Disruptive
Innovation Labs
External – “Invest”
Dynamic team with authority
to build disruptive concepts
to influence, shape, and
control our future
Focused team with authority
to invest in ventures for early
looks at new capabilities,
experiences, and models
We envision a system of complimentary components that
together comprise a growth engine
Growth Engine

23. DEVELOP MULTI-CHANNEL SOLUTIONS
Lean Innovation
Innovation Hub

24. Operational
Improvements
Customer Service
& Claims
Product & Service
Enhancements
Evolving Insurance
Products
Connected,
Holistic Solutions
Future of
Autonomy & Risk
Continuous
improvements for
operational excellence
Improving the
insurance value chain
for members
Updating products for
new market demands
Evolving products and
business models per
the sharing economy
Connected Home &
Car lead to Connected
Life & Solutions
Autonomous vehicles
will create myriad
opportunities
• Artificial Intelligence
• Blockchain
• Chatbots
• Mobile Claims
Management
• Pay-Per-Mile
• Next-Gen Affinity
• Growing
Commercial Fleets
• Auto Leases as
Subscriptions
• On-Demand
Insurance
• Connected Member
• Risk Prevention
• Fee-Based Services
(with links to
Insurance)
• “Insurance of Me”
• Autonomous Fleets
• Related Consumer
Services
• A.V. Claims
Administration
AN INTEGRATED VIEW
Innovating in Insurance*Illustrative
Protect & Grow Our Core Innovate Our Future
Key:
Current Testing
or Recent
Discussions
* Does not include disruptive or non-insurance innovation testing
Sample of Next
Opportunities:
Amazon Alexa
Concept Testing
Lyft Credits
for Claims
Autonomous Drones
for Claims or U/W
Nest Connected
Home Pilot
Usage-Based
Insurance
Tech-Based A.V.
Players
Ride-Sharing
Enhancements
Traditional OEM
Autonomous Vehicles
(A.V.) Players
GIG Car Sharing
(Claims Admin.)
InsurTech Players
Forging New
Models
Current or
Potential
Partners:
Satellite Imagery
for U/W
Home-Sharing
Enhancements

25. TO SERVE MILLENNIALS WE LAUNCHED THE
ROOM8 APP FOR ROOMMATE MATCHING
Room8

26. Use a balanced set of metrics, analytics.
Use only what makes sense.
And, there is no “there.”

27. IDENTIFY KEY METRICS
 Innovation Index
 Sustainable Engagement Index
 Innovation Competency Trends
 Innovation Platform
o ROI of innovation platform investment
o Number of challenges run, number of ideas generated and launched
o ROI, financial or productivity gains of ideas generated
o Employee, organization and location participation rates
 Innovation Tools & Training
o Number of employees/teams trained on innovation
o Financial impact, productivity/process improvement gains generated by the
training
 Disruptive Innovation
o Number of new/disruptive products/services launched
o Percent of total revenue/income generated by new/disruptive products/services
o ROI/time to market of new/disruptive products/services
o Percent new/disruptive products/services generated with external partners
•

28. What we’ve learned

29. Act like a
leader who has
the authority to
change things,
even if you
don’t
Hacking Innovation
Be user-
centered.
Design from the
bottom up, not
top down
Tools matter.
Use what works
and solve
problems in the
now
Produce, and
non-believers
become
sponsors
A simple way YOU can hack innovation

31. Additional Thoughts & Resources

32. Toolkit

36. SUCCESSFUL MOVEMENTS ALL HAVE 3 ACTS
S-CURVES
Nancy Duarte

37. INNOVATION INDEX
CurrentCurrent

38. KEY DRIVERS OF INNOVATION
Innovation
27. The company does a good job of
improving efficiency.
33. The company demonstrates a willingness
to invest in continuously improving our
processes.
Training &
Development
25. I feel comfortable voicing my ideas and
opinions even when they are different than
others.
35. The Executive Leadership Team members
take an active, visible role in communicating
to employees.
Communication
4. The career development discussions I have
had with my immediate supervisor in the past
year were effective in furthering my
development.
24. The company does a good job of
providing opportunities for professional
development (for example, training, project
assignments, lateral transfers).
Continuous
Improvement/
Efficiency
Driver Items Key Drivers
Colored cells indicate a statistically significant difference
Current% Fav
74
78
60
79
70
70
vs. Ins.
Norm
vs. HP
Norm
+2*
+4*
+8*
+3*
+2
+3*
+12*
+16*
+14*
+18*
+17*
+9*
+10*
0
-2
+7*
-4
-11

39. CULTURAL ASSESSMENT
COMPETING VALUES FRAMEWORK

40. Adhocracy
CULTURAL ASSESSMENT
NOW VERSUS PREFERRED
ELT Now Preferred Diff Execs Now Preferred Diff
Random
Sample
Now Preferred Diff
Clan 37.3 27.4 -9.9 Clan 32.3 27.5 -4.8 Clan 26.7 29.9 3.2
Adhocracy 10 23.3 13.3 Adhocracy 12.5 24.9 12.4 Adhocracy 16.8 24.6 7.8
Market 20.6 30.4 9.8 Market 25.5 27.5 1.9 Market 28.9 23.8 -5.1
Hierarchy 32.1 18.9 -13.2 Hierarchy 29.8 20.2 -9.6 Hierarchy 27.6 21.7 -5.8
Clan Adhocracy
MarketHierarchy
Clan
Hierarchy
Adhocracy
Market
* Gaps of > 5.0 between Now and Preferred indicate a need for significant culture change.

41. More of Less of
The organization is a very dynamic and entrepreneurial
place. People are willing to stick their necks out and take
risks.
The organization emphasizes permanence and stability.
Efficiency, control, and smooth operations are important.
The management style in the organization is
characterized by hard- driving competitiveness, high
demands, and achievement
The organization is a very personal place. It is like an extended
family. People seem to share a lot of themselves.
The management style in the organization is
characterized by individual risk taking, innovation,
freedom, and uniqueness.
The management style in the organization is characterized by
security of employment, conformity, predictability, and stability of
relationships.
The leadership in the organization is generally considered
to exemplify entrepreneurship, innovation, or risk taking.
The management style in the organization is characterized by
teamwork, consensus, and participation.
The glue that holds the organization together is
commitment to innovation and development. There is an
emphasis on being on the cutting edge.
The organization is a very controlled and structured place. Formal
procedures generally govern what people do.
CULTURAL ASSESSMENT
BIGGEST PAIN POINTS, BIGGEST OPPORTUNITIES

42. • Most decisions should probably be made with
somewhere around 70% of the information
you wish you had. If you wait for 90%, in most
cases, you’re probably being slow.

43. • “The more you engage with customers the clearer things become
and the easier it is to determine what you should be doing”
•
John Russell, President, Harley Davidson

44. • It is easier to act your way into a new way of
thinking than it is to think your way into a new way
of acting
Harry Stack Sullivan

46. “THE BEST WAY
TO HAVE A GOOD
IDEA IS TO HAVE
A LOT OF IDEAS”
• Dr. Linus
Pauling