Palestra apresentada por Francesco Fazio, diretor da Delloite

1. D E L O I T T E C O N S U LT I N G L L P
11º Insurance Service Meeting
Rio De Janeiro, September 21, 2017
Decrypting Innovation
A practical approach

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A story in three acts
INTRODUCTION
Extraordinary times of
change, outside and
inside your industry,
that make innovation
more imperative today
than ever before
A disciplined approach
to innovation: why it
generally fails and what
makes good innovation
discipline – modern
methods for innovations
Innovation in
insurance:
notable examples
across the ecosystem,
how to build the
capability
ACT 1 ACT 2 ACT 3

3. Extraordinary
Times of Change

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Spotify
Sometimes things change…

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Uber innovates by integrating many existing things…
… elegantly

6. 6

7. 7
Connecting the dots between cattle, ranchers who own them,
companies that buy the beef, and consumers
BOV CONTROL ASSESSMENT
CONSUMERBUYERRANCHER
Plan for pregnancies,
know when to best sell
based on weight, etc.
Track product origins,
ensure ethical and
environmental practices,
and choose the rancher
Know where the filet
mignon came from and
how it was raised

8. 8
Learning from and leveraging health data…
INSURANCE MODELS OF THE FUTURE
“The average person will generate 1+ million gigabytes
of health related data”.
- IBM Watson Health
What if…
… consumers demanded personalized
coverage based on their genetics, rather
than historical population data?
… consumers started aggregating into
“healthy” groups or pools, and self-
insured?
… health and life insurers started tracking
medication adherence, adjusted policy /
coverage accordingly, and encouraged
certain proven treatments

9. 9

10. 10
Learning from and leveraging lifestyle and behavioral data…
INSURANCE MODELS OF THE FUTURE
What if…
… consumers demanded active lifestyle
discounts in their premiums?
… drivers could receive real-time route
suggestions to help them avoid more
dangerous roads?
…insurers and financial institutions used
customer spending data to help consumers
cover major purchases at the time of
purchase?

11. 11
Learning from and leveraging environmental data…
INSURANCE MODELS OF THE FUTURE
What if…
… pedestrian and vehicle traffic data could
help retailers understand how much liability
and property coverage they need?
… home insurers could reward safe
behaviors like locking doors and changing
smoke detectors?
…small farmers or municipalities could
monitor their agriculture for water, light or
nutrient needs and reduce fires or crop
damage?

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SO WHAT? THE INNOVATION IMPERATIVE
The average time to
reach $1B valuation
for is 20 years;
recently we have seen
several getting there
in less than 1
RICHARD FOSTER
Yale University
Companies are growing faster than ever…and becoming
irrelevant more quickly as well
0
10
20
30
40
50
60
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Source: “Creative Disruption Whips Through Corporate America”, Innosight / Richard N. Foster / Standard & Poor’s, Winter 2012
Years(rolling7-yearaverage)
projected
Life expectancy of a F500 company
~50
years
~30
years
~12
years

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Innovation is (almost painfully) hot right now
BUZZWORD BINGO
Innovation is a
Top 5out of 20
challenges CEOs are focusing
on in 20161
$680Bn
R&D spend by top
1000 firms in 20162
only 5%
of their innovation
projects actually
succeeded2
but...
1: The Conference Board Review 2016 CEO Survey 2: Strategy&, 2016 Global Innovation 1000 report , Doblin analysis

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Breakthrough innovation is plagued by many myths
INNOVATION MYTHS
1. Start with brainstorming!
2. Mostly enhance your creativity…
3. Innovation = great products…
4. Speed is everything—we have to beat competitors to market!
5. Great entrepreneurs trust their gut—you can’t study innovation!
6. Great innovators work alone...
7. It takes lots of ideas and experiments to get one good innovation...
8. Protect your patents—don’t trust outsiders...
9. Think outside the box…

15. A disciplined approach to
innovation

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A more expansive frame for innovation
TEN TYPES OF INNOVATION
Network
Connections
with others to
create value
Process
Signature or
superior methods for
doing your work
Product System
Complementary
products and
services
Channel
How your offerings
are delivered to
customers and users
Customer
Engagement
Distinctive
interactions
you foster
Profit Model
The way in which
you make money
Structure
Alignment
of your talent
and assets
Product
Performance
Distinguishing
features and
functionality
Service
Support and
enhancements
that surround
your offerings
Brand
Representation
of your offerings
and business

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While companies tend to over - index on products…
TEN TYPES OF INNOVATION
0
100 Investment in innovation efforts
Last 10 years
SOURCE: Doblin research based on analysis of 2,000+ innovations

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…most value is realized outside of product innovation
TEN TYPES OF INNOVATION
0
100 Cumulative value creation
Last 10 years
SOURCE: Doblin research based on analysis of 2,000+ innovations

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TESLA MODEL S INNOVATION ASSESSMENT
Introducing a new vehicle brand, challenging industry orthodoxies
8TYPES:

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6TYPES:
The king of peer-to-peer rentals…
AIRBNB INNOVATION ASSESSMENT
8TYPES:
and now experience sharing

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8TYPES AND 10 TACTICS
AIRBNB INNOVATION TACTICS
++

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Better building blocks: Innovation tactics
TEN TYPES OF INNOVATION
Premium
Cost Leadership
Scaled Transactions
Microtransactions
Forced Scarcity
Subscription
Membership
Installed Base
Switchboard
Auction
User-Defined
Freemium
Flexible Pricing
Float
Financing
Ad-Supported
Licensing
Metered Use
Bundled Pricing
Disaggregate Pricing
Risk Sharing
Merger/Acquisition
Consolidation
Open Innovation
Secondary Markets
Supply Chain
Integration
Complementary
Partnering
Alliances
Franchising
Coopetition
Collaboration
Organizational
Design
Incentive Systems
IT Integration
Competency Center
Outsourcing
Corporate
University
Decentralized
Management
Knowledge
Management
Asset
Standardization
Process
Standardization
Localization
Process Efficiency
Flexible
Manufacturing
Process Automation
Crowdsourcing
On-Demand
Production
Lean Production
Logistics Systems
Strategic Design
Intellectual Property
User Generated
Predictive Analytics
Superior Product
Ease of Use
Engaging
Functionality
Safety
Feature Aggregation
Added Functionality
Performance
Simplification
Environmental
Sensitivity
Conservation
Customization
Focus
Styling
Complements
Extensions/Plug-ins
Product Bundling
Modular Systems
Product/Service
Platforms
Integrated Offering
Try Before You Buy
Guarantee
Loyalty Programs
Added Value
Concierge
Total Experience
Management
Supplementary
Service
Superior Service
Personalized Service
User
Communities/Supp
ort Systems
Lease or Loan
Self-Service
Diversification
Flagship Store
Go Direct
Non-Traditional
Channels
Pop-up Presence
Indirect Distribution
Multi-Level
Marketing
Cross-selling
On-Demand
Context Specific
Experience Center
Co-Branding
Brand Leverage
Private Label
Brand Extension
Component
Branding
Transparency
Values Alignment
Certification
Process Automation
Experience
Simplification
Curation
Experience Enabling
Mastery
Autonomy and
Authority
Community and
Belonging
Personalization
Whimsy and
Personality
Status and
Recognition

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Integrating more types of innovation can help deliver superior
financial returns
TEN TYPES OF INNOVATION
StockPrice(indexedto100)
2007 2008 2009 2010 2011
3–4 Types of Innovation
59 companies
5+ Types of Innovation
45 companies
S&P 500
1–2 Types of Innovation
34 companies
200
150
100
50
0
5-Year Indexed Stock
Price Returns of the Top
Innovators vs. S&P 500

24. Insurance Innovation
Exemplars

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Insurance exemplars
TEN TYPES OF INNOVATION
Network
Integrated repair
shops link multiple
organizations
Process
Analytics to shorten
claim fraud detection
from months to days
Product System
Single-platform
P&C insurance
Channel
Co-party activation
debit card for claim
payments
Customer
Engagement
App to file and
manage claims
Profit Model
Cross-claims data
exchange to reduce
overpayments
Structure
24/7/365 days a
year customer
service by phone
Product
Performance
Concierge level of
claims service
Service
Free mechanical
checkups for
policyholders
Brand
On-line brand for
the do-it-yourself,
no agents

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INNOVATION ASSESSMENT: PROGRESSIVE
Risk and cost management; new ways to manage customers…
6TYPES:

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INNOVATION ASSESSMENT: FRANK
A radical approach to connect and engage millennials
5TYPES:
Stylish retail stores, lounge environment
Young “ambassadors”
Self-service kiosks

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INNOVATION ASSESSMENT: OSCAR
Disrupting the insurance industry with telemedicine, transparency,
and a (gasp) great user experience
7TYPES:
“Making insurance
simple, intuitive
and human”

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INNOVATION ASSESSMENT: M-PESA
Money transfer and microfinancing services through the most
developed mobile payment system in the world
8TYPES:
Kenya
Tanzania
SouthAfrica
Afghanistan
India
Romania
Albania

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5TYPES:
CLIMATECORP INNOVATION ASSESSMENT
Delivering analytics, modeling, and rapid service

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6TYPES
INNOVATION ASSESSMENT: TROV
On-demand insurance for individual items

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6TYPES
INNOVATION ASSESSMENT: LEMONADE
P2P public benefit insurance company

33. Building an Innovation
Capability

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12 levers form the foundation of an innovation capability
INNOVATION CAPABILITY
7. FUNDING
Financial resources and
mechanisms for access
8. TALENT MANAGEMENT
Attracting and deploying
the right skills at the right
time
9. INNOVATION TOOLS
Protocols, techniques
for innovation
10. FINANCIAL AND
NONFINANCIAL REWARDS
Incentives, formal and
informal recognition
11. INNOVATION METRICS
Indicators to guide
decisions and measure
progress
12. EXTERNAL ATTRACTION
How other organizations
participate in your
platforms
4. SENIOR LEADERSHIP
How senior leaders engage
with innovation
5. GOVERNANCE
How and by whom
decisions are made
6. COLLABORATION
Connections across
the organization
1. INNOVATION STRATEGY
Goals for innovation,
opportunities to pursue
2. PIPELINE & PORTFOLIO
MANAGEMENT
How innovation initiatives
are managed in a portfolio
3. PROCESS
How innovations move
from hypotheses to
businesses
RESOURCES &
COMPETENCIES
METRICS &
INCENTIVES
ORGANIZATIONAPPROACH

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What you achieve is a function of what you are willing to install
INNOVATION CAPABILITY
GOOD
BETTER
BEST
• Diagnostics
• Measurable “innovation intent”
• Signature tradecraft
• Center of excellence
• Deep innovation “themes”
• Defined governance and funding
• Lightweight innovation: clouds crowds & prizes
• Clear sense of ecosystems shifts
• Metrics throughout the firm
• Incentives for leaders to sponsor growth initiatives
• High potential young people to author growth initiatives
• Breadth and depth of ecosystem partners
Hit rate
≈ 70%+
14x
Hit rate
≈ 50%+
10x
Hit rate
≈ 35%+
7x
Hit rate
< 5%

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What an innovation journey might look like
INNOVATION CAPABILITYINNOVATIONJOURNEY
6
Inspire new
ways of
thinking
Set a clear
direction or
intent
Respond or
capitalize on
a trend
Create new
businesses or
offerings
Set-up and
manage an
innovation
system
Develop an
innovative
culture
USECASE
Inspiring people
to change their
ways of thinking
Providing
direction and
intent for what’s
possible
Moving the needle to
achieve desired outcomes;
demonstration pilots
Running an
innovation
organization
MINDSHIFT FOCUS EXECUTE SUSTAIN

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Role of leaders in driving innovation
INNOVATION CAPABILITY
2 Challenge orthodoxies and learn from out-of-industry innovators
3 Innovate beyond your core product, across multiple types
4 Identify ecosystem partners to move faster in the space
1 Research your customers and end users, deeply, and with empathy
5 Inspire new way of thinking, help set the right ambition

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Articulating a clear intent, that is consistently reinforced and
communicated
ROLE OF LEADERS WITH INNOVATION

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Thank you!
Got questions?
Elias Zoghbi
PARTNER
Risk Advisory, Deloitte
Rio de Janeiro, Brazil
+55 21 99975-7271
eliaszohbi@deloitte.com
Francesco Fazio
PARTNER
Doblin, Deloitte Consulting
Chicago, USA
+1 (312) 203-9306
ffazio@deloitte.com