Innovation score an emerging risk

Sabine VanderLinden
Let’s de-risking corporate venturing…
Has your innovation score
become an emerging risk?

© Alchemy Crew Ltd 2020 | All rights reserved | 2
This presentation is based on AM Best Company, Inc’s Innovation
Score developed in September 2019 for insurers to align strategy and
innovation initiatives.
I have analysed the framework for some time. Presented it to young
and mature businesses and simplified its interpretation.
These interpretations are mine. They are based on my practical and
personal experiences supporting InsurTechs, Insurers and Executives
make better innovation and transformation choices.
© Alchemy Crew Ltd 2020 | All rights reserved |
Rating Agencies | An introduction

Innovation is becoming increasingly critical to the long-term
success of all insurers. With innovation, companies can develop
sustainable competitive advantages and better respond to external
challenges such as evolving consumer preferences, growing business
complexity, shifting market dynamics, and ever-expanding
technological advancements. Companies need innovation to
outpace competitors, fend off potential external disruptors, and
promote organizational longevity.
- AM Best Company, Inc.
“
Rating Agencies | An introduction

Scoring innovation helps determine if
innovation efforts have a demonstrable
impact (+ or -)
4
Innovation input Innovation output
+
Leadership
Culture
Resources
Process & Structure
Results: evaluated across infrastructure
§ Tangible & measurable impact
§ Quantifiable results
§ Sustainable competitive advantage
Level of Transformation
§ Automation
§ Adoption of emerging technologies
§ Disruption
§ Use of leading-edge processes and
tech across the business
Innovation Score
Minimum: >12
Moderate: 12<17
Significant: 18<22
Prominent: 23<27
Leader: <28
Rating Agencies | The Innovation Score

Three types of innovation
Horizon 2 Horizon 3
Horizon 1
Efficiency
Game
Changing
Sustaining
1 - 3 3 - 7 6 - 10 Years
Process
e.g. automation
Product & Services
e.g. New SME product
Business Model
e.g. Pure digital player
Rating Agencies | The Innovation Score fits within innovation approaches
5

Three types of innovation
Horizon 2 Horizon 3
Horizon 1
Efficiency
Game
Changing
Sustaining
1 - 3 3 - 7 6 - 10 Years
Process
e.g., automation
Product & Services
e.g., New SME product
Business Model
e.g., Pure digital player
1
2
3
Efficiency innovation is not enough
H2 & H3 initiatives must be delivered
in 3 to 6 years timeframe. Not 7 to 10
years. It takes 4 to 5 years to create
a unicorn startup.
Group-level corporate initiatives
must be delivered in less than 18 to
24 months timeframe. Iterate to
embed good market practices.
AWS
Kindle
Robotic &
Automation
Rating Agencies | The Innovation Score fits within innovation approaches
6

7
Your innovation score is becoming more and more important
to the external world
1 - A staggering 70% of digital transformations fail. Forbes, Sep 2019
2 - Resilience – Business continuity – Relevance – Responsibility…
Rating Agencies | Why is this important right now?

Examples of initiatives
SMES Climate Change
Agritech
Emerging Risks Autonomous Driving
Cyber
Rating Agencies | The Innovation Score & Innovation Initiatives
8

The main levers of your Innovation Score
Leadership
Culture
Resources
Process & Structure
Rating Agencies | Deep-diving into the levers of success
Level 1 Level 2 Level 3 Level 4
Low High
What is your level of maturity?
9

Insurance leaders must identify, sponsor and engage
top management and corporate talent across the
business to support sustainable growth objectives as
well as optimization efforts.
They have a direct influence on the drivers of
innovation. Leaders that voice, act and demonstrate
clear interest in “innovation” behaviour indicatively
show the commitment and support of board
members and key senior leaders towards innovation
activities to talented professionals at all ranks of the
business. This helps focus the business on initiatives
able to drive sustainable growth from innovation
efforts.
Level
1
Innovation activities are aligned with existing and
formulated corporate mission, vision and goals. There
must be clear demonstration that innovative
leadership is part of the culture of the business.
Innovation is not just done because someone says so.
Level
2
Managers are also involved in the process of
innovation, and they are doing so proactively. They
understand competitive pressures and the need to
evidence activities to support future promotions.
Level
3
All levels of management (board, senior & middle
management) are committed to the process of
innovation. This means enabling, articulating and
shaping other leaders, displaying and promoting
clear competences.
Level
4
Management seeks proactively innovation solutions
that are clearly linked to the company’s mission,
vision and/ or values. They exhibit competent
leadership traits and successful track record when
promoting innovation efforts.
Leadership
Rating Agencies | Four main levers of success
10

Key questions to determine your level of maturity
1 Is innovation critical to your innovation success?
2
Do innovation commentaries appear within your organisation’s long-term strategy? (e.g. annual reports, long-term
plans)?
3
Does your organisation talk about innovation across the business? Is there clear sense of agility to adapt the
organisation based on the external market drivers and changes that are occurring in the marketplace?
4 Are you able to provide clear evidence of the innovation activities taking place across all levels of the business?
5
Is innovation used as a tool to drive competitive advantage based on clearly defined mission, vision and goals or
are initiatives run reactively and misaligned to the strategy?
6 Is the organisation’s commitment to innovation clearly articulated by the leadership and management teams?
7
Are innovation initiatives clearly promoted throughout all levels of the organisation and understood by all members
of the teams?
Leadership
11

A strong internal culture can stimulate or supress
innovation. Still, corporate cultures must be
purposeful and systematic. Tolerance for risk taking -
often called “Resilience for Failure” within the start-up
environment - needs to be accepted as a learning
mechanism with an effective process to kill
ineffective innovation ideas.
Effective cultures will not just need to walk to the talk
but also display proof points and evidence of
success.
Level
1
Teams are reacting to changing market conditions
and responding to those on an ad-hoc basis and in
siloes.
Level
2
The organisation is identifying innovation efforts
based on market conditions. It operates within siloes
on an ad-hoc basis. Still, specific innovation initiatives
are clearly owned. Communication still remains for
the few.
Level
3
A structured approach is used to progress innovation
initiatives, leverage external insights to refine
innovation agendas and create evaluation criteria
and frameworks to decide whether to progress an
initiative or not. Success remains limited.
Level
4
The organisation encourages its employees to
participate in enterprise-wide innovation initiatives.
Ownership and leadership is clearly defined and
findings shared across the business and its business
units. Captured knowledge & shared examples from
failed initiatives have helped facilitate the
development of successful initiatives and refine
innovation frameworks and evaluation criteria.
Culture
12

1 Does your organisation embrace or re-act to changing market conditions?
Does the organisation have a track record of successful pivoting ideas when not working to meet those market changes?
2
Are innovation initiatives developed on an ad-hoc basis within siloes with limited communication and lack of ownership, or are they
supported by a strong open innovation framework, structure and governance with cross functional ownership?
3 Is innovation addressed within specific business units and/or the wider group?
4 Are your innovation initiatives able to yield sustainable growth results?
5
Does the organisation have examples and proof points that demonstrate that innovation is approached enterprise-wide and that
leadership and ownership is shared across functional/ business units?
6 Is the knowledge from failed initiatives harvested to facilitate the development of frameworks to deliver successful ones?
Culture
13

Characteristics of a great culture
1 4
2 5
3 6
Ownership
Transparency
Tolerance for Failure
Diversity & Inclusion
Effective communication & participation
Cross functional knowledge sharing
14

The strategic allocation of resources is crucial to
ensure the growth of the business.
Each business and its business units not only needs
to build the right level of agility and flexibility to face
external changes, but also adapt it internal
capabilities to face unforeseen challenges.
Individuals allocated to innovation work must have
the credentials to do so to gain respect and support
from the key stakeholders and the wider
organisation.
Level
1
The organisation allocates minimum and/or ad-hoc
resource to innovation. The key question is: Are the
resources selected the right ones to support strategic
and/or operational activities?
Level
2
Resources are allocated operationally to manage
innovation activitities. However, critical operational
goals are misaligned and tracking mechanisms do
not exist.
Level
3
The organisation devotes appropriate resources to
innovation, and its strategy for managing these
resources is linked to its operational goals allowing
for transformation and exploitation. Employees are
rewarded for their successful innovation ideas and
the successful implementation of those ideas.
Level
4
The organisation prioritizes resource allocation
towards innovation and is able to attract top talent
even outside the sector. Talent is rewarded based on
clear strategic and operational goals through well
defined growth metrics, idea generation criteria and
implementation goals. Demonstrable case studies
exist to show a strong track record of efficient use of
resources.
Resources
15

1 Does the organisation devote the right resources, tools and techniques to the innovation agenda?
2
Are the resources used appropriately [and not shifted around] to drive efficiency, sustaining and game changing innovation?
Can the organisation adequately and clearly determine, define and establish clear management of these resources?
3
Does the strategy to manage key resources linked with critical operational goals and objectives? Is the use of the resources
tracked? Can efficiency, sustaining and game changing innovation as well as the exploitation of digital transformation efforts
be linked to the resources?
4 Are employees well incentivised and rewarded for the exploitation of successful innovation ideas and their implementation?
5 Can the organisation demonstrate that it is allocating mix teams of technical, creative and financial resources/ skills to the
initiatives?
6 Can the business acquire talent outside the sector?
7
Can the organisation demonstrate a long list of track record of efficiency, sustaining and game changing innovation
supported by unique resources, when sharing leading innovation outputs?
Resources
16

Organisational intelligence is achieved by optimising
processes and structure.
It requires constant and consistent communication,
the avoidance of internal siloes and the gradual
integration of innovation efforts with mainstream
operations.
The process should be replicated to allow for
structured innovation programs to take place
combining data management, innovation strategy,
and governance procedures.
Level
1
The organisation does neither link innovation with
strategic goals nor with internal operational
processes and structure.
Level
2
The organisation does not yet link innovation strategy
and long-term strategy. The organisation inefficiently
drives innovation in mainstream processes and
operations.
Level
3
The processes and the structure of the organisation’s
innovation program are aligned with long-term
strategic goals and ensure integration with
mainstream processes. Data integration and further
development may be needed.
Level
4
The organisation’s innovation strategy and the
governance that support it is clearly aligned with its
long-term strategic and business objectives. Facilities
and procedures are in place to explore emerging
issues. Data is used to make better decisions, create
solutions, and solve problems. Data governance is
well defined and managed at a portfolio level.
Structure and processes facilitate innovation-driven
growth aligned with business objectives when
integrated with mainstream operations.
Process & Structure
17

1 Does the organisation have a clearly defined innovation strategy with efficient processes, structure and governance aligned
with agreed innovation initiatives, the goals to be achieved by each initiative and their operational requirements?
2
Is the organisation’s innovation strategy clearly aligned with its long-term strategic goals and business objectives, with
efficient processes, structure and governance clearly linked with mainstream operations?
3
Is the organisation’s innovation strategy clearly aligned with the organisation’s long-term strategies and business
objectives, with processes integrated with mainstream operations?
4 Are unique sets of data sources used to make better decisions, create solutions, and solve problems?
5 Is the data governance well defined and managed at a portfolio level?
6
Are the processes and structure facilitating innovation-driven growth, integrated with mainstream operations as well as
based on agreed corporate strategies/ imperatives and business objectives?
7 Are facilities or procedures in place to ease the exploration and exploitation of emerging issues?
(e.g. emerging risks, data strategies, APIs, etc.)
Process & Structure
18

Your checklist
Leadership A “learn, measure, pilot and build” approach is being deployed
Innovation initiatives are critical within the organisation Resources
Innovation initiatives are aligned with long-term strategy and business objectives Innovation initiatives are strategic, operationally aligned and efficient
Innovation initiatives are clearly embedded within mainstream operations Innovation initiatives are efficiently utilising the right innovation resources
Innovation initiatives are supported by evidences and track record Individuals with the right skills and training are deployed on innovation initiatives
Culture Innovation initiatives are tracked through case studies and track records
The organisation is proactively responding to market dynamics. The process is not
reactive or done on an ad-hoc basis
Technical, creative and financial resources are being deployed on innovation
initiatives
Innovation initiatives are not undertaken on a siloed basis. They are undertaken
enterprise-wide Process & structure
Innovation initiatives are shared/ communicated group wide There are clear linkages among the innovation strategy, long term strategy,
operational goals, mainstream operation and supporting processes & structure
Innovation initiatives are supported by clearly defined ownership Innovation initiatives are clearly integrated within mainstream operations through
processes, structure and governance mechanisms
There is shared ownership with the implementation of innovation initiatives The organisation looks for emerging issues and challenges to solve
An open innovation/ outside-in approach to innovation is deployed A clearly define data strategy is in place
19
Rating Agencies | Try it out!

S
LEADERSHIP
PROCESS
RESOURCES
CULTURE
5
1
4
3
2
5
4
3
2
1
5
4
3
2
1
5
4
3
1
2
LEADERSHIP
2
3
4
5
Innovation initiatives are aligned with the group level corporate strategy
Senior managers are involved in the definition of innovation strategies & initiatives
All level of management are committed to delivering successful innovation initiatives
Leaders and innovation teams proactively work on exploiting innovative solutions
Leaders and innovation teams are motivated to scale solutions across the group
1
PROCESS
2
3
4
5
Strategic goals, innovation processes and operational activities are clearly linked
Innovation facilities and procedures are defined and tested at the local level
Innovation processes are integrated in mainstream local operations and procedures
Innovation processes are integrated within local and international procedures
Innovation processes are embedded in group procedures to exploit new opportunities
1
CULTURE
2
3
4
5
Corporate teams are reacting to changing market conditions on an ad hoc basis
Corporate teams are clearly briefed on agenda, frameworks and criteria for growth
Corporate teams are encouraged to submit and own their innovation initiatives
Corporate teams are encouraged to participate to enterprise wide growth initiatives
Knowledge from innovation initiatives is captured and shared across the group
1
RESOURCES
Minimum expert resources are allocated on innovation initiatives
Technical, creative and financial resources are allocated to innovation initiatives
Expert resources allocated to innovation initiatives have success tracking mechanisms
Expert resources allocated to innovation initiatives can exploit & re-use learnings
Top external talent wants to join the organisation to work on innovation initiatives
2
3
4
5
1
Likelihood
to
Succeed
Rating Agencies | Try and share your results with me!
20

21
Sabine is a corporate strategist turned entrepreneur. She is the
CEO and Managing Partner of Alchemy Crew a venture lab
that accelerates the curation, validation, and
commercialization of new tech business models. Sabine is
renowned within the insurance sector for building some of the
most renowned tech startup accelerators around the world
working with over 30 corporate insurers, accelerated over 100
startup ventures. Sabine is the co-editor of the bestseller The
INSURTECH Book, a top 50 Women in Tech, a FinTech and
InsurTech Influencer, an investor & multi-award winner.
You can find Sabine under the following channels:
Twitter: SabineVdL
LinkedIn: Sabine VanderLinden
Instagram: SabineVdLOfficial
Facebook: SabineVdLOfficial
TikTok: SabineVdLOfficial
Email: hello@alchemycrew.com
Website: www.alchemycrew.com
Who I am?

Get in touch at
hello@alchemycrew.com
THANK YOU!

Innovation score an emerging risk

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