Leadership Insights: Digital Transformation in Insurance

Transcript

Mike Klein: Hello, and welcome back to another edition of Digital CxO Insights. I’m your host Mike Klein, and joining me today is my good friend, Tim Schaefer. Tim is the chief digital officer for National Guardian Insurance and has served as a business technology executive for many years.

Our theme today is gonna be about a term we use quite often, and that’s digital transformation, but we’re gonna do it a little bit differently today. We’re gonna parse those words, digital and transformation, and look at a chasm that exists between the two, the people, the processes, the technology, the use of data, all these things that need to go together to be a future success-forward business.

So, Tim, you’ve been a business technology leader for many years, I’m wondering if you can give me a little bit of a background on your career and your current job at National Guardian Insurance.

Tim Schaefer: Yeah, happy to, Mike. I started my career at Northwestern Mutual as a hands-on developer, and I actually spent three decades there, the last 10 years overseeing technology for the company as their chief information officer and then AVP of technology.

I retired from that role and had an opportunity to do a little consulting work and got connected with National Guardian. And while a different scale company, certainly, an interesting opportunity to come in and lead enterprise-wide digital transformation for them.

So that’s where I’m focused now with responsibilities around technology strategy, data analytics, and some of our digital efforts around mergers and acquisitions.

Klein: So you’ve been a Chief Digital Officer now for about two years, right?

Schaefer: That’s right.

Klein: So how is that role changing in 2021? And how is it different from your role as a CIO?

Schaefer: I think if I look back, the chief digital officer role, originally, I think was something that a lot of companies just felt they had to get one in their organization somehow given all the change that was going on, all the shifts in technology and business models. I think today it’s more refined, it’s more focused on specific business objectives.

And when I compare it to a CIO role, I think in a lot of organizations today, particularly kind of incumbent organizations and their industries, the CIO role is one that can still be pushed pretty heavily into trying to cut costs and expense management as a primary driver for their work. I see the chief digital officer role more often now is really focused on growth and revenue opportunities.

There’s certainly some opportunities around cost savings making that part of the business model, but I would say most chief digital officers today are really looking at where they can find growth opportunities through technology and shifts in the business model.

Klein: So the digital transformation is more about technology, it’s more about a mindset. I’m wondering if you might be able to explain that to me a little bit.

Schaefer: Yeah, it’s an important point. I think we hear those two words together all the time we’re going through a digital transformation, a company’s going through a digital transformation, but when we really break it down, there’s two key pieces here.

While the digital piece can mean a lot to do with technology and so forth, and certainly there are companies who believe they were going through kind of a digital transformation by adding some new technologies, doing some machine learning, things along those lines, really the transformation part of this, I think speaks to a whole shift in mindset.

And so to really go through a digital transformation, you really have to be talking about the shift in mindset, the way you look at your business, the way you understand your position in the market as a company. And it has a lot more to do with changing all aspects of your business model or at least examining them than just applying some technology to what you’ve been doing.

Klein: So if we’re looking at all aspects of the business model, what do you think is at the core of the digital transformation?

Schaefer: For me, when I break down what it really means to digitally transform, we look at things like automation of our processes, we look at creating new digital experiences for different stakeholder groups in the consumers and customers that we have. But fundamental and at the core of it for me is really what you do with data.

I think that’s really the defining element of a digital age is having access to all this data, but being able to do something of higher value with it, really get something intelligent out of that data.

So I think that’s really core to any kind of digital transformation effort in any organization is what are you doing to drive value out of your data?

Klein: Driving value out of the data, that’s certainly what people are looking to do today because that’s going to help them to get closer to their customers and to drive revenue.

Taking a look at National Guardian’s business model, how is that evolving at the same time as the transformation and how do you transform into a digital company from a firm that’s, what, about 100 years old –

Schaefer: Yeah, a little over 100 years old, about 110 years old, I think almost. And it presents different challenges when you’ve had a business model that has had success, that’s been around for some time.

The company itself has gone through changes certainly over that time, but as we look at it today part of the approach really has to be understanding what makes sense in the current business model, what still makes sense as we go forward, where do we really find the right place where we want to play and compete and how we can compete, but then rethinking too, where are the new opportunities? How can we do this better? How can we maybe enter into some new spaces or reach stakeholders and customers in different ways?

So it’s a matter of stepping back, one, understanding what your business model is. I often find that a lot of companies aren’t even sure of all the elements of their existing business model and what’s really made it work. So you have to understand where you’re at and then you’ve got to understand where do you want to go, where the opportunity lies and what can you do?

Yes, with newer technologies, with new intelligent data opportunities and so forth, but really understanding again, how can I better reach my customer? How can I automate more of what I’m doing in the organization? And again, most importantly, from my perspective, how do I get more intelligence out of my data so I’m making smarter decisions day in and day out?

Klein: So in order to use those technologies and to get to that place of making smarter decisions, I imagine there were a lot of legacy systems at National Guardian. And I’m wondering how do you clean up those legacy systems? And then what’s the impact of taking legacy on retaining, attracting and upskilling your employees?

Schaefer: Yeah, it’s a key question and it’s hard work, Mike. It’s really hard work to step back and look at all that legacy, understand for any sort of pre-digital company in your industry, where are the opportunities to re-platform, how fast can you go? What can you take on? I know within the industry I’ve been in insurance, this is particularly challenging, given the longevity of the products in the market and so forth.

But I have found through my experience that I’m much more biased now toward the idea of being aggressive on attacking the platform and thinking about how to re-platform that legacy, and every corner of the business, because it can really slow you down. It’s like a weight that’s just dragging your organization down in terms of its agility and responsiveness to changes in the market.

So I think part of it that’s been a new experience for me is rather than try to incrementally move legacy systems through two or three different generations of technology, National Guardian is really stepping back and taking a clean sheet look at this. And in some cases we’re putting in brand new capability in the cloud and not trying to pull forward the old capability.

We’re going to cut that off, move away from it, jump to a completely new capability in the cloud. In other cases there might be a couple of migration steps necessary, but the goal is to move aggressively.

And we’d like to over the next three years, completely re-platform our technology environment out into the cloud and gain not so much cost savings per se around this work, but really it’s the agility and scalability that comes with the cloud that we’re chasing.

Klein: So besides the cost efficiencies and the change in the business model, as well as the change in the employees and how they approach the situation, what are some of the other big transformations taking place? Do you have a different go-to-market strategy in terms of your sales channel?

Schaefer: As we look at the sales channel, I think there’s a couple of things that come out rather quickly. One, we have an opportunity to use data in that space much more aggressively than we have in the past.

I think oftentimes internal operations are sort of the first places that people see opportunity around data, again, driving around the efficiency mindset. But taking that growth and revenue mindset, I think looking at the sales channel, thinking differently about the technologies that are available there, how we’re connecting to partners. We have a B to B to C kind of customer scenario.

So we work through marketing partners and others out there to get our products into the marketplace. So what can we do to enable them to be smarter and target the right growth opportunities, how can we partner with them, and then what can we do around the technologies to streamline our interactions?

So everything from electronic applications for insurance to dashboards and other tools that our partners can use, so that we’re not only easier to do business with as a company, but are sharing our insights with them so they can be successful.

Klein: In order to go through this change and collect all this information that you’re going to turn into knowledge and wisdom, did the board of directors’ mindset need to evolve to go through this radical change of technology, as well as sales channels and so forth?

Schaefer: Yeah. I think that point hits on something that I think has become much more relevant just in the last year or so. I see a lot more discussion and talk about boards of directors and the need for them to have a mindset shift too.

We’ve talked for some years now about the importance of executives in the company shifting their mindset, employees at every level kind of seeing the world through another perspective and what digital technologies can do. But I think now we’re at a point where there’s also much greater recognition that the board has to shift perspective.

So we’ve had some new board members join the board at National Guardian, they come with different experiences running large innovation operations inside large companies, involved in entrepreneurial efforts, more backgrounds in technology and so forth. So I think blending that into the board to help the board shift its mindset is a critical step if you’re going to have an increased chance of success and a transformation.

Klein: So it seems like the business IT transformation is taking place throughout the organization is being led from the top as well as from the bottom up as well.

Schaefer: Yeah. I would say certainly in this case, in my experience with National Guardian, we have a good strong drive from the top sponsorship from the CEO speaking about the importance of being a digital company, going forward as one of the three key drivers of the organization right now.

So I think that certainly, it helps get the conversation going, it helps get people engaged, but you still got to work down through the organization and create opportunities for everybody to get some experience around what this can mean, the positives that come out of it, but just the new perspective that’s necessary in order to get the full value.

Klein: Well, value is certainly what the organization is looking for. So Tim, we have time for one question and it’s one that I want you to sit back and think about for a minute.

And that’s, what are some of the most memorable and satisfying moments and lessons learned during your career as a business technology company, excuse me, a business technology executive who’s worked at two rather large organizations?

Schaefer: Yeah, that’s a great question. It can be a tough question at times because when your career gets this long, you start to have lots and lots of reflections and memories and all the different experiences you’ve had. I’d say some of the most memorable though, there’s sort of a theme that comes to mind for me when I think about the stuff that I really remember as being the most positive aspects of my career.

And it all tends to come back to the same thing, which is working with a great team, being around great people, feeling like everybody’s really clicking together. I can think of times in my career where we put in hard work, we really work to build our team, really building trust among each member of the team and so forth.

And then what it felt like once we kind of got to that high performing level as a team. And so I think being part of a high-performing team and I’ve had two or three opportunities, I can point to that that has really happened. Those really stand out as some of the best memories.

I’ve certainly had some challenging memories, I think all of us in technology can remember the calls in the middle of the night because something didn’t go right and so forth or there’s some other crisis. But I think ultimately things that really stand out most positively are just being part of a high-performing team. And while it’s hard work to get to that level, it’s tremendously rewarding.

Klein: Well, you certainly had quite an evolution of your career coming from a CIO to a senior vice president at the business level, and then moving over to a chief digital officer. I really appreciate you taking the time to join us today here at Digital CxO Insights.

I’m again, your host, Mike Klein. Tim Schaefer, Chief Digital Officer for National Guardian Insurance. Join us on the web at digitalcxo.com. Thanks for joining, and have a great day.