Just about every project I am involved in nowadays with my insurer and supplier clients involves a desire for transformation. Claims transformation, business transformation, process transformation. But what exactly do we mean by transformation and how do we go about achieving it?

Contrary to what some of my clients think, we can be absolutely sure that transformation does not include doing things a little bit better, faster or cheaper. Nor does it necessarily involve the deployment of Artificial Intelligence, FinTech or InsureTech. It definitely does not mean settling claims in 30 seconds or less, and nor does it mean providing customers with ever greater choice of distribution channels, claims notification options or ways in which to complain (a recent request from a client who wanted to ‘transform’ their customer complaints process).

Of course, it may well be that some, or all, of these tools will help to achieve the hoped for transformation but it is just as likely that misapplication will delay or even destroy the desired outcome as the means of transformation is confused with the ends.

For me, a transformation programme of whatever type can best be defined as;

‘A customer-led movement designed and delivered to effect radical and irreversible change in the strategic choices being made, and the consequent structures and processes being implemented’

A bit of a mouthful I admit. but a transformation of a division, business or even a whole industry cannot be achieved without some acceptance of the complexity of the objective and the definition of the desired end state.

Living the Transformation Dream

Firstly, there is little value in any transformation programme that is not customer-led. In other words, the eventual outcome must provide greater value to the customer than they already achieve. A business that embarks upon a multi-billion pound acquisitions programme designed to transform the enterprise can only sensibly do so if customers will be better off as a result. Otherwise you can bet that the business may well be transformed in the interim but without the support of customers the end result will be yet another failure in the transformation game.

Customers will ultimately determine the success of a transformation programme (yes – even those that involve internal deployment of whizzy new IT stuff) and so the first element of a transformation programme must be an understanding of exactly where the key drivers lie.

Secondly, transformation implies more than just tinkering around the edges. When Direct Line, Churchill and others set about transforming the direct sales distribution channel (which had barely existed before they came on the scene) the achievement of their objective required wholesale changes in financial modelling, company culture, staffing, skills, processes, product design and countless other elements. Transformation is a movement in the sense that there are a multitude of elements involved which coalesce into a single sweeping force of change and achievement

Anything else is just a developmental change that will tend to happen anyhow in the normal course of business. Whilst often valuable these developmental trends can hardly lay claim to transforming a business or even a single division of a business. I recently got involved in a Claims Transformation Programme which revolved primarily around the deployment of a £5m new IT driven claims system – and this in a department that was responsible for multi-billion pound claims expenditures, resources and overheads. The new system was indeed valuable – but hardly transformational.

Thirdly, any transformation movement must be designed and delivered. Obvious really, but it is worth stating that transformation does not occur by accident or because the CEO has demanded it of his troops. Transformation only occurs because the right team have bought into the whole movement and actively participated in the design and delivery. Moreover, it has to be said that some transformation efforts are of such a scale as to need an army of human, intellectual and financial resources to make it all happen.

Obviously this is not always the case but never underestimate the change management resources needed to effect a positive and successful transformation effort

Successful Transformation is Irreversible

Which brings me to radical and irreversible change. A butterfly is transformed from a caterpillar into a new creature of beauty and elegance and there is no going back. If the proposed transformation is genuinely driven from the very top of the business with board support and stakeholder commitment then why would you ever want to go back to the old ways? This does not mean that you can’t test, model, redesign and improve before and during the transformation programme but there is only one direction involved – forwards.

Too many transformation movements fail because of a lack of complete commitment to the new ways (whatever they may be) and a fear of failure on the part of those inspiring or leading the effort.

Of course, as we ponder the next element of strategic choices we might be well advised to fully understand the difference between strategy and tactics (which is perhaps a topic for my next article). Suffice it to say that strategy involves the big stuff and tactics involves day-to-day improvements, change and process. Transformation is definitely not about a few minor changes here and there (no matter how valuable those might be). Nor is it about simply seeking to improve the processes, people and activities that already occur – this should happen anyhow as we pay legions of talented managers and leaders to drive the business forward on a day-to-day basis.

Finally, I would urge any transformation programme to understand the implications of the movement being proposed. For example, transforming a claims operation might hinge, for example, on a major switch into the digital arena. Clearly a customer-led initiative that could legitimately transform how claims are managed and settled.

Remember the People

However, a statement of intent has little value to the real people in the claims department who understandably fear for their jobs, their futures and their careers. When considering the structures and processes being implemented as a result of the transformation effort it should be clear that much of the success or failure will sit with the people affected and how they work with the transformation effort.

All too often I have seen so-called transformation programmes fail at the first hurdle simply because of an inability to manage change at both the macro and micro level. Purchasing your nearest rival to aid you in your own business transformation, or driving major IT programmes, or designing revolutionary new products may be valid steps along the way but the reality is that much of your transformation will live or die by the participation of the people who work for you

When considering the irreversible new structures and processes being implemented we would do well to focus on the people that we need to carry with us and on whom we depend to make things work in the brave new world post-transformation.

I cannot possibly hope to provide the definitive guide to transformation in your department, business or industry as there are far cleverer people than me still struggling with the concept. However, perhaps I can provide some guidance as to the scale of the challenge and just a few of the issues to be considered. For those involved in the day-to-day business of driving developmental change and improvement I wish you well but let us not mistake these important and urgent efforts for a truly transformational goal designed to achieve truly spectacular gains.