2. Think big, start small

nce insurers identify the customers they want to serve via ecosystems, they can begin testing how to reach them. Most will start with those lines of business and product sets most suited to ecosystems. Focusing initial efforts on the line of least resistance reduces risks and helps to create a foundation for expanding across the business. The experiences of first movers and early adopters can also provide valuable lessons about which initial steps to take and how.

Starting small should not preclude executives from thinking big about the potential of ecosystems and evaluating the full range of options. P&C insurers will have more options for embedding their products within other purchases, but forward-looking life and health insurers are gaining traction with platforms that offer richer experiences and diverse services that promote financial security and physical health.

Typically, these efforts focus on behavioural prompts designed to change behaviours (e.g., saving more for retirement, exercising more frequently). They may also include access to associated features such as financial planning or rebates for gym memberships. In evaluating offerings and features, it’s critical to prioritize those that customers will find most relevant.

3. Measure what matters

The best route to ecosystem success is a focus on what creates value for customers. Thus, metrics should reflect how that value is delivered. For many companies, this requires a significant shift not just in measuring performance, but also in the organizational culture.

Metrics need to drive the whole organization toward meeting more customer needs and doing the right thing for the customer. That means cutting across traditional fiefdoms and organizational boundaries where necessary. It’s also important to articulate a clear link between these metrics and how they will ultimately translate into value for the group and its stakeholders, including investors and shareholders.

Insurers should also look beyond the financial numbers in assessing ecosystem performance. The COVID-19 pandemic has reinforced how important it is for insurers to deliver on their purpose and provide protection and financial well-being to customers, employees, businesses and society as a whole. Ecosystem performance should be evaluated along these lines, too.

4. Understand why ecosystems fail

A shift of this scale presents significant risks, ranging from the strategic (e.g., poorly aligned incentives among partners or incentives that diverge as the ecosystem grows) through execution (e.g., failure to engage target customers successfully) and financial (e.g., under-investing or cost overruns) to tactical (e.g., sub-par project management). Failure to execute against the plan is a particularly common, and dangerous, risk.

Lack of – or loss of – a clear vision or strategy is another significant threat. Vision and strategy are important in that they create the guardrails and corporate governance framework that allows not just a single team, but teams of teams, to drive change inside large organizations. Such vision needs clear articulation and extensive communication to customers, distribution partners and your own staff. And it needs to be refreshed and sustained in the face of a constantly evolving market, particularly where well-established practices or cultural norms need to change.

Clarity of strategic vision should not preclude market realities or course corrections. One European insurer set out to create a mobility platform for the second-hand car market. It quickly learned that, rather than going direct, it was better to engage customers through existing channels for automotive servicing and assessments. It continues to add services aligned to the entire life cycle of car ownership. That level of flexibility is essential for insurers to diversify their offerings and capture more share of wallet via ecosystems.