Design Thinking Comes to Insurance

These days, mention “design thinking” and Apple iPhones come to mind, along with Tesla and hybrid cars, or maybe a funky kitchen gadget or two.

Design thinking, however, is becoming just as important to insurance offerings as it is to any physical product. Design thinking is not only about having attractive products, but also extends to the services, experience and ecosystem around products and services.

Admittedly, the insurance industry is a laggard in this area. A new study out of the University of Potsdam finds that only about seven percent of financial and insurance industry firms are actively encouraging design thinking, versus close to 20% of leading industry groups in this sector, such as IT, communications and education.   

What does it take to foster design-thinking in insurance?  For starters, design thinking, is, as the term suggests, a way of thinking. That requires training and enlightenment at many levels of the organization – not just in R&D or product development, but across the board. Everyone needs to be a part of the picture. As one insurance company executive stated in the Potsdam report: “[I]t’s all about staffing, [it] needs the right time and right people; it won't turn an insurance company into a creative hotspot [but it] can be very effective if executed at the right time and with the right people. If you have outstanding people they will work fine with design thinking, or without.”

For insurers, the key is to step up with new types of ways to think about offerings. MassMutual, for one, has a very interesting case study on its approach to design thinking, as relayed in a recent Harvard Business Review article written by Tim Brown and Roger J. Martin. They observe how MassMutual was contemplating a new effort to target under-40 consumers to buy life insurance. “The standard approach would have been to design a special life insurance product and market it in the conventional way,” they relate. “But MassMutual concluded that this was unlikely to work. Instead the company designed a completely new type of customer experience focused more broadly on educating people about long-term financial planning”

The result was a program called “Society of Grownups,” designed as a “master’s program for adulthood.” As Brown and Martin observe, “rather than delivering it purely as an online course, the company made it a multichannel experience, with state-of-the-art digital budgeting and financial-planning tools, offices with classrooms and a library customers could visit, and a curriculum that included everything from investing in a 401(k) to buying good-value wine.”

The launch of this program was not an overnight project by any means, Brown and Martin note. The effort was disruptive, as “it required not only a new brand and new digital tools but also new ways of working. In fact, every aspect of the organization had to be redesigned for the new service, which is intended to evolve as participants provide MassMutual with fresh insights into their needs.”

So what should insurance executives consider as they move down the path to design thinking? Lance Poole, a former executive with Protective Life and co-founder of Maxwell Financial Labs, published a very informative piece a couple years back to what it takes to bring design thinking to service-oriented companies such as insurance:

Understand that creativity is not limited to artists. “Design Thinking rejects the relationship of ‘creative’ equaling ‘artistic,’” Poole emphasizes. “Anyone can be creative: an actuary, an accountant, a lawyer. Children are by default creative, making a safari adventure out of a sheet and two chairs or a spaceship out of a refrigerator box. We start out imaginative, but somewhere along the way, we lose touch with our creative side. Design thinking seeks to unleash the creative potential that lies latent inside of each of us.”

Introduce empathy. “You need to spend lots of time talking and listening to your user,” Poole advocates. “Ask lots of open-ended questions. Try to evoke stories and emotions -- stories are an important foundation for the other steps in the design-thinking process.”

Define, with empathy. “The definition portion of the process helps create a user point-of-view statement,” Poole explains. “The point-of-view statement is like a problem statement, but with feeling and emotion. This provides a great platform for ideation -- brainstorming. Always start the creation of this problem statement with thinking about needs,” and craft a statement based on the problem, and should be “packed with emotion that compels us to want to come up with a solution.” For example, Poole illustrates, such as a statement may read: “An independent and energetic retiree needs to feel secure about not outliving her assets because her biggest fear is being a burden to her children later in life.”

Brainstorm.  Go wild with ideas – and put everything on the table, Poole urges. Though one may think, “If I work for an insurance company, why should I brainstorm solutions that I know I can’t create?” Poole states that “the answer is that your “wild” solution may provide insight that leads to a product you can create or a solution you can manage.”

Prototype and test. This is the point “in which you create something with which the user can interact,” Poole says, noting that the guiding principle of design thinking principal is to “show, not tell.” This is the opportunity to get feedback. Don’t worry if the presentation seems messy and incomplete at this stage, he adds. The important thing is to get prototypes and ideas out to users early and often, working closely to move things forward.