An ever-evolving world means insurers must prioritize managing transformations effectively to navigate and succeed.
Change management is a significant component of any successful transformation project. It means guiding organizational change to fruition, from the idea's conception through deployment, implementation, and resolution. This often means a large-scale digital transformation project, like a claims management system or payment platform for insurers.
When done well, change management helps everyone in the organization support the new way of working and help others see the benefits of working differently. But if the process isn’t managed well, transformations risk losing the buy-in of key stakeholders, often leading to failure. Research has shown initiatives with sound change management programs are seven times more likely to meet their goals — so it’s important to get it right.
The classic examples of companies that failed to get ahead of change management in their industries include Kodak and Blockbuster, both formerly great companies that missed the signals that showed they needed to transform. When they realized it, it was too late for a successful shift to the new digital formats consumers demanded.
Suppose Kodak, Blockbuster, and many others who missed critical market shifts had focused on learning, engaging, and shifting gears through a large-scale transformation. In that case, they might have remained successful through dynamic market conditions.
“Transformation isn’t a one-time activity or event, rather it’s a mindset, an ongoing philosophy of committing to change,” said Andy Cohen, President at Snapsheet. “A company looking to make a large-scale transformation must invest in creating a change culture first, before trying to implement new ways of working. Change management has to come first, or massive transformations won’t succeed.”
Why Change Management is a Game-Changer
A recent PwC survey of top European insurers found change management is the biggest obstacle to digital transformation. When done well, it gives insurers a framework to approach transformations in these critical ways:
Minimize Resistance
A good change management program will focus on transparent communication, education, and engagement. When employees are aware of the change, understand why it will benefit them, and feel involved in the process, they are more likely to accept it.
Experts commonly recognize four types of resistance to change: emotional, cognitive, behavioral, and systemic. Each of these can derail a transformation project in different ways.
Here’s how to manage these types of resistance:
- Emotional resistance is often the first response to change. Manage this with empathy and point out the benefits of transformation.
- Cognitive resistance is best managed by educating employees and clarifying misconceptions.
- Behavioral resistance can be managed by removing barriers and coaching employees.
- Systemic resistance should be resolved by removing the systems and policies that are getting in the way of progress.
Maintain Productivity
Executing a well-crafted change management plan does more than drive transformation. It can help insurers maintain productivity through transitions, improving results even during uncertain times.
During extended periods of transformation, individuals often need additional clarity and understanding of the final goals. The entire process can lead to uncertainty or confusion among stakeholders; however, organizations can avoid these challenges by following a structured approach to managing change.
The UK Life division of Zurich implemented a robust change management program to meet its goals of adding a digital platform while lowering costs through workforce reduction. Zurich credits this transformation work as pivotal in reaching its goals, including achieving gold accreditation in three departments and cost savings from fewer meetings and bureaucratic activities.
Build a Positive Culture
An effective change management program can help build a positive organizational culture while supporting the dynamic environment by:
- Making employees more resilient, innovative, and willing to take strategic risks
- Fostering trust, transparency, and respect across levels of the organization
- Creating more agile organizations that respond quickly to shifts in market conditions
Leadership also plays a role in developing a positive change culture, shaping a culture that is adaptable means leading by example, not being afraid to take risks, and celebrating innovation.
It’s especially important to support employees who are willing to take risks and recognize small wins.
Leaders need to be open to candid conversations with employees about both successes and failures, including being transparent about their own mistakes. This fosters an open atmosphere where individuals feel comfortable exploring new ideas and suggesting unconventional approaches. In an environment where individuals are hesitant to stray from the traditional path out of fear of consequences, innovation struggles to flourish.
Consider the three ‘C’s of effective change leadership:
- Communicate
- Collaborate
- Commit
Leaders can focus on these three mainstays by clearly communicating the why behind the transformation and what’s in it for stakeholders while collaborating with employees to drive progress. Committing to change is critical as a leader since it demonstrates the support of leadership.
Managing Change is Key to Transformation Success
Change management plays a vital role in the journey of digital transformation, acting as a core component for navigating through the complexities and challenges associated with adopting new technologies and processes.
For insurers, adopting a proactive and positive approach towards change management will not only facilitate a smoother transition but also set a solid foundation for future innovative projects.
By embracing this mindset, insurance companies will position themselves to be more agile, responsive to market demands, and capable of leveraging technological advancements to enhance their offerings, ultimately leading to greater future success.
External Sources:
- https://online.hbs.edu/blog/post/change-management-process
- https://www.prosci.com/blog/why-change-management
- https://hbr.org/2016/07/kodaks-downfall-wasnt-about-technology
- https://www.strategyand.pwc.com/de/en/industries/financial-services/accelerating-the-digital-transformation.html
- https://www.linkedin.com/advice/1/what-common-types-change-resistance-organizations-jorje
- https://www.cipd.org/globalassets/media/knowledge/knowledge-hub/reports/life-landing-transformation-change_2015-case-study-zurich-uk-life_tcm18-9062.pdf
- https://www.ccl.org/articles/leading-effectively-articles/successful-change-leader/
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