UNIQA and Cherrisk: Corporate Explorers in Insurance



Good morning everyone. Very nice to be here in Budapest to speak with you. As Keta says, I’m Andy Binns. I run a consulting firm based out of Boston in the US. I work with, as I’ll talk about, with a professor from Harvard Business School and another from Stanford Business School. And so what I want to talk to you about today is our work, and particularly this book Corporate Explorer, and where Cherrisk fits in, not in the sense of the Hungary market, it’s important there. Not in the sense of the German market where it’s launched, nor even the nine countries where it is available today, but actually in the global context. Why is this remarkable as a story of business innovation today? And why is it that I spend my life going around the world talking about these two handsome gentlemen and about the extraordinary work that their teams have created.

So let me give you a little bit of context. This is a chart that my Harvard colleague, Professor Michael Tushman has been using for 30 years. Yeah, that’s the rate of innovation in business schools, ladies and gentlemen. And what this story is all about is a series of companies who get to be fabulously successful and then they reach a moment of disruption. Something fundamental changes in the world, and they can’t respond. They fail to move. You see Nokia there. In European, we all know about Nokia mobile phones spent 15 years at the top of the industry of digital handsets. And then within only four years they’re gone. From number one to gone. And this is true of all of these companies on this chart of this extraordinary pace of disruption.

And so to some degree we know why, which is that instantly, this isn’t because they don’t see disruption coming or they don’t have the innovative ideas. In important cases, they actually invent the disruption, and Nokia certainly had all of the assets that Apple did, all of the ability to be a leader in innovation. The problem is one of risk. I fear that if I invest in something unknown and uncertain that I might lose what I’ve got today, I might put at risk the assets that I’ve got. And so as a result, most people feel that when it comes to making that big innovation, it’s better to leave it to the startup garages, the people working out of their homes to try and build these legendary unicorns from Silicon Valley and beyond.

But that’s odd because here I am talking about this book, Corporate Explorer. And oh by the way, our subtitle is How Corporations Beat Startups at the Innovation Game. And you can listen to me, but I think I’ve written this with a Harvard and a Stanford professor, surely there must be some explanation as to why we’d be writing such a crazy book. One explanation of course is that cannabis is legal in the state of Massachusetts. And so this may be a product of a deranged imagination. But the other possibility is that there’s some really powerful evidence out there that a few great companies around the world are managing to do this innovation inside corporations. And so there’s a different story than that one that we know about big companies like Nokia and others who get disrupted. And that’s essentially the story of Corporate Explorer.

And I have to say for me, as somebody who goes around the world telling this story. I was… In July, I told this to a room of 2000 people in Las Vegas. I felt like I should have been singing a song or something in Vegas, but they were fascinated. And I started that presentation exactly as I’m going to continue now, which is telling the story of Uniqa. Uniqa, a 200 year old plus company. This chart is out of date. They’ve already, as Wolfgang was quick to point out, they’ve also had another acquisition of AXA in Central Eastern Europe to add to this timeline. And so this is an old company. Now from a European perspective, perhaps 200 years, not so big deal. Americans get pretty impressed with the idea that this is an old company. But just to dramatize it to them, I also say, remember this is Beethoven’s Vienna where Uniqa was founded. So this is everybody’s stereotype for an old established firm.

But yet down here in Budapest, when I’m elsewhere in the world, I have to explain that you are down the Danube and I give them an image as to where we’re going. And I have to admit, I do make it sound a little more obscure than it’s really appropriate. But down the Danube is Krisztian Kurtisz, and Krisztian Kurtisz’s team as well. And what they’re doing is something really important. They’re having a vision of a different kind of insurance industry. One that is not premised on a very large administration with many flaws of actuaries and underwriters and loss adjusters and all of these different people involved in the administration of the policies. But instead, it’s one that is highly customer oriented, one that gives tremendous flexibility to the customer and changes not just what the customer sees, but everything behind it. And so in this idea of Cherrisk is something really quite transformative that by logic should exist only in the startup world. But here what we find as Krisztian will talk about is Cherrisk actually growing and succeeding from inside a corporation.

And what’s interesting is that this story of Krisztian as what I call the corporate explorer, not the entrepreneur, not the person outside doing this with venture backing, but somebody from inside the company. And Krisztian could have gone outside, he could have found a venture company to back him, but he instead did this inside the company, which leaves us with an interesting puzzle. Why is it that Krisztian and others like him make this decision? And the thing is that there are quite a few Krisztians around the world. The more that I researched this story, you find people from companies like Bosch in the center, there’s Sarah Cavallo from Bosch, the German company, there’s Yoky Matsuoka from Panasonic, building a whole new business model in Panasonic.

But there’s also some people around this, on this chart who’ve tried it and not succeeded. So part of our interest here is what differentiates those really successful corporate explorers from the less successful, those who struggle and fail. And part of the story is how well they develop the idea, how they ideate, create and generate the idea, incubate it, learn as to what works, and then scale it into something rapidly that can generate revenue. And one of the puzzles of corporate innovation is that all of our attention and effort goes to ideation. All of our attention goes on, let’s generate great ideas. Thing is we don’t make any money out of great ideas. We make money out of scaling them.

And so one of the things that Krisztian and Wolfgang and his team did that I think is really impressive is that they learned the lessons of experimentation. This is Jeff Bezos, who I think we can agree has some credibility when it comes to scaling innovative businesses. And he says something really important, quite simple, which is that your rate of your success as an innovator is all to do with your ability to experiment. And experimentation means learning through small tests, not seeing anything as a failure, but always as a learning. And the story of Cherrisk is one of piloting on a small basis, learning what works, learning what traction it gets with consumers, and then adding the next piece of scale, starting in Hungary, then going to Germany, not working out so well at first. But that isn’t a, “Oh, we failed.” That’s a “What did we learn? How do we reinvent in order to take advantage of what customers really want and what’s the right way to take this to market?”

And so experimentation is a huge challenge for corporations. And one of the reasons why some of these corporate explorers don’t succeed is that their leaders don’t have patience. They can’t deal with the degree of uncertainty that’s involved in this experimentation. No manager gets promoted for saying things like, “Well, I failed, but I’ve learned a lot.” In many corporate cultures, this is like heretical. It’s a great way to find the exit. And so this is part of what I want to point out, the great contribution that a leader like Wolfgang Kindle makes to this story is how that creates the right environment for a corporate explorer like Krisztian Kurtisz to be able to work through over a number of years, not spending too much money, but just enough to learn and to find out what will work to make this succeed.

And then they’ve got to scale it. And this is really where the corporations have the advantage over the startups. Because most startups scale by getting acquired by a large company. And they do that because you’ve got some things to use. And one of the biggest things you’ve got is already got a customer base. You already know how to engage a consumer market with your offering. Also in the case of Uniqa and others, you have capabilities that you can leverage, they had an insurance license, they have underwriters, they have the ability to construct the product in Cherrisk. They had to learn how to be a digital insurer, how to take this through an online transaction rather than the traditional channel. But in terms of the capabilities, they have much to offer. And then in terms of scaling, they are being able to scale across all of these countries with all already having the organizations and market presence as well as the license and so on to do it.

And this is what makes the difference. Can you, as a corporate explorer, leverage what your corporation already has that will allow you to go faster than a startup? And this is the piece that many struggle with because it means engaging with the beast, that existing dominance firm with many people and many managers who are vested in the way things have been done for 10, 20 or 200 years. And so that is part of why when you struggle that you lose, because you lose out to these silent killers. Nobody comes to Krisztian and says, “Hey Krisztian, that’s a great idea, but you know what? I’m going to work to undermine what you’re doing. I’m going to try to make us stay within the dominant insurance model.” Or in Nokia, nobody really said to the engineers who developed touchscreen technologies and email on the phone, they didn’t say, “Well that’s very nice, but actually I’m going to stick with the way we’ve always done things around here.” They do it in the quiet, and they do it overtly, sometimes unaware of what they’re doing.

And this can have some really serious consequences in very high-profile companies. This is General Electric in the US. And General Electric, in 2012, set out to be the leader in what they call the industrial internet of things using connected technologies to improve manufacturing efficiency and gather data and be able to do data analytics on all of this. And they completely fail. The strategy is dead 10 years later and the CEO, two CEOs are exited out the door and the man who leads GE Digital gone. And although that business unit still exists, the strategy had to shift. And the CEO, Jeff Immelt, gives a very simple explanation, he says that the culture was different. He didn’t understand how different it would be to do something new. He misunderstood or underestimated the degree of difficulty that the organization would have with this.

And so one of the things that I think is really critical to celebrate about what Krisztian, the team, Wolfgang have done, is that they’ve used Cherrisk as a way of shifting the culture of Uniqa to… And which creates resilience for the future. It’s not just about a single product, it’s about actually changing the organization. And we like to think of organizations as just hierarchies, Wolfgang speaks and everybody obeys, which I think you know might prefer. But in reality, organizations are really complex. This is a social network analysis of a corporation. Who talks to whom, who has influence. And the question that we ask of groups with this chart is, where’s the CEO? And many people say it’s number 90 down here on the bottom, Johnny Nomates, down there. Well really it’s up there at number 50 at the top with very limited amounts of information coming from just a few people. And what you want is success with 59 and 52.

In other words, what a Krisztian Kurtisz needs to do is to build a social network, build support. It’s not about his success as a corporate explorer, it’s about how many other people think that they made him successful. And this is the secret to managing that sort of cultural shift, which is so important to their success. And you’ve got to have many people playing different roles in this. People who will be willing to be your advocates, willing to give you access to assets as an ally, may be willing to talk to people who stand in your way, be an ambassador for you

And so when we think about the role of a corporate explorer like Krisztian, what we’re thinking about is somebody who’s really a leader of change. When these stories start, they are the fish swimming in another direction. They’re no longer saying insurance looks like the way it has done for 200 years. They’re the odd person out. And their job over the period of this innovation is to get everybody swimming their way. And this is really hard. I don’t want you to at any point, underestimate just how hard it is to be the odd fish in the sea and to change people.

Let me give you an example of just how remarkable it is and how much this leading change with is significant in the success of innovation. The lunar landings. Krisztian and Wolfgang weren’t responsible for that. But go back to the 1960s. We now see this as one of the landmarks in human history. 1960s, the majority of the US public oppose the lunar landings. There were letters to Scientific America from scientists saying, “Congress, please stop this madness. Stop spending money on this moon race.” And yet now we see it as a great success.

And this is the way that the story of explorers progresses. They go from being the odd person out to becoming the dominant player in the company and being able to see its transformation. And that’s the story which is unfolding here at Cherrisk. And so it gives me enormous pleasure and pride to be able to go around the world and tell this story of how starting in Hungary, but now emerging across nine countries, that transformation’s happening. And it puts, I think, Uniqa in a peer group of really significant global corporations who’ve managed to master this ability to explore into new areas and build markets and build transformation from within. Thank you.