Seeding innovation at Chubb

Jon Bidwell and Patrick Sullivan of Chubb share their journey of innovation from ideas to marketable products and the role of IT.

Interview conducted by Vinod Baya and Bo Parker
Photo: Jon Bidwell and Patrick Sullivan

Jon Bidwell is the chief innovation officer for Chubb Group of Insurance Companies. He is currently responsible for managing Chubb’s global innovation platform, internal venture fund for new ideas, as well as Chubb internal and external social media and collaboration tools.

Patrick Sullivan is the chief architect of Chubb in the CIO organization. He has extensive experience in the insurance and financial services industry at the senior management level, holding various positions from business analysis to enterprise architecture. Sullivan has particular expertise in the areas of IT strategy, governance, and business architecture.

In this interview, Jon Bidwell and Patrick Sullivan detail how transparency of ideas and creating new capability by combining existing modular and discrete functionality is allowing IT to drive innovation at Chubb.


PwC: What is your view of innovation and what role does information technology play in it?

JB: For most people, thoughts of innovation bring to mind major technological breakthroughs such as electricity, refrigeration, laser, telephone, and so on. While innovation can be groundbreaking, it is more often the incremental improvements of existing technologies and methods—the sum of many small but constant changes that over time can transform the way a company or an industry does business. Both are important to an enterprise.

Ongoing trends and business dynamics in our industry require the ability to very quickly sense market changes and where future demand may exist. In doing so, we want to leverage the knowledge and capability of our global employee base and to somehow, particularly in a virtual manner, pull those people together. Enterprises need to either have a pipeline of incremental innovations or start to nurture and experiment with the more disruptive innovations. The key is to leverage our capability at all levels within the organization and to increase the speed and scope of idea generation and transformation into marketable products that result in new business value.

For us, nearly every road of innovation leads back to information technology. Once upon a time, it might have been brochures or sales pitches or putting more guys on the road in cars. Today, whether it’s salesforce.com solutions linking the sales force together, development tools, mobile tools, or whatever it may be, all of these things lead back to technology and our ability to manage its evolution.

PwC: We’ve read that you have implemented an idea management system and are using an open innovation approach. What impact has that had on innovation at Chubb?

JB: Yes, we have been using an idea management system for over two years, and more than 1,500 new ideas have been developed during that time. Several business cases have been funded and more are in development. The idea management system has allowed us to successfully shift the “center of gravity” of innovation to line employees and out to agents, thereby embedding innovation deep into our day-to-day operations.

As we sense changes in market needs, we need the capability to generate and screen ideas for new products, enhancements, and services quickly and efficiently. The idea management system helps with that. We then take the most promising ideas and find the financial and human resources needed to bring them to market.

PwC: Patrick, how has that affected the role of IT in innovation?

PS: The idea management system creates a great deal of transparency around innovation. Now we can see ideas as they’re being formulated, so we get at least a quick look into what folks are thinking, where ideas are going, and where there’s some commonality as well as themes and threads. It really helps us determine where we want to do research or where we want to look at things from an operational perspective—to think about how we would operationalize some of these ideas before they’re well formed.

So as others are forming the ideas through the innovation capability that Jon has developed, we’re able to see those ideas, think about them in advance of seeing the business case, and be better prepared to help.

 

"The idea management systems are good because you can bring many viewpoints— often geographically dispersed and then across different competencies—together very quickly if you’re artful about it." —Jon Bidwell

 
 

PwC: As Jon said, many ideas depend on IT to bring them to business value. What are you doing to be more responsive to execute on the good ideas?

PS: From a technology perspective, many new ideas often need a new way of using existing capabilities or of exposing them either through different external channels or through newer processes that are internal. By conceptualizing IT capabilities as a set of services, we can put these capabilities onto the shelf, so to speak, and expose them for quick reuse, whether it’s a reporting application for a BlackBerry or some form of a customer-facing application.

But if our information and capabilities are locked in our monolithic legacy systems, then every time we implement a new idea we must either build something new, which will increase maintenance costs over time, or re-factor a legacy application. If you’re refactoring a legacy application at the point that you need it, you’re going to be too late to the market.

We use service-oriented architecture [SOA] to build discrete units of business functionality that we can use in many ways. So when these new uses come up—combined with an early view of the idea pipeline—we’re able to bring good ideas to value quickly.

PwC: Businesses increasingly operate in digital ecosystems. We find that there continues to be opportunities to change analog interactions to digital interactions to drive efficiency and flexibility. How much runway do you see to digitize interfaces and bring innovation to existing operations?

JB: I would say that we’re just scratching the surface. For instance, in Chubb’s claim service centers, gains can be achieved just by getting more paperless tools, so getting to electronic files, dual screens, and digitizing the interface with vendors, such as windshield, glass repair, and restoration companies. There is a lot of runway there.

Also, in some situations a simple change can get you a ton of mileage and assets you can leverage, because you can dramatically speed up transaction flow. For example, we have a defined process in a first party claim settlement for personal insurers. We very recently put in the ability to generate an alert every time a critical threshold was hit, and that alert would be sent to the agent who handled that customer. From a technology standpoint, creating that ability was neither difficult nor expensive to do. We were responding to an innovative idea. We could do it because we had defined all of these process stages electronically, and we cut tens of thousands of status update calls out of the claim service centers in one shot.

PS: There’s still a lot of runway for optimizing processes by using the technologies that we already have today and the communication channels that we’ve opened up with prospects, customers, or the producer workforce. When we look at things of the nature of the latest, greatest, and the new form factors and devices, we can make greater use of the intelligence that we already have and optimize.

PwC: How are you positioning IT to take advantage of this opportunity? Are you lowering the barrier to how quickly you can deliver new IT capabilities?

PS: For us, SOA is highly important and strategic. It’s being able to black box and provide boundaries around specific capabilities that we’re going to supply to our enterprise, especially in terms of our legacy assets and legacy modernizations. We focus on being able to design for obsolescence. That is, we want to define a discrete unit of functionality that we will build and be able to replace without needing to rip and replace an entire $100 million or $200 million policy administration system or whatever it cost us to build.

We look at components of functionality, such as our ability to generate documents, our ability to generate interfaces, or our ability to link to things like comparative raters or agency management systems. And then we provide those same types of business services, whether it’s a rating, quoting, or booking premium. Whatever those major pieces of functionality are, we build and design our software for.

Then we would look at things like cloud computing, which provides software as a service and helps build out our infrastructure completely. Cloud computing is also a function or component of a service-oriented architecture in that we can use different units of functionality to provide different aspects in a new workflow or to help us build new IT capabilities.

 

"The [idea management system] really helps us determine where we want to do research or where we want to look at things from an operational perspective—to think about how we would operationalize some of these ideas before they’re well formed." —Patrick Sullivan

 
 

PwC: As you become more open to third parties and others in the digital ecosystem, what issues do you encounter and how do you take care of them?

PS: First, we have core competencies in our business that IT maintains as strategic advantages. We understand and protect these core competencies. As pieces of our infrastructure are used by third-party providers, whether it’s cloud or outsourcers or just folks who can build and integrate with our capabilities because maybe they have an edge on the information asset that we don’t have, it raises the bar on us to research and understand who we’re really doing business with and how to manage from a security perspective. It also puts emphasis on maintaining the scalability and reliability of those services or applications. And, in some cases, it also increases the maintenance effort.

Those are things we address from the perspective of the architecture. It’s the why we do it, not so much how we do it. If we’re doing something to make a speed-of-efficiency play for a strategic advantage or to reduce operational costs, we look at architecture in terms of the big picture. We understand the business value, and then we make sure that there’s a value statement after we look through all the capabilities. And, we make sure that we are providing a maintainable, secure environment, because our reputation and mission-critical operations are on the line.

You start to find where you have bottlenecks within the organization. You may aspire to do a lot more innovation, but it’s a lot of pick-and-spade work to bring an idea to fruition. I liken it to building a road. It’s one thing to draw a line and say that’s where we want the road to be. It’s another thing to get all the equipment and people, blast the passes through the mountains, level all the stuff out, grade it, surface it, and everything else. Organizations fall down in this, because the execution part of it is really hard. Going forward, we look at how we continue to lower the barrier to execution of the ideas so that new ideas can come to value quicker.

PwC: One needs knowledge to work on ideas. Ideas themselves are knowledge. Have you done anything from a knowledge standpoint to support innovation?

JB: We are increasingly going back to what we call the warehouse, or the store of ideas, and looking under particular topics and pulling things out. So with this notion of trying to create a better ecosystem, we’re learning now how innovation works. Thankfully, we made a decision to be very rigorous in how we tagged and built our taxonomy for ideas that went in, so we actually can find things very easily by very specific topics.

 

"The aspiration is [for innovation] to become invisible. You have the tools in place so that innovation simply becomes the set of ethics, practices, and beliefs that are fundamental to as many people in the organization as possible." —Jon Bidwell

 
 

PwC: We are trying to understand what role tension plays in driving innovation—especially the tension created by ongoing business. Have you seen any correlations in this regard?

JB: There’s plenty of tension in any kind of innovation, and the more disruptive the innovation the more tension there is. I’m a big believer that tension is good for innovation. The idea management systems are good because you can bring many viewpoints—often geographically dispersed and then across different competencies—together very quickly if you’re artful about it. That is something that we’re constantly learning about. For instance, you can try to build up some of these rudimentary scoring models to come up with ways to rank ideas. However, it really is about the tension and the tradeoffs in return, complexity, cost, revenue, and different components that all have different constituencies within the firm.

PwC: As you see your role and the impact of your role on your broader organization, will the legacy be that innovation is sustained across points in time?

JB: The legacy or the aspiration is to become invisible. I mean, what you do is simply create the knowledge base. You have the tools in place so that this simply becomes the set of ethics, practices, and beliefs that are fundamental to as many people in the organization as possible, and they simply think and act that way. It’s the reflex. When somebody drops a dollar out of their pocket and you’re walking behind them, you pick it up, you tap them on the shoulder, and you hand it back to them.

Innovation should be like that. If you’re a salesperson, you should always be thinking, what’s the pain point here, am I satisfying it, and how could it be done differently? If you’re the underwriter, you’re thinking, how could I improve the product? It’s why we spend a lot of time with the learning and development groups and our internal business schools and the like. We have them do live innovation events and we teach them the process so that we inculcate that in as many people as possible.

That should just be the way—if you’re the right person for this organization, that’s how you should be thinking every day. You should never be satisfied with status quo, staying in place, or just polishing the business that you have today, because someone will come and take it away from you.