Introducing season 2 of Unstructured Unlocked! Indico Data CEO, Tom Wilde, steps in as co-host alongside Michelle Gouveia, VP at Sandbox Insurtech Ventures. In this episode, they discuss Indico’s recent top position in Everest Group’s Intelligent Document Processing (IDP) Insurance PEAK Matrix® 2024.
Michelle Gouveia:
Hello everybody. Welcome to a new episode of Unstructured Unlocked, Michelle Gouveia.
Tom Wilde:
And I’m co-host Tom Wild,
MG:
And we are joined today by Wendy Bukowitz, the director of Strategic Innovation at the Cincinnati Insurance Companies. Welcome Wendy to the podcast.
Wendi Bukowitz:
Well, thank you both for having me. I’m delighted to be here.
MG:We’re thrilled to have you. Can you give a little bit of background on roles that you’ve had and what you do at Cincinnati Insurance in your current role?
WB:
I came to Cincinnati the end of this year. It’ll be six years ago to set up an innovation discipline here, and this is my first and only experience with a primary carrier. Prior to that, I was with Munich Re North America for about four years. So I entered the insurance reinsurance industry through reinsurance, which is a pretty strange path to travel in this industry, and that makes up the sum total of my experience with the insurance industry. Prior to that, I was a strategic innovation solopreneur consultant. I was also the director of innovation at what is now Willis Towers Watson, a predecessor company and a strategy consultant at PricewaterhouseCoopers.
MG:
Yeah, I forgot that connection. You and I were at Munich Re companies at the same time. We just never crossed paths there.
WB:
It’s a big place.
MG:
Huge. Yeah. Yeah. So Wendy, given your background, I’d love to understand because when we talk to people at different organizations, the word innovation means different things depending on what business unit you’re for, what experiences you may have had in the past with innovative projects or strategy. So I’d love to understand, how do you define innovation within your current role?
WB:
We borrowed our definition from the corporate startup, which was a book that was published over a decade ago, maybe 15 years ago. And I don’t think I really appreciated why they called it the corporate startup or why we called what we did corporate innovation really until I got here. And the definition, it’s very simple. That’s part of the reason why I really like it. We switched around a couple, two parts of it though. We said that it’s delivering value to customers by creating new products and services in a sustainable and profitable way. And what we switched in that definition is their definition starts creating new products and services that deliver value to customers. But I deliberately wanted to place the value to customers first in the definition because when I talk with this about innovation to my business partners, and I use this definition, I say, this can sound like what companies do anyway, but what’s really different is the starting place.
WB:
We’re not starting with what we want to do, how we want to grow, of course that’s the impetus. But what we do is we immediately then set that aside and go out into the market. For us, it’s our distribution partner and our customers and try and understand their problems, how we can create value for them. So it’s a very different starting point for that discussion. And then for us, because we only distribute through independent agents, we have this kind of dual value challenge. We have to create value not only for the insureds, but also for our agents and brokers. So it’s a very simple definition. People can understand it immediately, and then we can have a really good discussion about how innovation approaches that same business imperative profitable growth in a different way.
TW:
That’s really interesting. I mean, how do you distinguish between, like you said, you could characterize that as continuous improvement. There’s other terms for it versus innovation, which I think people associate with r and d and step change functions. How do you think about your mission in those two bookends?
WB:
It’s really hard. It’s really hard. When I think about continuous improvement in organizations, I often think about operational improvement, re-engineering processes. And we very deliberately, when we came in, we drew this right line and we said, we are going to work on opportunities or problems where for us to be successful, our agents and policy holders have to change their behavior in a consistent and sustained fashion, and we don’t have control over that. So we’re going to focus on that set of problems because our methodology and toolkit are designed to deal with those problems. So that’s carving out we’re not going to be, and we said not so that we could create a little space for us when we first came in. It gets a little blurry as you’re here over time. Sometimes you get sucked into things that are internal to work on. But I would say where we are also not doing continuous improvement is we don’t work on anything at scale.
Our team doesn’t have really the skillset or experience to work on true scaled operational processes. So again, that’s why we stay out of that. Not that there isn’t innovation in that there is, there’s a constant small bore innovation, but we are separated out Tom and Tom. This isn’t to say that we don’t work on smaller opportunities, we do, but we’re working on the kinds of opportunities in the company that I would say some of them are things that our business partners know they should work on, but they never get to. They’re always dropped to the bottom. And others are opportunities where the time horizon is 2, 3, 4 years out before we really want to be in it in a big way. And what we say is rather than being at zero in 2, 3, 4, 5 years, let’s be at an informed place and informed by actual experience in the market as opposed to just research on the side.
So we’re very clear that we’re working in a certain area. And some of it may be smaller impact, some of it may be bigger impact, but it’s always new to us. Sometimes it’s close adjacencies, sometimes it’s also, I would say it’s still new to the industry and I don’t know about you, but a lot of times I find that things where we think we’re behind once we start getting involved and we realized nobody’s really solved this, nobody really, this is still very hard, very difficult. No one’s really at scale in a big way. So I think we are definitely working on something new. It’s net new, net new to us. Net new to the industry.
MG:
When you were talking about innovation and service of the customer, and you mentioned that the agents and then the engine insured, are there ever opportunities or initiatives or efforts underway where your customer is actually inside the four walls of Cincinnati Insurance? So to your point, you’re working on something that a business unit may not have had capacity to do, and how do you interact with them in that way? Are you identifying opportunities where they could be doing something to improve a workflow that ultimately supports that agent or insured? Or are they coming to you and saying, we have a need for something, we don’t know what that solution is. Help us find it?
WB:
A little bit of both. With rare exceptions, and I can only think of one in the six years that I’ve been here or whatever we’re working on, has to touch an agent or a poly, it has to go outside of our four walls
Because our methodology is really, that’s human-centered, lean startup. It’s really starts outside in for the most part. And so we do, and it’s a bit of both. Our team, we meet with about 75 business partners every month. We’re a team of seven. So we kind of divide and conquer and every month we’re having 30 minute meetings. And the idea here is to both bring them ideas, things we’re thinking about on behalf of their business unit or operating unit, and also understand what their immediate pressures and needs are. And sometimes things will bubble up. They’ll have read something, heard something, and they’ll want to talk about it. And that’s actually how we source our opportunities, predominantly our business partners telling us what their problems are, what things they want to do. So I would say I don’t have an idea management platform, for example, which is Tom.
That’s the kind of thing that a lot of companies have when you’re doing a lot of continuous improvement because there you’ve got the people who are actually working a process and they’ll have an idea about how I could do this little part of it differently. And I think an idea management platform is awesome for that, but it’s not as awesome for the kind of work we’re doing. So the way we do it is through this informal but structured every month, meet with the business, share ideas go back and forth, and we manage a pipeline and a portfolio which we do share, and we stage it with an idea we’ve come up with, but we haven’t socialized with our business partner an idea that has been socialized with the business partner and idea that the business partner has said, yeah, I want you to work on it.
And then the next step is an idea that the business partner says, yeah, I want you to work on it and I’m going to give you a resource and I want you to go in your next iteration of programs. So we actually track it along all that path. We have roughly probably four times the amount of stuff in our pipeline, four to five times than what’s in our portfolio. And that’s a big thing that I learned when I first started. I actually thought it was going to push more through, but what I learned is if I pushed more through than I had to get it out the other end, we had to slow. We had to slow down our throughput
TW:
On this topic. Maybe going to the next step, talk a little bit about failure and setting expectations. I think that sometimes what I say to my young adult children is, your willingness to fail at something is kind of a superpower because a lot of people aren’t willing to fail at anything. They’ll stay in their lane. But how do you set expectations? Because what I’ve observed in big companies is there’s a fairly low tolerance for failure and failure. A couple times of failure, you get people being like, well, we’re just not going to try this anymore. We failed. So how do you balance that working out towards the edge of the possible with setting expectations with your stakeholders?
WB:
Well, the big thing that we try and do is make sure that the problem is worth solving, even if we’re not able to solve it today. So we have worked on a couple things in which our first foray out, either it’s that feasibility viability, desirability where we bombed on one of those elements. Typically we bombed on the viability. We couldn’t figure out the economics of it. We just couldn’t figure it out. And I can give you an example of that. Initially we tried to approach the problem of commercial property water damage. And at the time, the model, the solution was you or the property buy devices.
So capital outlay upfront, maybe not huge, but capital outlay upfront, you install them, you monitor them, you do this. Okay, so there was a desirability problem. There was a viability problem. Now from a feasibility problem, the technology kind of worked. I mean, although there were some problems with the wifi signal strength, it wasn’t strong enough in all properties. Two years later, that model shifted. And so we tried this, we tried this, and we just couldn’t get anywhere. And the head of our commercial alliance business did think of it as it didn’t work. It just didn’t work.
I kept saying, no, no, the problem, we still want to solve the problem. We just haven’t been able to do it. So we stopped working on it. But then fast forward, the business model changed from the vendors. Now it’s water monitoring as a service, and you basically, it’s a subscription model. You don’t buy the devices, you don’t get stuck with the technology. Oh, by the way, they 24 7, monitor it. Oh, they escalate calls. Oh, it’s very different. And so the economics all of a sudden start to shift. It’s much more attractive. And during that period of time, water damage to commercial property starts to just blow up. There’s so many more unexpected freezes. So pipes are bursting, water is leaking, so the problem becomes bigger, and then the technology changes. And so when the head of the business brings it up as a big problem, we’re able say, I think we should take another, I think we should work on this again, because this has changed and we see evidence that the technology is better, the solution itself is better, the economics are better. We still have to figure out
MG:
Drive behavior.
WB:
We still have to figure out all that stuff, but we’re further along. And so I think, and it’s hard because for two years I didn’t have a very receptive executive. He was not real enthusiastic about this, but I think as to keep coming back to, but it’s a big problem and we would want to solve it. And if there’s something out there that we can, yes, we weren’t able to, here’s why we couldn’t solve it. Now you notice, I didn’t really use the word failure. We couldn’t solve it. I do still think the stink of failure is pretty bad in big companies.
I don’t have a magic solution for that. But I know that in some of thinking about this, and I’m sorry Michelle, I do want to say this. Some of innovation is such a grind. You just have to grind it out and keep doing the due diligence and figuring it out and be, maybe it’s less about tolerating and more about willing to go back and say, okay, I didn’t succeed the first time, but let me try and lay it out for you about why I think we should take another run at it. Such persistence in the face of getting things done.
MG:
Definitely. And so I’ve got a comment on that. And then kind of a follow up question for you, Wendy. I totally agree. I think part of, I’ll use the blanket term innovation is that it’s not a failure. It just didn’t meet all of the criteria to be a full success. So what are the learnings you can take to your point to two years later, what didn’t work from the first attempt that now the second attempt will be that much closer to successfully deploying or executing on the end goal? So I totally agree with you on that. A little bit of what you mentioned in terms of bringing that project back around is how do you, with a team of seven, so a very lean team, think about prioritization. Whether it’s things that your team has identified or that people are bringing to you, how do you think about prioritizing that and how do you structure that so that there’s alignment between your work efforts and how the company is thinking about where your work efforts lie?
WB:
So we’re a team of seven, but we are not the only seven people in our company working on innovation. For two of the programs that we run, we actually use, our associates come offline to work with us. So one program tackles larger scale problems, and we have cross-functional teams of three associates, each who come offline two days a week for five months. We have an outside trainer coach who works with us to help upskill them in this lean startup human-centered design. We have a methodology, which is a pretty standard methodology. It’s been adjusted over time to really fit our organization. But we have a phase zero start where we do a lot of due diligence, phase one, two, which is proof of concept, and then a phase three, which is proof of value. And we run that fairly programmatically. We run it at in two five month cycles.
So we have associates coming offline anywhere from six to 12 at a time. And then we also have another program where people come offline four to six hours a week, and same cross-functional teams of three. So we might have as many as 20, 25 of our associates coming offline for various levels of investment to work on things. And this is a multiplier effect also with the trainer coaches. They keep us honest with what’s really going on outside of our own industry and with innovation methodologies and tools, and also kind of software that we can use as we’re doing limited small scale testing in the market. And then we also, so that’s one way that we supplement our small numbers. Another way is in the innovation that we work on that we call breakthrough, which I kind of jokingly say, well, if we can do it ourselves and it’s not breakthrough.
So that’s what the breakthrough innovation is. And that means typically, even if we had our associates working on it, it would take us so long because part of the trade off when we have associates work on it is we call it a dual mission. We’re getting the work done, but we also want to give our associates a professional development experience. And this is my long-term vision, which is as these associates go out into the company, as some of them stay with us and get promoted, the understanding of what innovation is and how it works as they become managers, become something different. And Tom, this is ultimately, it’s beyond my tenure with the company, but hopefully how you actually help foster this idea that innovation is part of our toolkit as an organization where you give people that hands-on experience and exposure. So that’s one thing. But on the breakthrough innovation, going back to that, we actually work with a venture build studio folks who actually know how to do this, all the stuff that we need to do, the customer discovery, the testing, and they can do it pretty fast, but that’s another way that we augment our seven because we can’t do that by ourselves. So we’re a small team of seven, but we I guess plug in partners and we also plug in our own associates so that at any given time there could be 30 to 50 people working on innovation.
But it gives us, what it’s really nice is that is a fixed cost for the organization. It’s low. And I think that’s really helpful.
TW:
This is obviously very close to my day-to-Day. Talk a bit if you could, about a vendor’s role, a solution provider’s role in innovation. And I think that some of the things that we experienced, I’ve experienced over my whole career is that participating in innovation with a big enterprise has some real opportunities for learning, but some real opportunities to spend a lot of time where there isn’t really a budget yet there yet. So that’d be really interesting to hear how you think about when to use a solution provider as a partner in the innovation and what’s the right expectation setting to make that successful and make it viable for both parties.
WB:
So when we think about our budget, we actually put in placeholders for stuff, and I hope we’ve earned the trust of our executives and our business partners that we are putting placeholders in our budget. If we’re successful at this, if this actually proves out and we want to go a little bigger, we want to put a placeholder in for X amount in our budget so that when we come to you and ask for it, and you ask us if it’s in the budget, we can say yes, but we commit to you, we won’t spend it just to spend it.
So every year when we go through a process, my job is to explain all the variances in the innovation budget because we didn’t spend things or we spent less, or we moved this around. So we try and budget it. But I would say we also are very clear that we are not going to do things at scale. We are trying to work in the smallest possible way we can because we are taking risks. We don’t know if things are going to work. So we really don’t want to blow through a lot of money if we don’t have to. We certainly don’t want to damage. I talk about, I don’t want to break the company, just don’t want to break the company, don’t want to damage a relationship with an agent, don’t want to damage a relationship with a policy holder. So we absolutely know that Some of the reason I think that companies like us have innovation is precisely because technology has enabled us to solve problems in a different way.
I mean, otherwise, why do you need this innovation kind of stuff? This would be technology that you use all the time that you understand, and you just find a way to prioritize your existing resources and deploy it. But the constant change in the technologies, whether it’s the digitization, the censoring of the world, and now of course all forms of ai. And Tom, you talk about that. I think AI has ai as we’ve gone to generative, AI has created such challenges in terms of really just understanding where we can partner with a third party where what we have to do ourselves, because we have to be able to explain it and control it, and the data has to stay inside. We can’t share the data in any way. That’s really opened up a huge, huge set of challenges. And I don’t think we’re alone as an organization in sorting through them, but we know that even though we would like to keep our, and I heard this from our chief information officer, he is managing his IT ecosystem. He doesn’t want it to be so vast that he can’t understand it. But by the same token, we know that we can’t do everything ourselves, nor is it wise for us to do everything ourselves. So we do work with startups and other vendors, and sometimes this is probably not what a startup company wants to hear. Sometimes we say, well, why don’t we start with a startup for a couple years? And then if we decide we really like it, but we want to build it, then we’ll just go build it.
TW:
Yep, yep. No, we’ve experienced that, I think, and that’s healthy too. I think then it’s on the startup to prove that the vendor solution is still superior to building it. Right. That’s a fair ask.
WB:
I agree. And I think in many cases that is true because no matter what, when we talk about building it ourselves, we say, well, are we committed then to being best in class on this? Which means you don’t build it and just sit on it because nothing is like that, so
TW:
You can’t orphan it. Yeah, that’s the hardest part I think about building technology inside an enterprise. That’s primary job is not technology.
WB:
Exactly. So I think, yeah, we absolutely have in our mind that we will work with, we’ll work with third parties, we’ll work with startups, we’ll work with other vendors, and then it’s a dance internally between our information security people, our IT organization in terms of how they want to our whole tech stack. And I think we have a pretty good, I’ll call it creative tension. We’re all not always happy about how it shakes out, but I think it’s always a good discussion.
MG:
Wendy, I just want to probably put a wrap on this area. I know we touched on AI a little bit, so Tom and I, I’m sure have a number of questions related to that and how you all think about it. But wanted to dive in on something you said where you said you’re working on the smaller initial piece and you’re not the group scaling. What is that transition look like? How does something that started in an innovation group or work effort become a scaled solution in an organization? What type of adoption, what type of championing do you need? What type of structure or governance might you need around, I’ll call it point A to point B in something like that?
WB:
When I first came here, I would say I first came here and I thought, okay, we’ll work on the front end of innovation. We’ll work on POCs, we’ll do proofs of concept. And then so we’ll really have understood the problem, we’ll have understood the design of the solution, we’ll have validated that that solution design works, and then we’ll hand it over to our operating units and they’re just going to take it and run with it. And then year three, we had handed a few things over and a couple people were working on the side of their desks on them, and they were trying very hard, but they all had day jobs. And I said, wow, this stuff isn’t going to go anywhere. So I actually took it back. We went to businesses and said, here’s what we want to do. If we really want to be successful at this, it’s got to be every day, eat, breathe, sleep thing. They have to
MG:
About, I’m having flashbacks, Wendy, my time at
WB:
HSB, they have to think about this all the time. Otherwise they can’t make those connections. They can’t build what we need to build. So you need to give me somebody full time. They can come out of my budget, they come out of my budget, which is nice for an operating unit, and I will keep that person for 12, 18, 24 months until we figure out. So we actually build some MVPs. We actually start to build whatever it is and transact in the market, and we create a roadmap for the operating requirements. And what the executive has to do though, the executive has commit that if a person comes offline to do that and we decide not to go forward, that they will promote them into something better. That is the real challenge inside of a company.
TW:
Great point. The career risk of asking someone to do that,
WB:
It’s huge. Especially because the people you’re taking are people who can do, they’re going to get promoted anyway. They’re going to do fine. They really are. So you’re asking for someone to take a big gamble and by large people in insurance companies, this is not why you come to an insurance company. It’s not what’s attractive. So we created this backend of innovation that we call proof of value, and that’s exactly what it is. We are taking whatever it is that we’re working on, and we are creating the conditions by which it can transfer back to the business unit and it will be prioritized. It may not always be the number one, but it’s going to be on that list and it’s going to get what it needs to become operational at scale. It is going to be part of that discussion. Is it going to follow the timeline that’s agreed to when it goes back, probably not the nature of being in an operating unit.
So we had to do that. And in fact, that is now pretty much how we work things. There are some things can go back. Like Tom, you were asking me. Let’s say we’re piloting a new technology that’s part of a tech stack that we already have, but we haven’t used that piece and it involves our agents and policy holders. We might do that work on a small scale venture. We call them ventures. Michelle’s differentiate them from projects, true project work. But that might go and that might get piloted with one or two areas, but then it’s done enough that we can send that back to the business unit and they can start to scale that because it’s not as big a leap. And what we’ve done is enable them to get started, work out the kinks, figure out how to get it accepted by agents and policy holders, but then these other ventures that we work on, we need a full-time person.
And it’s not going to be quick. It’s going to take us another year, two years before we really understand what is going to be required to get something to scale. And here, if you had told me when I joined that I would have to get so far down in the weeds to really understand those requirements, I would’ve said, oh, innovation shouldn’t do that. But that’s another thing I’ve learned is not only do we get in the weeds, Tom, you were talking about when we work with startups, part of what we do for all of our, we go through all the administrative stuff. We work with our vendor management office, we work with information security, we work with legal, we work with corporate comm, we work, we take all that off of our business unit so they can focus on the actual thing they want, not navigating all of our internal processes. So it’s the tedious tactical work. And then to take something back to the business, we have to really understand what does that mean? Oh, we have to file endorsements in 26 states. We can’t offer a free telematics solution for one year because of regulation. To have a national program. We have to do that. Well, all those things have to be on the roadmap. We have to get commitments for when we’re going to do that. We don’t want to send someone back to the business unit not be able to execute a national program
TW:
With ai. So have the advancements in evolution of ai, have they fundamentally changed the way innovation happens at an insurance company at any company, or is it still the same, it’s just another topic that has to be accounted for? What are your observations there or experiences there? I
WB:
Think it has fundamentally changed the way we think about innovation. It’s fundamentally changed the way that I interact with my business unit partners sometimes. I just was having a discussion yesterday where we were talking about offering a credit for something and we don’t easily get the certification or validation that the risk management solutions been implemented. And I seemed to my business partner, well, we have an effort underway in our underwriting process to make sure underwriters are collecting that and looking at that. And I’m able to say, yeah, I don’t think that you should have your underwriters collecting anything and looking at anything. I think this is exactly what our intelligent automation team that’s working on AI should be doing. I really think we ought to talk with them, right, because, so yes, it’s fun when I hear that that’s a problem, and I think, okay, they’re going to change the underwriting process. I think that the work of the underwriter, I think there’s another way to think about that,
Which is that should not become the work of the underwriter. So I do think it changes how we think about what the solution is for certain things, whereas before it would’ve been adding a task to an individual’s plate, I don’t think so anymore. And then the idea that you can’t know a very high percentage of something, whereas before, maybe you would’ve made a trade off Tom, and you would’ve said, if we could get 65% of it now, it’s like, yeah, no, we could get like 98%. But a lot of it, to your point, is still really focused on internal operations. I think that’s where it’s safe, right? It’s safe. It’s in our four walls. It’s us. It’s not about pricing. It’s not in pricing models or anything like that. It’s just how we get our work done. So that is pretty safe, right? We’re not introducing some factor that would be challenging in a regulatory environment. We are really simply really improving the way that we go about doing our work. But I do think it has fundamentally changed a great deal of how we think about what solutions are available to us.
TW:
Well, these are fascinating insights. I think this is probably a good stopping point. Really enjoyed the conversation. We’ve been talking to Wendy Buckowitz from Cincinnati Insurance about innovation. Wendy, we really enjoyed having you.
WB:
I really enjoyed the conversation. It’s so much fun to talk with both of you, and I really appreciate the questions. Thank you.
TW:
Excellent. Well, I am Tom Wilde, your co-host.
MG:
And I’m Michelle Govea, your other co-host,
TW:
And we are signing off. Thanks so much.
MG:
Thanks, Wendy. You.
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