Drawing inspiration from other industries, the 2009 INNovator of the Year veloped a methodology to speed up product development.
Five years ago, as he took over the role of CEO, Paul Hopkins threw out a challenge to Chief Strategy Officer Mark Smith and his fellow executives at Farmers Insurance: Find a repeatable, structured approach that will enable the insurance carrier to quickly research and develop ideas, and turn them into products that will drive growth through 2010 and beyond.
Smith knew that successful companies in other industries, such as General Electric and Procter & Gamble, had developed processes for quickly developing new products and he set about taking the best practices of those models to create an innovation framework for Farmers. The end result: IdeaPoint.
IdeaPoint is a rapid product and services development methodology that calls for the Los Angeles-based insurer to put a bunch of smart people in a room with the right processes and information they need to vet and develop new ideas. The best ideas are then matched against market need and existing market offerings. The team then calculates the resources required to create the new product or service, comes up with a prototype and formulates a go-to-market strategy -including cost and distribution issues - usually in just 45 to 60 days.
For Farmers, the process isn't just quick - it's profitable. The property/casualty carrier estimates that, this year alone, initiatives developed through IdeaPoint will contribute $1.2 billion to the company's gross revenue.
Matthew Josefowicz, director of insurance at Novarica, says IdeaPoint is a good example "of changing business processes to take advantage of new technical capabilities, in this case the capabilities to streamline communication, planning, and project management."
THE NEED FOR SPEED
Farmers, which is a U.S. subsidiary of Zurich Financial Services, saw a structured framework as the best way to launch new products and re-energize existing products and services.
A typical IdeaPoint Session, as the company calls the process, starts with management gathering ideas from across the company and then selecting employees - up to 60 from various disciplines, including agents as well as information technology, finance, marketing and other staff - to join with outside experts and consultants to determine the feasibility of an idea.
Over the next four to six weeks, the team puts together "fact packs," which include market research, focus group results and competitive intelligence, among other information. They also work on defining the idea's initiative, vision and strategy.
The group then gathers for one to three days at the company's Innovation Solution Center in Agoura Hills, Calif., for an "IdeaPoint Workout," in which they define the product or service, set up a value proposition, look at how much it would take to get the idea off the ground, and explore other potential hurdles. This is an intensive, collaborative effort in which the shape of the product or service is essentially hammered out. The teams then leave the Center, but, over the course of the next week or two, they work on the planning and follow-on activities necessary to implement the idea. If, after the entire process, they still believe the product or service has potential, they prepare an outline on the offering for executive management review.
Before IdeaPoint, it could have taken nine to 12 months to go through a similar processes, Smith says, which often meant that a window of opportunity could be missed.
Among the products, services and corporate expansion efforts that have come out of these sessions:
* The acquisition in 2007 of Bristol West Holding, an auto insurer.
* Expansions into the East Coast, and small businesses.
* Farmers' Next Generation Homeowner policy, which provides expanded coverage to homeowners faced with personal injury suits, such as libel and slander.
* An Apple iPhone application that not only enables customers check on their claims, but also to file claims from the spot of an accident.
Granted, the process isn't flawless. Much depends on making sure the right people are in the room. Smith recalls a time a new product was being planned without agents and district managers present - the people who ultimately would be responsible for selling the new product. The oversight was caught, but after the agents and managers provided their insights, "we had some rework to do," Smith acknowledges.
But, overall, the company has met the challenge thrown down by Hopkins - who's now the carrier's chairman - and developed a continuous pipeline of product ideas. "We've had 14 consecutive quarters of profitable growth," Smith says. "And the only way to do that is to have new growth ideas."
(c) 2009 Insurance Networking News and SourceMedia, Inc. All Rights Reserved.
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