It is no secret that the insurance industry of today is not known for its cutting edge technology inventiveness, or even for utilizing the latest technologies embraced by other industries. Part of that situation is no doubt due to the conservative and risk-averse nature of insurers, but part of it may also be due to the lightning-fast pace at which technology in general is advancing. Even outside the technologically phlegmatic insurance arena, technological advances are happening so quickly that one wonders how any enterprise could adequately plan to respond quickly enough to leverage such changes for competitive advantage. During the opening insurance general session of the just concluded Oracle OpenWorld conference in San Francisco, Oracle Insurances SVP and GM Rick Connors offered this very relevant observation: In the new economy, speed and acceleration have changed the name of the game. In other words, the ability of any enterprise or company to ascend to, or remain on top of, the business totem pole rests on how quickly it can act and respond to the market. Technology clearly will be the rocket boost that enables such a response. That got me thinking about quantum physics (I know that seems a little bizarre, but stick with me here). Specifically, I thought about the Heisenberg Uncertainty Principle, which statesin briefthat the more precisely the position of a particle is determined, the less precisely the momentum of the particle is known at that instant, and vice versa. So we can determine how fast something is traveling, or we can determine its exact position, but we cant know both at the same time. Applying this to our question of technology advancement, I would propose that we can make our business plans based on where that advancement is at this moment, or we can try to gauge the speed of change and make plans for where we think technology will be at some time in the future. It seems obvious that we cant do both, or at least that we cant devote our full energies to both courses at once. If we adopt the first option (planning based on the current technology environment), we can build a solid plan based on proven technologies that represent the best available solutionsfor now. How well these technologies and plans will serve our enterprises in a year or two or five is to some extent an unknown, since speed and acceleration are going to take us to a new place where the older technologies may have become unworkable or irrelevant. On the other hand, if we plan for a future state that has yet to develop, we run the risk of being wrong and having done our work in vain. If were right, however, were probably going to be in the catbirds seat in terms of competitiveness. That means were light years ahead of our competitors. So here is the problem: The technology landscape is changing too rapidly for us to precisely plan for the future, but to base our plans on what we know now may carry even more risk in terms of leaving us badly outclassed by competitors who guessed right. The best solution, it seems to me, is for companies and enterprises to remain flexible enough (agile enough) to respond to market changes. In order to do this, we must make sure that we are not too tightly tethered to any particular platform, brand or supplier. That doesnt mean we dont use the best-of-breed technologies available today. We must, however, be able to make guesses on the fly, and we must be able to survive and keep moving if our guesses turn out to be losers. To be sure, the balance between risk and reward is a delicate one, and each company and enterprise must determine its own tipping point. I could write much more on this topic, but I have to take this phone call from the Journal of Applied Physics. Meanwhile, it may be useful to remember that, as one physicist quipped, Even quantum physicists dont understand quantum physics.
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