How Delight Drives Innovation

OXON HILL, Md. — What does a 9-year-old behind the wheel of a $156,000 car have to do with the future of insurance? Everything.

LIMRA’s CEO opened the association’s annual meeting on Monday by admonishing the more than 750 attendees to innovate for a better future and the second main speaker showed how it can be done.

“You can’t keep cutting costs forever,” Robert A. Kerzner said. “At some point you really have to focus on growth.”

Kerzner said that growth would have to emanate from investment in technology. But he also acknowledged that his member companies might have difficulty identifying the most effective spend in tech.

He identified more than two dozen examples where insurance and financial companies are innovating as the industries try establishing new practices. Kerzner urged his audience to perfect processes rather than to try becoming the industry’s lead disruptor.

The next main speaker, George Blankenship, has had a front seat with major industry disrupters. He was with Gap when it transformed from denim purveyor to industry leader under Mickey Drexler, later with Apple under Steve Jobs, then at Tesla with Elon Musk and lately with Amazon under Jeff Bezos.

In each case, the innovators were disruptive, but not for the sake of disruption. They all intensely focused on the human in the middle of it all.

That is what put a 9-year-old behind the wheel of a Tesla.

Musk’s overall dream is to power people’s lives by the sun, but getting there requires incremental steps. In the case of transportation, Tesla needed capital to become a mass-market auto manufacturer with the Model 3.

Somehow, the company had to persuade people to pay for a car that they hadn’t seen and was not expected to be produced for at least a few years.

Tesla designed its showrooms to delight 9-year-olds where they can build a car through an engaging interface and see the product projected on the wall. Then the salesperson would invite parents to seat their child behind the wheel of a car in the showroom and encourage them to take a picture.

Then the parents ask the question that Blankenship said he loves: “How much is it?”

“$156,000.”

“Get the kid out of the car!”

But then the salesperson would reassure the browser that it was OK and that the family could have a Tesla of their own for $5,000 — the Model 3.

“And people did that!” Blankenship said. “By the thousands!”

But the ultimate focus was the customer experience in the showroom. The object was for everyone to leave smiling with a positive imprint of Tesla on their brains.

That was the strategy for Tesla because it was an unknown brand at the time. Apple was a known brand when Blankenship worked for the company in 2000, but the problem was one that should be familiar to annuity sellers.

“All they said was, ‘All I know is I don’t want one,’” he recalled. “It was for creative weirdos.”

So, the company focused on the customer experience with the product and associated environment. Interfaces were simplified and the design was distinctive. The first iPods were $600 but early adopters wore them proudly with their telltale white earbuds.

Apple opened stores to elevate the buying experience, although some critics predicted they would flop. But through it all, Jobs and his company focused on delight, earning ardent consumer devotion.

Blankenship asked the audience what they could do to construct a 10-year runway for their own companies. He defined innovation as taking something existing and making something better of it, as Apple and Tesla had done.

“Look at what’s around you,” he said. “And see what you can turn into something special.”

He offered four basic steps:

• Simplify products and processes.
• Courage — have it to follow through on ideas.
• Conviction — develop it to stand behind your efforts.
• Celebrate success and failures.

One step he said wasn’t possible was taking a step backward. The pace of change wouldn’t allow it.

“Somebody is going to redefine your industry,” he said. “The only question is this: Will it be you?”

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. He was also vice president of communications for an insurance agents' association. Steve can be reached at steve.morelli@innfeedback.com. Follow him on Twitter @INNSteveM.
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