Yesterday was a great day: I could witness the operationalization of my enterprise protocol evolution model. Nobody at the MunichRe symposium specifically talked about the model. However, the symposium’s theme “Modularisation of the Insurance Value Chain” actually is the operationalized version of it. Here’s my perspective on the next evolutionary phase of companies: enterprises will be organized like modularised protocols: Enterprise Evolution Model — The Modularisation of the Value Chain.
In my model, I describe the evolution of the enterprise as a development from the enterprise as an institution, over the enterprise as a platform to the enterprise as a protocol.
Since enterprises move slowly and need time to evolve to another level, today many top managers still discuss the impact of companies with platform architectures, and the so-called platform economy is a relevant topic of many board meetings. Looking beyond, however, some enterprises have already left — or even leap-frogged the platform evolutionary level, and are moving towards the protocol level. A rather interesting aspect: this development can happen with or without the enterprise realizing it: it‘s not that clients call and congratulate the key account manager to have made it to the next evolutionary level. And neither the company‘s product or risk managers can conclude this paradigm shift from the market acceptance of the company‘s products or the balance sheet or P&L: the business might be running apparently perfectly.
Exogenous Shocks Are Triggered By Exogenous Shocks
Most paradigm shifts are triggered by exogenous rather than endogenous shocks. In the last decades, players in various industries have experienced new competition by contenders they had never heard of before — mostly from the technology space. Amazon (retail industry), PayPal (finance industry), Uber (taxi industry), Apple (telecoms, watch, music, movie, photo industries), are perfect examples for technology companies shaking up traditional industries in a few year‘s time.
To scan the competitive horizon and to provide enterprises with the necessary information, know-how, and spirit to look into the unknown, is the responsibility of innovation departments. Yesterday, MunichRe‘s innovation department had invited industry, science, and technology representatives to a full-day symposium on the modularisation of the insurance value chain. Being an insurance outsider, I myself experienced a very steep learning curve. For this opportunity of personal development alone, I have to thank the MunichRe team for inviting me!
Modularisation Leads To The Protocol Level
Over the course of the day, fully packed with insightful talks and inspiring conversations in between, I had my Heureka moment: the process leading to my enterprise evolution model‘s protocol level can be described in better, much more operational words: it‘s the modularisation of (an industry‘s) value chain. What each participant of the (re-)insúrance industry calls modularisation is, in my words, the integration of an enterprise‘s DNA in each part of the value chain. This was my first insight.
To integrate an enterprise‘s DNA into a value chain can mean that the enterprise owns the value chain, or it rather orchestrates it. As every brilliant maestro does, the enterprise has to make sure that the orchestra sounds perfect and delivers exactly what the maestro wants to deliver: the key message to the audience. And for enterprises, this key message is whatever they define as their brand equity. Each participant in the orchestra, i.e. product departments, own companies, or external coöperation partners, has to deliver their parts resulting in an orchestrated holistic product and service experience.
Enterprise Evolution Model — The Modularisation of the Value Chain
The process of modularisation not only supports the enterprise to reach its next evolutionary level if actively and consciously executed, but it also makes the enterprise much more resilient, by transforming the enterprise from a company offering products and services to a company that is an integral part of a complete industry‘s value chain — and many different industry players transport this DNA to customers.
I really would love to dig deeper into this and to have more conversations about the modularisation / enterprise evolution protocol model. Thankfully, the MunichRe team wants to build upon yesterday‘s event and organize a next level symposium — looking very much forward to it!
Featured image: A presentation slide of Magdalena Ramada