The article defines a platform as follows and I quote.
“A platform or complement strategy differs from a product strategy in that it requires an external ecosystem to generate complementary product or service innovations and build positive feedback between the complements and the platform. The effect is much greater potential for innovation and growth than a single product-oriented firm can generate alone.” (Definition by MIT Professor Michael Cusumano).
So what does this have to do with independent insurance brokers? Well, there is general agreement that the insurance industry is ripe for disruption. Customers are adopting this new interconnected consumerized world faster than most agents can keep up. Whether it is mobile or the Internet of Things (IoT) or plays by competitors in the B2B space like Zenefits or the havoc being wrought by the Affordable Care Act one does not have to look for far for disruptive forces challenging the status quo.
Now change in business is part of life, and the winners are usually the ones that can modify their business plan to embrace the change and outperform their competition. Of course there are those that will only stick their heads in the sand with the strategy being to weather that change hoping that if they simply wait it out, the disruptive influences will just move on. See Blockbuster for more details on the outcome.
To be successful, we need to have options. Innovation and agility should be built into the way we operate. The challenge is who has time? Just taking care of our customers, finding new ones and keeping the lights on pretty much takes care of the non-sleeping hours. On top of that where will the investment dollars come from needed to design and build these innovations even if they even could be constructed in isolation?
Well, the good news is that other industries have already solved this problem. They are building their businesses on platforms that are designed to create ecosystems of products and networks that bring the innovation to the industry. For examples of this one only has to look at the Apple App Store or the Google Play Store or on the B2B side of the house what Salesforce.com has done around its AppExchange. The WSJ article spells out a bunch more if you are looking for specifics. These organizations realized a while back that they could not be all things to all customers. However by creating a platform which partners could innovate on top of the result is and I quote "much greater potential for innovation and growth than a single product-orientated firm can generate alone." (MIT Professor Michael Cusumano)
The threat we face as an industry is that we need to look reality in the face and ask whether the systems we are dependent on today will allow the development of these ecosystems of innovation. If they don't, then we have a significant problem which undermines our business model and threatens our very survival.
If the incumbent systems are restricting brokers ability to innovate this will prove catastrophic. The facts speak for themselves. The majority of agents don't do more than 10 million in revenue and have no realistic way to finance innovation of this scale on their own. Put bluntly the industry need access to this innovation ecosystem to survive. For the larger players, the only way to escape lock-in is to forklift themselves off the incumbent systems which will undoubtedly bring massive change management risks along with huge increases in internal costs.
So what is the solution? We as an industry need to demand more from our vendors. We need them to understand that by opening up their systems they are in fact not only saving themselves but empowering their customers to prepare for the big challenges facing the industry. We need them to create development environments that will make developing solutions for the industry attractive for developers from both a technical and financial perspective. This means creating API's that align with industry standards. This means outreach efforts to the developer community. Time will tell if this message falls on deaf ears but one thing is clear. I don't see how the insurance brokerage industry can innovate fast enough to outperform the disruptive challenges facing it without access to innovation ecosystems that underpin today's so-called platform economies and the solution is not to simply stick our heads in the sand hope the disruption will pass us by.