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Summary
Researchers have long touted the benefits of diversity, from decision-making, to the ability to innovate, to improved financial performance. I’ve seen first hand that cognitive diversity, defined as “the inclusion of people who have different ways of thinking, different viewpoints and different skill sets in a team or business group,” is essential to innovation. When we bring together cross-functional and cognitively diverse teams, the quantity and quality of ideas improves, we see problems in different ways and we spot considerations that we might have missed.
Head of Training at Ninety, responsible for creating and delivering training experiences that change mindsets, increase innovation capabilities and develop first-class facilitators, including leading on global innovation programmes.
Perhaps it’s no surprise then that Ninety’s 123 Framework hinges around creating such a team.
This way of thinking was echoed in Ninety’s People and Culture Whitepaper. Out of the 75 insurance innovators that we surveyed, the majority perceived cross-functional teams as more effective than a dedicated innovation resource. Furthermore, 86% of respondents believed that a lack of cognitive diversity definitely or probably impacts their ability to innovate. However, whilst the importance of cross-functional teams and cognitive diversity is recognized within the industry, there is a gulf between the ideal and the reality. Here, I’ll share some of Ninety’s insights into the realities of insurance innovation, and steps we should take to innovate in a more powerful and representative way.
A lack of cross-functional collaboration is a common culprit for unsuccessful innovation efforts.
Our research on this topic found that business functions are where innovation ideas most frequently get stuck, and divisional silos were ranked by those surveyed as the third highest cultural blocker to innovation (tied with legacy systems). In fact, I’ve lost count of the number of times that a training participant has admitted to me that they intentionally exclude ‘difficult’ departments (usually cited as legal or compliance), until absolutely necessary because they ‘always say no’ or ‘don’t like taking risks’. When we exclude departments that might provide a more sceptical perspective on our idea, we run the risk of creating an echo chamber – only including those who are likely to agree that an idea is a good one, often for the same reasons. This is contrary to the principle of cognitive diversity which welcomes different viewpoints. And it works both ways. In our Insurance Innovation Blueprint report, we identified that a ‘them vs. us’ culture between innovators and the rest of the business, was a key source of angst amongst the 250 major global insurance businesses that formed part of the study. In this scenario, sabotage can occur: traditional business functions don’t want ‘the innovators’, often perceived as arrogant or detached, to succeed. Unwittingly, by excluding these groups and making them feel like enemies of innovation, we cultivate hostility and create silos.
At Ninety, we combat this by incorporating a representative from all functions that will be touched by a proposed idea within the team that develops it. In our experience, involving ‘tricky’ business functions early on and making them feel a part of something different to ‘business as usual’ encourages them to stop saying “no” and start saying “no, but...”. The responsibility for this falls on our shoulders as innovators. Organizations could not function if everyone acted ‘like an innovator’ the whole time. This is especially true for functions such as compliance and legal – if they were to spend their time getting ‘creative’ with regulation, this could lead to huge and disastrous consequences. Instead of writing off individuals in this function because of their BAU responsibilities, when we involve them in an innovative project, we should endeavor to shift their mindset – even for a day, or an hour – to accommodate for their changed role within the project. This comes down to trained practitioners, who are able to understand how to cultivate an innovative mindset in a project setting, as well as being experts in innovation methodology. Most importantly, it requires the building of cultural bridges to create a truly cross-functional team.
It’s important that in our desire to create cross-functional teams, we don’t forget that thinking about diversity not just in terms of professional attributes but also personal attributes, such as class, gender and race, is extremely important. A key component of this, of course, is DEI (diversity, equality, inclusivity). We tend to see greater innovation maturity and effectiveness in global composite businesses with great diversity of culture, language, background, etc., than we do in single-market monoline businesses, who tend to recruit from the area immediately around their head office – people who went to the same schools, have lived in the same area, etc. Surprisingly, although the importance of cognitive diversity came out strongly in our research, lack of diversity was considered the smallest blocker to innovation within the company cultures of those we surveyed.
Does this indicate a gulf between the ideal and the real for the industry? At Ninety, we strongly believe that the insurance industry still has a way to go when it comes to diversity. This stance is informed by statistics for the sector, but is also unfortunately reaffirmed by our
own observations from working closely with insurers. This is a wide-spread, industry issue that we each need to play a part in resolving. It is also contrary to the principles of inclusive design. When developing a product or service, users tend to have a range of backgrounds and perspectives, and we incorporate their diverse needs and insights in that development. It should be the same for innovation and culture design. While trying to develop a company that is better suited for equality, you need that insight. It will help you reach a different perspective when approaching risks and innovation challenges, and will help you find solutions that maybe you hadn’t thought about.
The Covid-19 pandemic, and the leaps it has generated in hybrid and remote working, makes now a timely opportunity to review recruitment structures and hire more diverse talent. As one of the interviewees for our Inclusivity in Insurance Innovation blog argued: “in some scenarios, you will need to take the active decision to recruit someone that you need to upskill, not because it makes the best financial sense in the short term, but because you want to drive the best long term outcomes in terms of diversity and creating a psychologically safe environment.”
This point links neatly to one more additional factor that we must consider. Increasing cognitive diversity by hiring more diverse talent and encouraging cross-functional collaboration is not enough. Psychological safety, “a climate in which people feel free to express relevant thoughts and feelings,” must be present in order to unlock the best in those taking part in innovation projects.
As part of this, employees must learn about the importance of psychological safety and how they might encourage greater psychological safety in workshops and meetings that they run. Even simple actions, such as enforcing equality of turn-taking in a workshop, or stating that all ideas and perspectives are welcome at the outset, can make a difference.
By combining a proactive approach towards creating cross-functional, cognitive teams and cultivating a psychologically safe environment, we set ourselves on a path to truly effective innovation.
Ninety partners with insurance organisations to empower everyone to innovate, from innovation methodologies to facilitation skills. If this article has resonated with you and you’d like to explore things further, please do get in touch – we’d welcome the opportunity to talk with you.