About Digital and Innovation – and What’s in Between

By: Itai Green / Orly Stern Izhaki

Digital and innovation – two big words that one defines, but are not always clear and precise. Many organizations of different sizes understand today that it is necessary to play in the Digital and Innovation fields in order to remain relevant, but it is not always clear how and how much.

Written by Itai Green founder and CEO of Innovate Israel and  Orly Stern Izhaki, Chief Digital & Innovation Officer at Menora Mivtachim.

In this article, we will define the two concepts and how to effectively approach integrating them into your corporation.

When talking about Digital, some refer to the term “digital marketing”, which is actually the way to promote business and sales through social and digital platforms, such as Facebook, Twitter, Instagram, e-mail and more.

Digital has a much broader meaning. Digital is the connection between business and technology. Digital enables organizations to create real value for their customers, and hence also for the organization itself, through advanced technological tools. Digital usually includes mobile applications, e-mail communications, WhatsApp, SMS, digital promotion (marketing) and of course self-service processes that enable the customer to run independently and perform end-to-end processes without human involvement.

Indeed, Digital touches everything. Digital reaches all levels of the corporation and integrates business issues, customer service, legal matters and of course various technologies. This is precisely why the industry term is “digital transformation.” In order to implement this digital transformation, a significant change in the level of the organization is required. It is not possible to just take outdated business processes and simply automate them, as this will not create the experience expected by the client. In many cases, organizations are in different stages of the transformation and engage in a very basic digital experience.

Innovation, on the other hand, is the next step. Innovation connects the capabilities of digital technologies and platforms. Furthermore, Innovation within organizations refers to rethinking the business – new products, new business models, and all this through using advanced technologies and “disruptive” thinking. Innovation relates equally to the change of organizational culture, the change of perceptions among managers and holders of control, and to change processes within the organization.

Ostensibly, it can be assumed that large organizations operating for many years in veteran industries are required to end the digital revolution before they reach innovation.

In practice, it is also possible and perhaps better to work differently.

Organizations that will use innovation as an engine to promote and accelerate digital transformation will benefit twice. On the one hand, advanced technologies and the use of creative knowledge and capability from the outside, from startups, is a lever for shortening digital processes in the organization and improving the user experience. On the other hand, there is little reason to wait for the end of digital transformation. Our dynamic world maintains a complex market that does not allow organizations to wait. Organizations must promote innovation parallel to the revolution that is going on within the organization and move towards trial and error experiment, encouraging the organization and its employees to take risks.

The insurance industry, for example, is an old industry, and operates by the same business and actuarial models for many years. The insurance world has been selling the same products, in the same way, for years.

In the past two years, we have witnessed changes in the insurance industry, including advanced technological capabilities and new players emerging in the insurance world, such as small digital insurance companies focused on a limited number of products and because they are digital natives, they provide a simple and seamless customer service experience.

Large companies also use digital innovation to encourage better behavior. NationWide, for example, uses Amazon’s Alexa to encourage proper driving, while offering incentives in the insurance premium. The result is savings for companies and for consumers.

The largest and oldest companies in Israel and around the world are working to create simple digital processes from end-to-end, without the need for human involvement behind the scenes, alongside innovation.

One of the tools transforming old, cumbersome complex processes is the use of artificial intelligence (AI). This technology enables automatic decision making and provide immediate and personal customer response. The technology replaces a complex and long process of human decision making that creates uncertainty on the customer side and inconsistencies on the company side. Two interesting Israeli companies in this field are Five Sigma, which offers an AI-based claims management system, and Atidot, which offers a Big Data platform that enables insurance companies to produce analytical models to make decision-making processes faster and more efficient.

At the same time, there is a growing innovation process in insurance companies, beginning with the transition from fixed annual payments on insurance to payment-on-demand and Pay Per Use. An interesting example of this can be found in companies that enable the operation of insurance and payment only when using the vehicle is in use. Bambi Dynamic is an example of such a company. The company offers drivers the ability to operate or pause their car insurance and pay only when they need coverage. Another company is Trov, which not only provides On Demand insurance as mentioned above, but also enables potential customers to photograph products via cellular and receive an insurance quote.

Another interesting innovation stems from the new technologies that create the need for new products – for example, the cyber world. Businesses, even of small and medium size, face cyber threats that did not exist until recently, as a result of the development of the Internet. Menora Mivtachim, for example, now insures small businesses with cyber insurance – a completely new digital insurance product. One of the tools that provides a rapid response to innovation, a combination of business and technology partners is Kovrr, which helps insurance companies understand, evaluate and manage cyber risks in a way that allows proper pricing of insurance policies.

Digital and innovation complement each other and allow corporations to advance and accelerate faster.