Companies’ failure to innovate exposes them to risk and has a huge impact on the global economy.
When I bought my first house, my real estate agent needed me to go through the standard title insurance and escrow process in order to close the transaction. The process seemed strangely antiquated, based on an outdated model that required numerous, unnecessary steps. I looked into it and discovered that the handful of companies controlling the title insurance industry were still operating much like they did in the 1950s. They had managers overseeing teams of people who manually entered the same information into multiple computer programs in order to double-check data that had already been processed multiple times.
I asked why the title and escrow industry hadn’t embraced new technologies, from automation to machine learning to predictive analytics, given the rise of disruption in similar sectors. People in these companies told me this was simply how it’s done. But they also made an argument that they felt was enough to explain why new technologies should stay out of the sector: Because some cases require special care or involve unusual situations, people must be handling all processes in their entirety.
Coming from a tech background, I knew that didn’t make sense. Numerous data entry and processing tasks assigned to human workers could be safely handed off to machines. I also knew that computers can engage in exception handling — including, if these companies wanted, alerting managers every time there’s a case that requires a human expert.
With a better understanding of the gap in the market and the challenge at hand, I launched my own company, States Title, which eventually grew to become a Top 10 company in the $16 billion title insurance industry.
My experience turned out to be emblematic of what’s happening in numerous global industries where all-or-nothing mentalities still reign when it comes to technology. The thinking is that because machines cannot take over an entire process, they might as well be kept out of it altogether.
But companies’ failure to innovate exposes them to risk and has a huge impact on the global economy. Accenture recently estimated that a whopping $41 trillion in enterprise value is ripe for disruption.
Here are three crucial steps to overcome legacy approaches and begin putting new technologies to use strategically, without handing off the entire process.
Hire and Empower Disrupters
Workflow processes often get caught up in a vicious cycle. The company has a set way of doing something; managers train recruits in the company’s system; some of those recruits go on to become managers and pass on the same lessons. Inside the company, the workflow becomes second nature.
To break the cycle, organizations should hire managers and recruits with experience introducing technological elements, even first-of-its-kind technologies. For example, at States Title, chief data scientist Andy Mahdavi was previously an astrophysicist who used a technique called Markov chain Monte Carlo to detect dark matter. The technique optimizes theoretical models until they match the data. For us, he has adapted this technique to work on title insurance risk, optimizing our machine learning algorithm to produce maximum profit while enabling the best customer service.
Organizations should also provide employees with time and resources to learn about new technologies and give them opportunities to experiment with the workflow to find ways to tweak, replace, or automate parts of them. Keep an eye out for those employees who are solution-oriented, willing to try new things, and supportive of positive disruption, and encourage them to develop new technological skills.
Look for Criteria
Certain steps within your operations are better suited to this kind of change than others, so it helps to search first for those that meet key criteria.
A study on digitization in aerospace manufacturing reported that processes that would benefit most “are document intensive, include lots of handoffs among end users, and require high collaboration.”
A Deloitte report on robotic process automation (RPA) recommends looking at processes that “typically have repeatable and predictable interactions with IT applications, including those that may require toggling between multiple applications.”
Managers should take an in-depth look at their processes and consult experts to determine which processes may be the best to start handing off to technology.
Prepare for Some Challenges
As your business begins to implement new solutions, there may be some frustration among your teams.
TechCrunch warns that when a product cannot “deliver everything they want, exactly as they want it, right now,” employees may “deem the entire solution completely unsuitable.” Managers need to prepare for some inevitable failures and pushback by engaging in change management.
When we introduced a piece of machine intelligence, one of the lenders we work with faced this problem. The change saved the company time and money and made the employees’ jobs easier, but some of those employees complained because they found the user experience too different. We altered the interaction model to simulate more aspects of what they’re used to.
It’s up to managers to keep things steady, helping workers know that experimentation is part of the disruptive process and that their feedback is being taken into consideration.
As Accenture noted in its report, far too many businesses are vulnerable to disruption because they’re relying on “high barriers to entry.” They see those barriers as defenses warding off competitors, and they fail to innovate.
But with technologies transforming the workplace at unprecedented speed, no industry is safe. It’s time for leaders and managers at all levels of an organization to ask how these technologies can be used to improve their processes — not how long they can keep the status quo.
