ABSTRACT
Suncorp is the leading general insurer in Australia. In 2012 Mark Milliner, CEO of Suncorp Personal Insurance (PI), created an internal division to manage strategic risk, applying a framework developed by Dr. Luca Gatti and Dr. Kirsten Dunlop, and appointed Kirsten to lead the division. The journey that led to the creation of the PI Strategic Innovation division started with a program of work called Marco Polo, involving employees from all over Suncorp Personal Insurance. Marco Polo enabled PI to articulate a sense of its own identity (Business Rationale), and to identify 11 areas of strategic risk, emerging from relevant and possible systemic and long-term changes in the future market context. The Strategic Innovation division is charged with responsibility for monitoring, reporting and managing these Risks, as well as working on embedding a unique capability for strategic innovation as part of the solution to managing strategic risk. Three and half years on, in part because of its investment in this approach, Suncorp PI has successfully:
Accelerated a vertical integration strategy for repair and restoration supply chain with sufficient benefit to the bottom line to enable Suncorp to maintain excellent margins through market downturn and increase customer satisfaction to world-class levels.
Experimented with innovative approaches to employees working from home with extraordinary customer satisfaction results, unprecedentedly low levels of absenteeism and high sales performance.
Partnered with start-ups to co-develop pioneering and disruptive business models for insurance.
Achieved exceptional employee engagement scores for the SI division that are consistently higher than global high performing norms.
Built an asset base of relationships globally with access to new business models, research ideas, thought leaders and regulators.
Started to renew/adapt the model of the core insurance business to prepare for change.
In April 2011, Mark Milliner, CEO of Suncorp Personal Insurance, Australia’s largest general insurer, met with a consultant who had recently relocated to Australia from Italy. Their 232conversation was about strategic risk. They would later understand that between them they shared the will and the ability to help an organisation think beyond the security of a market leading position, to understand and manage external change of a disruptive order and to equip its leaders with the courage and the capability to lean into change.
The consultant in question, Kirsten Dunlop, had been working for Generali Group, a global insurance conglomerate headquartered in Italy, leading a division called the Generali Group Innovation Academy. In response to a remit for leadership development and business innovation globally, Kirsten had introduced in Generali a C-suite program exploring external change, designed and facilitated by the director of Contextf, Luca Gatti, which had led to the identification of strategic risk as the key factor of concern in considering how to thrive and compete in a changing world. It had quickly become apparent in the course of the Generali Executive Forum that strategic risk was little understood, despite being identified as the responsibility of country and company CEOs in Generali’s risk register, and despite representing the most significant cause for concern in terms of potential value destruction, a reality later borne out by the collapse of Lehman Brothers and the financial crisis. Through conversations with Generali executives over a period of 4 years, Kirsten and Luca, now husband and wife, experimented with better defining strategic risk and with forming a view on how best to manage strategic risk effectively (see Chapter 10 by Luca Gatti in this volume). This led to a full-year program focused exclusively on identifying strategic risks for Generali’s core insurance businesses in the wake of the financial crisis, followed by a further year of exploring the notion of developing strategic innovation options as a means to hedge against exposure and build capability to adapt the business model ahead of change.
After a change of management, Kirsten left Generali at the end of 2010 and moved with her family to Australia. The encounter with Mark Milliner, which happened shortly after, proved to be life-changing for both. It led to the launch of a program for Suncorp Personal Insurance (PI) focused on exploration and management of strategic risk. Called Marco Polo, the initiative ran for 18 months and was so successful that Mark decided to create a permanent division in PI with responsibility for managing strategic risk through innovation. Now three years in, the Strategic Innovation division consists of a team of 24 people, part permanent, part rotational, furnishing the organisation with a robust framework for governance of Strategic Risk characterised by practical and effective practices of generating intelligence and insight into relevant and possible change in the future, access to alternative business models, and the means to understand why and how to adapt the business to achieve resilience and competitiveness over the long term. Flow of insight and exploration of alternative business models is now embedded in PI’s strategic decision making and planning practices and has led to the organisation seizing and consolidating disruptive opportunities in the market, and determining to shift the centre of gravity of its core businesses as well as its relationships with customers.
