About the Role
Scott Kirsner: Tell us a little bit about your role as Chief Customer Advocate in the Life and Protection Division, and maybe about the transition that happened last year, when you switched from SVP of Innovation to this role.
Aaron Proietti: The Chief Customer Advocate role and title, is one I really haven’t come across very much in any of my dealings. It’s a new role, obviously, to Transamerica, but maybe a new kind of emerging role in corporate America. I’ll get into some of the differences between a customer advocacy role versus a customer experience role in just a bit.
Transamerica started a journey of creating a culture of innovation several years back. In late 2012, I started to head up that effort of creating that culture of innovation. Over the course of the last several years, the expanse of that innovation program has grown, and we’ve evolved very rapidly as an organization — not only because of the work we’re doing in innovation, but because of some of the pressures that the life insurance industry is feeling. This move to digitization, innovation, customer-centricity is something that we’re feeling every day, in every part of our business.
The evolution of my role from the head of innovation last year to this Chief Customer Advocate role was, on the surface, a curious one. I didn’t really lose any responsibilities. It just may have looked like a title change. But in fact, it’s part of a bigger rising tide, particularly in the life insurance industry, of consumerism, and making sure that we’ve got the consumers’ best interests in mind.
Designing the Life Cycle of the Customer Experience
Proietti: In fact, what the role is starting to morph into is an emerging industry or an emerging term that I call “Customer experience design.” We want to be a very specific something in the minds of our customers.
In order to achieve what we want to be in the minds of our customers, we actually have to think about designing the entire life cycle of our customer experience. That’s been the evolution of my role.
Kirsner: Did the innovation team or innovation effort go away last year, or are there still people with innovation in their roles, and they report to someone else? What happened? I remember the last time we spoke, which I think was earlier last year, you had combined insights and analytics and market research into a group, and it had gone up to north of 50 people.
Proietti: That’s right. Functionally, I manage a department called Insights and Innovation. The actual job, when I got the new title, didn’t change. It was more of a perspective change or a mindset shift towards what it is we’re trying to accomplish.
Within our Insights and Innovation department, we have five centers of excellence, and we are centrally located and serve the broader business.
Those centers are our innovation center, which is responsible for driving cultural change, improving our innovation capability, and doing some experimentation work. Then, we have a center for advanced analytics, a market research center, a customer information management center.
And our newest center is our customer advocacy office, which is responsible for understanding where our company is making decisions that affect our customer experience, and what lens are we using at those decision points to actually determine what customer value means?
That’s where innovation is starting to play an intricate role in trying to understand, what decisions are we making, and did we do enough from an innovation perspective to evaluate the options, to test and experiment, in order to be confident that the changes we’re making to the way our customers experience us are the right ones to be making.
A Distributed Team
Kirsner: Just one follow-up to that. These five centers of excellence you mentioned, are those physical centers that somebody could go visit in a different city? Or are they more distributed throughout Transamerica and the U.S. and maybe internationally?
Proietti: Let me say that Transamerica is very aptly named. As it implies, we are located everywhere. We are in nine major geographies across North America. As a result, we are a very virtual and remote company. The centers are not physical centers; they are functional centers.
The lack of a physical space and a physical presence within any one of these centers presents a whole host of challenges that we’re still learning how to deal with, but in some respects, it does give us an advantage, in that we’re located everywhere and we see a lot of the business and the business problems firsthand.
Kirsner: Do you get people together? Is there an annual or a quarterly get-together where those centers are in one place?
Proietti: In our “culture of innovation” work early on, we learned the value of face-to-face interactions — seeing body language, seeing how people show up and what baggage they’re bringing with them into the room, and having those offline conversations is extremely important.
We do get folks together from time to time. In fact, our innovation center got together just last week, after the Front End of Innovation conference in Boston, and met for a whole day, planning out its strategy.
Challenges of a ‘Skunkworks’ Program
Kirsner: If we rewind the clock a little bit, you mentioned your group did a lot of culture-of-innovation work.
I think you did something called a “Culture of Innovation Cafe” series. You also had two big skunkworks projects that you were working on. Can you talk about that phase? Maybe you would say, “Gee, if I could do it over again, I would have done something differently.”Or just tell us what you learned about that approach, of doing some of the soft, fuzzy, cultural stuff, and then also having these two big skunkworks projects that your team was developing maybe a little bit separate from the business units.
Proietti: The skunkworks programs and our cultural program started in 2012. They started with a very small set of individuals, in many cases, who had never met each other before. I was fortunate enough to lead one of our skunkworks programs, and then another gentleman was the leader of the other one.
Every one of the team members, or most of the team members right now, were also part of one of those early initiatives. What we learned was that when a sleepy, stuffy company tries to become innovative, it is met with a whole host of cultural challenges. The skunkworks programs were very important for learning process and getting exposure to process.
But it was very difficult to institutionalize the solutions that came out of those programs. Everyone can empathize with being extremely busy all the time. As you might imagine, if you were not part of one of those projects, and then suddenly at the end of a year, if someone presented to you, “This is the great idea that you should now build,” that wouldn’t settle well with you.
That’s actually what happened. We came out at the end of the year with all these great new concepts that could take the insurance industry by storm, and there was nowhere in the organization for them to fall, and there was nowhere for them to be built. We continued to explore exactly why.
Kicking Off a Cultural Conversation
Proietti: In 2013, we took on that Culture of Innovation Cafe series that you mentioned, by traveling to every one of our physical sites and hosting a dialog with our employees about what it would take for a culture of innovation to flourish at Transamerica.
I was a little naive at the time and thought that what our employees would tell us is that they wanted budget dollars, and they wanted fancy innovation laboratories and that we’d be building little rooms with beanbag chairs. But in fact, what happened was our employees threw up all over us.
They told us all the reasons why Transamerica, as a sleepy, stuffy life insurance company, will never be innovative.
Kirsner: They just restated the problem to you, or wanted to vent about how the culture isn’t innovative?
Proietti: That’s exactly right. They needed their time to get their heads around this transition. What I didn’t know, and to answer your question, what I would have done differently is studied change management a little more closely, to really understand what it was we were up against.
I was naive, going in thinking we would get solutions, we would implement fun, innovative things, and then move on to commercial innovation. Instead, we spent a year or two really grappling with human issues about how are humans treated in the workplace? What’s the value of their opinions and their ideas? How do you empower them?
Employee empowerment has been this great theme of ours over the last several years.
Kirsner: In terms of the projects that you were developing and then trying to hand them off the business units, that’s something that we hear a lot. Was it both that you hadn’t involved them enough, and that there were some conflicts with the way the business is operated today or conflicts with your distribution chain?
Proietti: Absolutely. It was a mix of reasons, but first and foremost, I believe there was a certain amount of resentment. Whether or not they would have used that word to describe why these ideas were not institutionalized…I doubt they would have used that word, but we had to use some language to describe it.
There was resentment that there was this super-secret special program going on that, when it came out, said that it could solve all the world’s problems. I think that folks felt that their expertise was diminished, in some respects.
The folks who have been leading business groups and marketing groups and sales channels for years suddenly were getting advice from people who had no business giving them advice on what ideas to implement.
The next real challenge was, because they were so immersed in their business and because their business challenges and their reward mechanisms were very short-term, building for the future was not something that they were geared up or staffed to do. It wasn’t something that Transamerica rewarded, at the time. We’re getting better about that.
Creating an ‘Innovation Ambassadors’ Program
Kirsner: What do you have that you feel is working really well, and is maybe transferable to other companies?
Proietti: First and foremost, we were very inclusive with our program — after that first year, of course.
In the second year, when we had those Culture of Innovation Cafes, at the end of four hours of our employees throwing up all over us and telling us all the problems with our company, we still had the audacity to ask them, “Who in this room will volunteer to help us become more innovative?” Without fail, every city we went to, 30 percent to 50 percent of the hands went up in the room.
Even though they had just spent four hours griping about our problems, when we asked for volunteers, we had them. We have launched a very successful innovation ambassador program that kicked off at the end of 2013 and is still going strong today. These are volunteers who are trying to understand what we are trying to become, as a company.
They are out there in the culture, listening, observing, bouncing ideas [around], and reporting back and sharing best practices with each other. That takes it out of the hands of my small innovation center, which is six folks. Six people cannot change the culture of 6,000, but 200 can.
Our innovation ambassadors have been probably the biggest cultural success that we’ve put in place. From a commercial success, we’ve continued to emphasize building capabilities that will support innovation. First and foremost, we launched our center for advanced analytics and marketing research center.
These were functions that existed in some capacity already, but [we formalized] them and made them available to help our businesses get access to insight. Their phones have not stopped ringing since we turned those channels on.
Proietti: We’ve tried to immerse ourselves with external influences, whether it’s attending conferences, meeting with companies about best practices, or signing on with consultants.
It’s been tremendously valuable to get these different perspectives about what Transamerica could become. I think the biggest successes have come from programs that consultants have helped us with. A consultancy by the name of Contineo has helped us with collaborative problem solving. One by the name of Maddock Douglas has helped us on culture work tremendously.
I’ll mention a third, Relativity Sciences, [which] has helped us to understand how to apply entrepreneurship in a corporate setting. We’ve learned a lot of lessons about what we could and should be doing differently as an organization, as a result.
Kirsner: I forgot to ask the basic first question, which came in from a listener, which is who do you report to in the organization?
Proietti: Currently, I report to a divisional CEO.
Kirsner: That’d be the Life and Protection division?
Proietti: The Life and Protection CEO, who reports to the CEO of our Americas business, who reports to the Aegon CEO of our global business.
Resisting the Push to Measure
Kirsner: Related to that, who sets the budget for innovation at Transamerica? Is there a committee that reviews your work?
Proietti: I’ve tried to resist measurement of innovation. The reason for that is because our declaration is to have a culture of innovation. When the culture is truly firing on all cylinders and innovating all over the place, it should be next to impossible to measure the value created from the “innovation movement.”
The ultimate scorecard is execution of our strategy. If we’re not executing on our strategy, I would fully expect the innovation budget to be cut off. It was set originally by the CEO, who’s a visionary — who saw that an innovative culture could actually take a lot of pressure off the leadership.
If we have ideas which are not only being generated at every rank of the business, but also executed at those ranks, that’s the end state. They know what the strategy is, and they’re aiming for that. As a result, our scorecard is execution of our strategy.
Kirsner: Is there any kind of committee that looks at innovation and green-lights things for funding, or can put more resources on things, or maybe kills other ideas?
Proietti: We need less committees. [Laughs.] I’ll start there. To some extent, there are, but it’s not an innovation committee, per se. We have to look very functionally to find those decision points. Actually, I talked about the evolution to customer advocacy. What our customer advocacy office is doing right now is an audit of those decision points.
Where are we making decisions about what we are going to invest in? That’s a harder exercise than we anticipated it would be, because that’s where the innovation decisions are being made. We don’t have a central committee that is green-lighting projects. There is an executive review board that would green-light the biggest of projects, and the most radical, revolutionary stuff.
But that’s a normal process in any business, to go to the C-suite with those types of proposals. I wouldn’t say that’s specific to innovation.
A Rising Tide of Digitization
Kirsner: Can you talk about channel conflict, in terms of going direct to customers online, or with a mobile app, versus working with agents?
Proietti: Yes. I hope there’s no agents on this call. [Laughs.]
Kirsner: I don’t think so.
Proietti: I say that jokingly, because the agents we want to work with are those who don’t view enhancing customer experience digitally as channel conflict. Certainly, there would be some who would view it that way, but what we’re trying to do is make sure that Transamerica has a relationship with customers, no matter how those customers are acquired. Traditionally, in the insurance and investment and retirement businesses, it has been nebulous who actually owns the customer relationship. What we’re doing is stating that Transamerica wants to have a very valuable role in the relationship with our customers. It has to be something more than what we’ve had in the past.
That’s the rising tide of consumerism and digitization of this business. Things have to change. The agent and producer models of the past will not float in the future. Millennials, even Gen-Xs, don’t want to sit kneecap-to-kneecap with a life insurance agent at their kitchen table, talking through life insurance options. That day is dying.
We’re being responsive to that, and hopefully, not in a way that’s threatening, because we still do need expertise. Consumers have told us repeatedly that they need validation. A life insurance agent can be that point of validation.
If consumers are researching direct, if they’re applying direct, but getting that validation with a life insurance agent — we’ve done most of the work that the agent used to do, and they’re still getting paid for it.
Shifting Consumer Attitudes
Kirsner: This is related to what you were talking about when you touched on millennials, and not necessarily wanting to have that in-person conversation over the kitchen table. As Chief Customer Advocate, now, how would you describe the big things customers want from an insurance company in 2015?
Proietti: [Laughs.] They don’t want any relationship with an insurance company. In fact, we’re seeing that consumers’ relationship with risk is changing. In the past, risk mitigation was important. Buying an insurance policy to mitigate against an occurrence of a bad event was something that was critical in people’s lives.
Those were the days that a breadwinner could actually go off to work and maybe not return at the end of the day, because the factory was so dangerous. That’s where insurance was born. Those were the growth days — when those fears existed and we had to mitigate against those fears.
Consumers today seem to have an “I will deal with it when it happens” type of attitude. It’s because they’re more connected than ever to Facebook. You can appeal to your friends and family for co-payment money on Facebook. You can go to crowdfunding sites like GoFundMe, if you get hit by a car and need help to pay your hospital bills.
They have options today, and they have so much more access to credit, that the risk mitigation techniques are changing.
Kirsner: Are there some products or services yet that you can point to that have come out of your innovation work, since 2012? Or has it been more about culture, more about process, more about the network of catalysts that you talked about?
Proietti: Since we’ve launched a cultural movement, most of the ideas have not been spawned through a centralized, skunkworks-type operation. They’ve been spawned and generated within our various business lines.
The biggest victory there is our reaction to the changing regulation of healthcare, and healthcare reform. The folks most impacted by that in our business rallied together to generate a whole host of innovative solutions to that regulatory and marketplace threat. That’s been a tremendous success for us, from a culture of innovation perspective.
The programs from 2012, we launched one of those ideas last year. It was called our Trailblazer program. It was a different way to treat our top producers. We wanted to treat them as a knowledge base, and actually help them learn about financial services and risk.
We did pilot a program at the top of the Transamerica pyramid [building] in San Francisco last year. That was a failure. We haven’t followed up on that program, but it was one of the ideas that came out of 2012. There’s at least one program scheduled to launch this year, which I can’t really talk about yet. The life cycle of change in the insurance industry is very slow. It did take three years, concept to commercialization.
Tracking Disruption and Opportunity Outside the Company
Kirsner: Let’s see if we can squeeze in one last question here. Do you track disruptive start-ups? Are there disruptive start-ups in your industry, similar to Airbnb in lodging or Simple in banking?
Proietti: Actually, I had a call just this morning with our compliance and regulatory folks in Europe and the U.S. What we were talking about is what consumer protection trends are emerging, and how are companies going to react to those. As an organization, we are starting to become a lot more responsive to those types of signals in the marketplace that something is changing.
It’s not just the innovation center that’s going to track that stuff. It was really cool to see that our regulatory folks are taking a keen interest in understanding how regulation or lack of regulation presents new entrant opportunities. That’s something that they’re going to focus a lot of time and energy on.
There aren’t too many who are really trying to disrupt the insurance industry just yet. That’s because there is a lot of regulation. The barrier to entry is still fairly high to look like a traditional insurer.
Certainly, we’re seeing adjacent things happening that we’re taking a lot of interest in, whether it’s in big data, and using data and social data or predictive analytics to underwrite products differently, or to present options to consumers differently. Utilizing artificial intelligence to replace traditional advice.
Those are the areas we’re looking at right now, trying to understand who’s doing what and what could potentially be a disruptor to our industry