John Welch, FCAS and CEO, Reinsurance–North America with XL/Catlin, hosted a webinar on “Innovation from the CEO’s Perspective” as part of the CAS Innovation Council’s Actuarial Innovator Profile Series in December 2015. Welch stressed the importance of nurturing a culture of innovation to achieve the benefits that flow from innovation and change. Cultural change has to be driven by the leaders at the top of the organization.

Welch drew from the article “The Eights Pillars of Innovation” by Susan Wojcicki, formerly with Google and currently CEO of YouTube. Welch provided several examples of his organization’s investment in innovation from four dimensions:

• Have a mission that matters.
• Think big but start small.
• Look for ideas everywhere.
• Never fail to fail.

Welch stressed that an organization’s brand and mission make a big difference where innovation is concerned. “When your people rally around your brand and buy into your mission, they’re much more likely to innovate.” At XL/Catlin, innovation is interwoven into the organization’s messaging to its stakeholders and its commitments.

Examples of thinking “When your people rally around your brand and buy into your mission, they’re much more likely to innovate.”big but starting small included XL/Catlin’s approach to introducing opportunities for innovation in limited regional and business line competitions. These opportunities ultimately evolved into a global, organization-wide Innovation Day. Welch emphasized that innovation efforts can fail when people equate being innovative with being revolutionary. “Innovation can be evolutionary rather than revolutionary.”

“When your people rally around your brand and buy into your mission, they’re much more likely to innovate.”

The CEO’s responsibility in driving innovation is to make it easy to collaborate by providing the right incentives and advertising the organization’s innovation efforts. Welch challenged actuaries to look for ideas everywhere by focusing outside of the insurance industry. He offered examples from telematics to driverless cars to drones, and he detailed how each of these phenomena will impact insurers in the future. Welch also demonstrated how his company serves as an innovation partner to customers and other organizations, by offering data, access to capital, and modeling skills.

Finally, Welch emphasized the importance of failing as part of achieving success in innovation. “Formula 409 was named for the fact that the first 408 designs failed to work!” Welch said of the famous cleaning product. “As much as failure has to be tolerated, we don’t bet the company on each new idea. One of the biggest shortcomings on the various innovation competition submissions has been the lack of credible analytics around cost and risk,” Welch said. “Actuaries can be vital teammates to provide a more well-rounded proposal to management. I encourage actuaries to spend more energy on how something may work than ways to shut down a new idea.”

As a parting message to actuaries, Welch challenged the audience members to take risks outside of their comfort zones and not to accept the status quo.