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The Changing State of Innovation

In some very specific ways, the Web has helped make innovation a less risky proposition for insurers.

In early May, I learned something in a New York Times article that completely blew me away: the first digital camera was actually invented way back in the 1970s. It was invented -- albeit in a clunky, rudimentary form -- by Steven J. Sasson, an Eastman Kodak electrical engineer.So what took so long for digital photography to truly take-off? Well, at least part of the blame has to be shouldered by the camera companies themselves, who for eons had depended heavily on the sales of film.

from the NYTimes:

"My prototype was big as a toaster, but the technical people loved it," Mr. Sasson said. "But it was filmless photography, so management's reaction was, 'that's cute - but don't tell anyone about it.' "

And just this week, another Times piece -- one that highlights the work of Jay Harman, an Australian naturalist - openly wondered: "What of someone invented a better mousetrap and the world yawned?"

from the NYTimes:

Mr. Harman is a practitioner of biomimicry, a growing movement of the industrial-design field. Eleven years ago, he established Pax Scientific to commercialize his ideas, thinking that it would take only a couple of years to convince companies that they could increase efficiency, lower noise or create entirely new categories of products by following his approach.

It has been a longer and more circuitous path than he first imagined. Despite glowing publicity and a remarkably photogenic technology, Pax Scientific has not been an overnight success.

"When I started I thought that this would take 6 to 12 months," Mr. Harman said. What he found instead were companies that had little interest in redesigning their products, even in the face of the promise of double-digit increases in efficiency.

Presently, Kodak has vastly improved its digital product development and, with energy conservation a hot topic, Harman's ideas are getting increased attention. Still, one has to wonder what it would have taken for a company to recognize the value and opportunity that these innovations represented earlier.

It's likely, I think, that the main thing holding companies back from large-scale innovation is fear of the unknown. And in many ways, that fear is warranted. It'd be irresponsible in many ways to abandon tried -and-true business models (like film) for an unproven technology (like, in 1970, a digital camera).

In certain pockets though -- including those that can directly relate to insurance -- the Web has taken a lot of the risk out of the innovation equation. Last year, for instance UnitrinDirect set up shop in Second Life, an online virtual world. Just this month, Aviva USA will begin using its presence in Second Life to recruit new agents to its producer community. It's possible, that one or both of these could falter. Second Life could drop in popularity or Second Life users may ultimately decide that they'd rather not want to interact with insurers in a virtual world.

However, with these innovative efforts, perhaps failure (for lack of a better term) is an option. In both cases, these investments represent less than one percent of the carriers' annual marketing budgets. That's a small price to pay considering that, if something like Second Life truly takes-off, the virtual world could become a viable new distribution channel or marketing channel for carriers.

Such a low cost no doubt has helped Aviva USA and UnitrinDirect marketing and technology teams justify these efforts to their business partners. In a way, it's allowed insurers to innovate on the fly. Another way to put it: its let some insurers build a new mousetrap, without having to tear down the old one just yet.In some very specific ways, the Web has helped make innovation a less risky proposition for insurers.

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