Aviva CEO Mark Wilson's legacy of cultural change
Hundreds of candid interviews and conversations - mostly in private - with top global leaders have revealed how many are ‘scared’ and ‘overwhelmed’ by the new disruptions. A number of smart leaders are taking big risks and finding new ways to handle them. Our book Thinking The Unthinkable demonstrates the enormous potential for individuals and organisations to find solutions by modifying culture, mindset and behaviour.
Here we share the experience of insurance giant Aviva. The sudden departure of Mark Wilson as CEO, announced on 9 October after alienating the board and preference shareholders, shows the difficulty of transforming a traditional insurer.
Being a disrupter isn’t easy and can be a risky strategy.
If we don’t change we are going to die.
That was the stark message from Aviva CEO Mark Wilson as he set out to disrupt the insurance giant from within in 2013.
Companies in the huge global insurance business face a massive pressure to reinvent themselves. They must ensure relevance and a new level of digital efficiency.
Their priority is to think both unthinkables and unpalatables for their business to thrive and survive.
Insurance is one of the last industries to be truly disrupted, according to Mark Wilson. From the moment he took over, the new CEO made it clear that complacency had no place. Market success could not be assumed. Aviva had to evolve into a different business. Fast.
Capital had to be boosted, costs had to be cut and share price falls had to be reversed.
So how did he tackle it?
“I remember us all being struck first by disruption being used as a sort of very positive attribute internally,” explained Sam White, Group Sustainability and Public Policy Director.
“It wasn’t just a passing fad. It became very entrenched, a very sort of dominant part of the culture.”
He describes a willingness to try something for a year and if it didn’t work to rip it up and try something ‘equally large or more ambitious’.
But there is often a price to pay for shaking things up so radically.
“Obviously some people react better to disruption than others,” Sam White told us.
“I think we’ve seen quite a lot of turnover at senior levels of people sometimes because they weren’t willing to embrace it or deliver.”
He said the CEO was clear from the outset that there would be a lot of change. It would become the new culture.
And his message to those who were uncomfortable with it? It’s not the organisation for you.
So what were the big change projects that transformed Aviva?
Dramatic innovation would be vital. So would diversification into fintech using inspiration from its newly created Digital Garage.
This is a standalone start-up staffed by newly recruited data engineers at a new off-site location in East London.
Aviva had been struggling to hire digital innovators. After all, what kind of data geek would want to join a ‘boring’ insurance company? Not at Digital Garage. They convinced people with very different experiences in the gaming world to join them.
Up to £100m a year was budgeted to be spent on digital transformation. A venture capital fund had another £100m to invest by 2020.
But most importantly, new ideas would be tried out and implemented. No one would pay a price for proposing ideas that failed.
A sense of premium was placed on innovation and the view that a good idea could come from anywhere.
Ask It Never
To save costs Aviva withdrew from some foreign markets. It rationalised more costs and doubled down on its liabilities by mergers with Friends Life in the UK, plus deals in Ireland and Canada.
Then, to capture more market and impress customers it invested heavily in a system designed eventually to end most of the human contacts with Aviva customers.
Ask It Never short-circuits all the time-consuming hassle of filling in forms – and probably talking to an agent by phone, who then asks questions you don’t know the answer to!
The catchline is ‘Get a quote, not a quiz’.
Aviva wanted to offer a pre-underwritten and pre-approved quote by using the vast amount of information on public databases out there more intelligently. As a result, quotes were as much as 20% cheaper.
Another first for the company was experimenting with Amazon’s voice-activated Echo. Aviva was the first UK insurer to launch an Alexa ‘skill’. It lets people ask questions to demystify insurance jargon.
This was an example of the cultural change at Aviva – trying to innovate at pace.
From the Echo device launching in the UK to getting something to market was less than 12 weeks.
The new culture was ‘test and learn’.
“No one bounces through a huge transformation process where your roles are at risk and your colleagues’ roles are at risk,” Sam White told us.
“With the best will the world, it takes a while to get through every part of the business, every level of the business. So there’s a period which is difficult. If it’s not difficult for you, it’s difficult for someone sitting within earshot of you.
“Humans are going to respond emotionally to that. I know I do.”
More than any business, insurance companies like Aviva must calibrate risks from unthinkables.
In the extreme, failure could threaten its survival, a reality CEO Mark Wilson both thrives on and has to live with. For the two years after his arrival in 2013, this new aggressive enlightenment on innovation strengthened Aviva’s market position.
In the past three years, the company has underperformed in the market.
Just one or two major unthinkables in the future could soon deplete its value even further if Aviva and its CEO make the wrong risk calculations.
Mark Wilson paid the price for “badly handling” the plan to buy back Preference Shares, as the Board described it when it announced the reversal in March.
The company announced his departure saying its aims under Mr Wilson’s leadership had been achieved and it was ‘time for new leadership to take the group to the next phase of its development’.
Mark Wilson’s legacy is a significantly different culture at Aviva. His departure shows how difficult radical change is to bring about successfully.