Nationwide Is A Technology Company That Develops Insurance Products

Jim Fowler spent most of the past two decades working as a technology executive at General Electric. He would rise to become the global chief information officer of that company. When an executive recruiter contacted him about an opportunity at Nationwide, he was not interested. As a favor to the recruiter, however, he agreed to listen. He found that he was drawn to the company’s purpose of protecting and working for its members, the business leadership’s commitment to disruption, and the board’s support of that journey. 

He succeeded a highly regarded and long-term CIO of the company in Mike Keller. As such, Fowler’s initial strategy had a lot of continuity with the last strategy that Keller pursued. Fowler indicates that his focus is on

  1. Modernizing the technology team,
  2. Modernization of all the underlying platforms, and
  3. Leveraging those pillars to create a set of customer journeys

Fowler has been a CIO long enough that he has seen the role go from leading a back-office function to one that impacts customer experience, and ultimately the top and bottom lines of the company. He describes his vision for the future in this interview.

(To listen to an unabridged podcast version of this article, please click this linkThis is the 48th interview in the CIO’s First 100 Days seriesTo read future articles in either series, please follow me on Twitter @PeterAHigh.)

Peter High: Following 18 years with General Electric, you joined Nationwide in the third quarter of 2018 as CIO. What attracted you to this opportunity, and why did you feel it was the right time to move?

Nationwide CIO Jim Fowler

Credit: Nationwide

Jim Fowler: In March of 2018, a good friend of mine called me and said, “Jim, there is a job opening up in Ohio, and you should take a look at it.” While I was not interested in leaving GE, I had known this person for a long time, and he told me to talk to them anyways. When I asked which company had the job opening, he told me Nationwide. I would be lying if I told him that my first thoughts were one of excitement, but I trusted him. I came to Ohio, and I met with several different groups of people in the following order.

I met with three business unit presidents, and we discussed the fact that insurance is an industry that has yet to be disrupted, that Nationwide is on the journey to get there, and it would rather disrupt itself before a competitor disrupts it. We had a robust dialogue about how that was going to look and the role they wanted its technology partner to play;

I also met with the CEO, Stephen Rasmussen. While he echoed what the business unit presidents had to say, he also helped me understand that Nationwide is a mutual insurance company, which I previously did not know. Nationwide is working for its members because the members own the company. He elaborated on the purpose of the company, which is to protect what matters most to our members. The reality is that we can only do that if we meet our members where they want to be met, and we know that is going to become more of a technology-driven connection;

I had an hour and a half conversation with two of our board members. In this time, we had a fulsome discussion about how technology was going to shape both the financial services and insurance industries for the next 100 years. As the stewards of Nationwide’s 100-year-old iconic brand, they were focused on making sure that the leadership got there, and they were motivated to find a technology leader to help them do so.

Leaving GE was a hard decision because I had loved the company for the past 18 years. That said, there were three main reasons why I was attracted to this opportunity.

  1. Nationwide’s purpose of protecting and working for its members;
  2. The opportunity to work for a business leadership that is completely engaged in asking for help in the disruption journey;
  3. The level of support that the board has given the company to redefine itself.

High: InsurTech has not been as fast to move as the rest of FinTech. Can you give your perception as to why that may be? Further, what role do you believe digital will play in that disruption?

Fowler: For the most part, insurance is sold, not bought. Most people do not wake up in the morning thinking, “I am going to buy an auto policy today.” Instead, they buy an auto policy because they have to if they want to own a car and because it makes sense to protect the assets that they have. I believe this is why insurance has been one of the last areas to move. That said, we are seeing a new generation of buyers coming into the market who expect a different type of transaction. These individuals may want to purchase insurance that is usage-based, or they may only want to insure their assets when they need to. We believe the transaction is morphing into something where the product is going to be bought or sold with what is protecting it. That change in behavior is starting to drive the disruption. Startups in the insurance space are focused on that up-front selling capability to make it more of a user-friendly experience.

High: Your company has a great desire for technology to be part of the solution. Can you elaborate on some of your plans?

Fowler: Nationwide is transitioning into a technology company that sells products to protect our members. Whether we are protecting their retirement or their assets from an insurance perspective, we are a technology company more so than ever before. If you talk to our board members or leadership teams, you would hear them repeatedly preach those words. From my perspective, I have to be the Chief Technology Officer for the company. As I come into my new job, I see my role as [having several] different elements.

  1. The back-office operations of the company have to run digitally and in an automated fashion, which is something I am familiar with and understand how to do.
  2. My role as a catalyst for technology. I have to be that R&D arm who looks at applied technology and the design of technology to meet our members in different ways than we have in the past. This involves working with product managers in all of our lines of business to help educate them on how some of these future technologies can help change the features and functions of our products and how they are developed going forward.
  3. I believe the job is going to have a much more commercial angle to it than ever before. As a technology leader, part of my job is to help us sell into different distribution channels. This past year, we made the courageous move to change our underlying business model by deciding to exit the exclusive agent model. There will be no more Nationwide specific agents that exclusively sell Nationwide products, so we are heavily leaning on a channel of independent agents. Independent agents have a specific set of needs. They want to have frictionless and seamless transactions for their customers, and technology is going to be at the heart of that. I have to spend more time with the commercial side of the business and helping those channels understand the investments that we are going to make in them. We have to listen to them in order to understand their needs, and from there, lay out the technology roadmap that needs to be in place to support them.

High: Roughly a decade ago, there was a trend where IT departments were outsourcing a tremendous portion of IT. The rationale behind this was that IT was not strategic, therefore it was not “the business.” There are now a number of businesses that define themselves as a technology company that sell X, in your case insurance. The evolution from wondering if CIOs would exist in the near term to the role becoming more strategic than ever is extremely interesting. As a long-time CIO, could you reflect upon the changes that have led to this?

Fowler: I have lived exactly what you are talking about. When I joined GE, Gary Reiner, a long-term friend and visionary at that time was running the playbook of 70, 70, 70. This involved how CIOs were outsourcing much of the operational side. At the time, IT was back-office, and the role was centered on keeping the lights on and running the operation as cheaply as possible. We have gone from a project-based operational mentality to a product-focused one, and we have moved from the back office to the front office. Further, we are expected to not only manage the operational side of the job at a reasonable cost, as we need to additionally think about the investment in the future features and functionality that are going to drive product growth. Revenue targets that are tied to technology and features that ride on technologies that may not even exist today are now part of IT’s role. Some leaders in the function have been able to make that transition, and some have not. It is a drastically different role than it was when I first got into the business.

High: What changes are necessary in order to realize this? Naturally, much of what was outsourced needs to come back in. Moreover, there are process, technology, skill, and culture changes that need to evolve as well. How do you see IT teams becoming more nimble, product-centric, and more involved in revenue decisions?

Fowler: IT has moved from project to product. In old-school thinking, IT received a certain level of investment to use for the next year or for the next piece of custom-developed software. IT ran that to an end and then moved it to an operational group. While IT managed the ups, the downs, and the risks, the project was essentially over once they passed it on. However, in a product world, you have to think about that differently. You are still making an investment, but that investment is made in terms of a business return. The investment is designed to drive down operational expense and increase revenue growth. CIOs have to think about the financials on a per unit cost basis, so an additional dollar of cost has to return more than a dollar back on either the top-line revenue growth or the bottom-line income. You have to be more of a long-term builder of an application. In a project-based world, IT walked away at the end, but in a product-based one, there is no end. Instead, you have to care for and feed that product in the long run, and you have to think about when you are going to sunset the application, when you are going to upgrade the product, and how you tie that back to the business goals.

It is critical that IT has the skills to make this transition. In the old world of outsourcing, there were many mid-level program and project managers who managed contracts. In the new world of product management, you need more software engineers, developers, data technology specialists, and people who understand what it takes to work in the cloud and run the underlying infrastructure. You cannot completely rely on an outsourcer anymore. In the middle of the organization, you need to retrain and re-skill those project and program managers to manage products. These managers have to be able to manage technical resources again.

The one consistent element between the project and product world is that you still have to be deep in technology. You had to be deep in technology when you were managing it from an outsourcing perspective, and you have to be the same today. In today’s world, this involves seeing the trends and determining how you can translate them into capabilities for the products that you can be selling to your customers going forward. CIOs have to play the role of Chief Engineer or Head of R&D for a company. While I did not have to do so before, it is now an expectation.

High: How did you prepare yourself for the financial services role that you currently have? Further, how do you see IT teams developing the appropriate level of business acumen to realize the vision you just created?

Fowler: Coming into the job cold, I had to learn a great deal to be successful. This had many similar elements to a team that is transitioning from traditional IT roles into ones that are more product-focused. My first move was to talk to trusted partners who could educate me on the industry. While I had previously worked in financial services, I had never seen insurance before, and I had never seen the elements of financial services that exist in Nationwide’s financial services business. Thinking about retirement and annuities were both new to me. The partners were additionally able to give me an outside-in view of Nationwide’s role in the industry. They did not worry about telling me what they thought was the polite thing to say. Instead, they gave it to me as they viewed it. As I spoke to multiple partners, I heard many different viewpoints. What one company thought was a deep strength and competitive advantage for Nationwide, another viewed it as a disadvantage. I had to listen to both sides and make up my own mind as to where the truth lied between the two.

I also had to understand the culture of the company. Nationwide has a vastly different culture than GE’s, or any other company for that matter. Because of this, I had to study how work gets done here. Nationwide is a collegial organization, and it is one that is built on trust. When we provide a product or service, we use what matters most to the member as the first input into anything that we do. At a publicly traded company, the customer is always important, but you also have to worry about the shareholder. In a private company, you do not have to worry as much about that, and it is easier to make long-term investments.

One of the most interesting moves I made was becoming a Nationwide customer. Admittedly, I was not a Nationwide member when I joined, so whether it was property and casualty for my home and auto insurance, thinking about my retirement plans, or the different features and functions of our products, becoming a customer was a great way to get an outside-in view of the organization. This helped me understand the business we are in, how we make money, and how we think about making money. When your member is your customer, the bottom line either has to come back to the member in a reduced rate or go into making better products, features, and functionality. This is different than being at a publicly traded company where the bottom line goes to the shareholder, and you are trying to maximize their return.

I had to learn about the technologies that we have today, where we were headed from a technology roadmap, and how that aligns with the overall business strategy. In my second week, we went over our updated business strategy document with the board, which was a great experience so early into the job.

High: You followed a long-serving CIO in Mike Keller, who had one of the longer tenures as a CIO anywhere. Could you reflect on the process of engaging a new team and thinking about what is special about the organization while additionally looking to put your own fingerprints on the plans you have described?

Fowler: I was lucky to take over after Mike. Mike was a legendary CIO who had a view of what technology should be doing at Nationwide. When I came in, I was asked to continue the transformation on two key pillars of the technology strategy. Mike had a strong technology team, some great talent, and an incredible vision. I always tell people that I was hired to continue Mike’s transformation, rather than lead a turnaround, and I give Mike credit for that. I have three pillars of focus, two of which are a continuation of Mike’s strategy.

  1. Modernizing the technology team itself. We are 100 percent agile today because of Mike and his leadership team’s vision for how to quickly turn around the product, features, and functions for our business users. This had to happen before the second pillar;
  2. The modernization of all of the underlying platforms. Mike had the vision and the courage to take the risk to modernize every one of these platforms, such as our policy management, claims, life insurance transactional, retirement plan, and annuity systems. Every one of these underlying systems has been undergoing a rewrite or re-implementation to begin to provide a platform on which the company is going to grow going forward. First and foremost, my job is to complete what Mike started. The transition of the organization was well towards complete, we are about half way to modernizing the underlying platforms, and we know what it is going to take to get there;
  3. Leveraging these pillars to create a set of customer journeys, which is a pillar that I am bringing to the team. We need to think about the customer as someone who is going to have different needs at different points in life. Our job is going to be to meet them at those different points. The way in which we think about the application of artificial intelligence [AI], the Internet of Things [IoT], and the application programming interface [API] landscape is the build off Mike’s foundation that I am now focused on.

High: As you think about the future, what are some trends that are making their way onto your personal roadmap?

Fowler: I am thinking about the member journey. As an example, I will use my dad and my daughter. When my dad graduated from college, he moved back to his hometown, and he met someone who became his agent for life. This man was there when he needed his first auto policy, when he needed a home policy, when he was thinking about buying annuities for retirement, and when he was looking into estate planning around life insurance. This relationship represented my dad’s journey of protecting himself throughout his life.

My daughter is a freshman in college, and when she graduates, her first interaction with the world is going to be needing renters and car owner’s insurance. When that happens, her interaction is going to be substantially different than my fathers. She is not likely to move home, and if she does, it is doubtful that she will meet her agent for life. Instead, she will likely find her first apartment on some interface, such as Renters.com. She will be proposed with the idea of obtaining renters insurance, she will be shown how the policy looks, the cost of it, and an easy option to bind that policy. I believe she will start her own business one day, and when she does, she will update her LinkedIn profile. This will create a high-quality lead for an independent agent or consultant, and they will ask her if she has thought about retirement plans for her employees. She is going to get married and have kids, so she is going to buy diapers online. Something is going to recognize that she has kids, so it is going to suggest life insurance to her. It is going to take everything it knows about her and provide a policy quote right then and there that she can click on and bind to. Odds are, she will have five to six different jobs over the course of her life, which means that she will have five to six different defined contribution plans. She is going to want to consolidate and turn these into a defined benefit plan to make sure that she has all the money she needs for retirement. That journey management is going to happen with technology going forward.

An example of one of these technologies is the idea of a digital twin. We think about a digital twin for a physical asset, but I believe there will be a digital twin of a person where you can meet that person at different points in life. You are going to apply models through AI that are going to be able to connect metadata with that twin to trigger something to happen. Smart technology is going to change the way in which we think about financial services and insurance. We have launched a smart drive product, and we are launching a smart ride product that is usage-based insurance for the auto industry. This means that we are only going to charge you when you drive your car. If you have a car that is parked in the garage for half the year, you are not going to pay as much as the car you are driving around year-round.

The other technology that I am fascinated with is quantum computing, which is still in its early days. I am interested in this technology because I am taking a piece of knowledge out of my old job of predictive modeling. GE’s aviation business has done a fantastic job of using predictive modeling to design products and to predict where failure points are going to occur within their product set. A limiting factor of that scaling is that it takes a great deal of compute capacity to be able to run all of the models to simulate all of the different results that could occur. When you think about the design of a home or a car, there are millions of different designs. I hope that quantum computing can provide a platform on which we can build real-time modeling where we can create personalized insurance and protection against the failure models that we could see in the design of someone’s home or car. I believe that predictive modeling technology on top of quantum computing has an opportunity that we do not even understand yet. 

Peter High is President of Metis Strategy, a business and IT advisory firm. His latest book is Implementing World Class IT Strategy. He is also the author of World Class IT: Why Businesses Succeed When IT Triumphs. Peter moderates the Technovation podcast series. He speaks at conferences around the world. Follow him on Twitter @PeterAHigh.

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