Published: 13 Jan 2014
Soon after joining MetLife Inc. nearly two years ago, Gary Hoberman observed IT employees describing themselves...
as order takers, a role that doesn't exactly scream innovation. Hoberman, CIO of regional application development at the New York City-based insurance company, made a mental note: Get rid of that mindset as quickly as possible.
What MetLife needed from IT was not just the ability to deliver on orders but also new technology, experimentation, flexibility, risk-taking -- in other words, to demonstrate some brass. His goal was to instill a startup culture smack dab in the middle of a 145-year-old enterprise.
"Innovation is really important to us at MetLife, and we’ve found that approaching creativity with a startup mentality produces results," Hoberman said.
Introducing the values of startups to the enterprise, however, is far easier said than done, and not just at a venerable insurance company. For starters, it requires a fair amount of entrepreneurial spirit from CIOs, themselves. In many cases, they will need to do the following:
- Get a new funding structure in place.
- Measure the success of a project that doesn't easily tie into a return on investment.
- Attract the right talent.
- Help employees become entrepreneurs inside the enterprise, or intrapreneurs.
Not just an IT strategy
At MetLife, pushing the IT envelope was a company initiative set by executives at the very top of the organization. CEO Steve Kandarian, named to the position in 2011 after serving as the company's chief investment officer, established a $300 million fund earmarked specifically for new technology investment. The fund was critical to the success of MetLife's startup culture, Hoberman said.
When Hoberman and his team began brainstorming ideas on how to address the perennial business problem of integrating data to get a 360-degree view of the customer, for example, the fund gave them the freedom to think out of the box. He and his team landed on an idea now known as The Wall, a new platform for the call center with a user interface that looks, acts and feels like Facebook on the front end and a MongoDB NoSQL database capable of integrating data from 70 different sources on the backend. The new platform was up in running in 90 days, an aggressive commitment Hoberman and his team made to the business and kept. "You have to deliver," he said during a presentation at last fall's Gartner Symposium.
Hoberman and his team didn't stop at the call center or at U.S. borders. By mid-January, he anticipates MetLife will have five walls up and running, including two for countries outside of the United States.
Overcoming the innovation catch-22
The Wall is an example of overcoming what Leigh McMullen, an analyst with the Stamford, Conn.-based consultancy Gartner Inc., calls the catch-22 of innovation. "You can't innovate with the front office unless you're close to the front office, and the front office will not allow you to get close to it unless you've done something for them that's innovative already," McMullen said during a presentation on running IT like a startup at the Gartner Symposium.
Hoberman took a novel approach to engage the front office. He hired an external consultant to develop a prototype, which cost between $20,000 and $30,000 and was built in two weeks. The prototype enabled Hoberman to give demos and gauge the business' interest. When MetLife's Kandarian saw the demo, he said, "We've been waiting 10 years for this," Hoberman recounted. With its innovation credentials in place, his "intrapreneurs" could move ahead on their innovation project.
Not all CIOs who aim to build a startup culture will have the support -- politically or financially -- that Hoberman did, which will make overcoming the catch-22 more difficult. In those cases, McMullen suggests CIOs take a step back with their teams and map out the business, making note of political players, influencers and what's important to them.
"Your starting capital -- and that's not just a metaphor -- is understanding the people, the organization and the business moments or the moments of truth that are going to power or make a difference inside your organization," McMullen said.
Some CIOs might not have the luxury of researching business needs or cherry picking an innovation project. When Jonathan Reichental became the CIO for the City of Palo Alto, Calif., he was ordered to complete a Web redesign project gone stagnant within his first six months on the job. The IT staff had already put in more than three years of work as they attempted to perfect every aspect of the website before going live. But Reichental didn't have time for perfection, so he implemented lean startup, a process popularized by author Eric Ries that involves designing and releasing prototypes quickly and making incremental changes based on customer feedback.
"You can't sit on your idea or money for too long because, first, it runs out and people lose patience and [second,] there's a lot of competition," Reichental said. "So you have to act fast and move quickly through the process of developing your prototype and your product."
Keeping the original website live, Reichental launched a beta version and asked for community feedback for the next iteration. Two or three months later, Reichental and his team, who initially doubted the approach, were able to unveil the newly designed City of Palo Alto website, community feedback incorporated.
"We had to have at least one success before my team members believed in [the lean startup]. Reichental said. "There was certainly skepticism and a lot of fear when we went live with the beta website."
Gartner's McMullen believes lean startup is a strategy worth considering when developing an intrapreneurial culture. He also suggested CIOs take a page from marketers by making use of techniques such as A/B testing, a method enabled by cloud computing that compares the behavior of a randomly selected group of users given access to new features against those who weren't. The point is to shake up the IT order-taker mentality.
"Traditional IT approaches are broken," he said, of the value of these methods. "We don't need to ask people what they want; we need to be in front of the curve, studying the market, [and] looking at it from the outside in."
Forget about ROI
But for an established business to act like a startup and be willing to build products before its customers even know they want them means taking chances and experimenting. The willingness to test hypotheses without any guarantee of success makes it difficult to measure success by traditional standards.
Initially, Gary Hoberman and his team wanted The Wall to be a customer-facing application, not an internal one. "The impediment is data quality," Hoberman said. Bringing together data acquired through mergers and acquisitions and legacy systems from across the enterprise canturn up a lot of dirt.
Rather than shelf the project, Hoberman and his team saw an opportunity for kaizen or continuous improvement. In addition to the Call Center Wall, they built the Research Wall. It includes a column that rates data quality on a scale of one to three. When users see an error within a customer record, they can click a button and file a help desk ticket. "We're basically crowdsourcing data quality," Hoberman said.
MetLife's Wall, for example, helped establish a new relationship between the business and IT, but how does the company measure the project's ROI? "We'll get that ROI in better customer feedback and when [net promoter scores] go up," Hoberman said, referring to a customer loyalty metric.
The company is also grappling with how to measure ROI on a product that could open up a new business. MetLife Infinity is a private social media platform built in-house and hosted by Microsoft Azure. There, MetLife and non-MetLife customers alike can share photos, videos and messages now or can schedule messages to be released in the future. The new platform leads the insurance company in a new direction and changes how MetLife interacts with customers, as Paul Taylor, an editor for The Financial Times, has noted. But there is no easy yardstick for measuring its value.
"The theory we have: Who are our competitors? It's unknown at this point," Hoberman, who came up with the concept of Infinity, said at Symposium. "But we do know if we build relationships now with customers, they're three times more likely to purchase a product from MetLife in the future."
McMullen agreed that traditional ROI metrics are not up to the task when it comes to potentially disruptive technology. "We need new means to measure success," he said, "because the old types of measurement around ROI and the way we calculate our benefits haven't worked for years." Even the lean startup approach suggests businesses consider measuring how solutions evolve and what is learned rather than leaning on the traditional time, cost and quality measurements.
Paging Sherlock Holmes
Innovation projects will fail, that's inevitable. Palo Alto's Reichental, in fact, warns that the lean startup is not a blueprint for everything and encourages CIOs to pick and choose their projects carefully. But a failing innovation project doesn't always equate to a lack of success. The question for CIOs who have been able to jumpstart a startup culture is how to keep it going, said Gartner's McMullen.
Borrowing from a composite of CIOs he's worked with, McMullen suggested encouraging developers to think and act like detectives. An innovation that fails becomes evidence that helps get to the right solution and "solve the case." More important, according to McMullen, is it encourages creating testable hypotheses before doing anything else.
When creating a testable hypothesis, "try to take as much eyewitness testimony off the table and [instead] observe what people do," McMullen said. "Then figure out a way to make their lives better."