ERGO: Making the power of innovation come alive through effective cooperation between insurtech and insurer
Effective cooperation between incumbents and start-ups is an important factor in successfully leveraging emerging technologies and accelerating digital transformation in the industry. One of the forerunners in this field is Mark Klein, Chief Digital Officer at ERGO Group and Chair of the Board of Management of ERGO Digital Ventures. We sat down with Mark to talk about ERGO’s ecosystem, which is built with start-ups and aimed at jointly exploiting the potential of emerging technologies in the metaverse and beyond.
Mark, DIA Amsterdam 2022 was the second time we had you on stage. The first time was back in 2017. What has changed since then?
Yes, after I joined ERGO in 2016, I was on stage for the first time at DIA Amsterdam as well, on a panel about how to effectively collaborate between corporates and start-ups. It was all about the power of innovation – and it still is: how do we leverage that power of innovation and make it come alive in the hands of our customers? The challenge is that, on the one hand, we have a tremendous number of startups with great ideas, and a young team, hungry to deliver. On the other hand, we have the corporations that have the customers, the processes, and the data that is available. Wouldn’t it be great if we could bring these two worlds together?
What is ERGO’s view on innovation?
Currently, times are changing. When traveling here, at the airport, the train stations, everything is crowded. We have the pandemic, the war in Ukraine, inflation, the stock market is down. We are living in a time of transformation. And on top of that, technology is evolving at a tremendous speed. New technologies make it to market much faster than in the past. Change is always a risk, but it can also be an opportunity. I strongly believe that we have to capture this change as an opportunity. We should leverage technologies to solve the problems we have today. And when you reflect, why do we see challenges in transportation, trains, airports, taxis? It’s because we have less and less people doing work. One of the key solutions at the end of the day is technology to enable us to generate further.
ERGO is a pretty young insurance company. We were founded in 1853, so we’re 169 years old. And as a corporation, we have learned over time that we have to create stability. But sometimes we tend to forget that we also have to challenge ourselves, every day. If we miss a trend in technology, that will basically hurt us.
What do you see as the key elements of your innovation approach?
In order to participate in these fast-changing times we believe that three elements are needed and these are a strong focus for us:
1. Mindset of our colleagues
Are you open to change? Do you embrace technology or are you afraid of technology? When you are a startup company, you are open to change, you know technology, and you know how to drive that. But our insurance colleagues sometimes need to be opened up to the latest and greatest technology, to collaborate and drive change throughout our company. We do that with a lot of communication and we demystify technologies. We also do this by tapping into an ecosystem of partners and bringing them together, to work closely with one another.
2. Creating an ecosystem
A very important pillar is also that we’ve created an ecosystem of partners, start-up companies, scale-up companies, developing companies that help us bring in technological know-how and the innovation spark. We bring them together, let them work in teams, very closely together.
We are permanently screening the market for potential collaborations. We are picky but committed, we’re putting resources behind it and we make these collaborations come alive. Scouting is a really important part of our work within the innovation sphere. We are working together with leading voices, in order to get insights into their pipeline and understand the technology trend before it arises. Because I strongly believe we have to be ahead of others and not behind. It’s not the fast follower but it is the one who is leading, who will get the most benefit out of it.
What does the current innovation ecosystem look like at ERGO?
We currently have over 60 collaborations actively running within our company. We have five scouts searching for potential start-ups. We are active in Berlin, Munich, Dusseldorf, Tel Aviv, and San Francisco. And we are currently evaluating whether we should be looking into China a bit more. Although, with the pandemic this is difficult. We always have jointly developed with close collaborations with startups. But there’s one thing that always has to be taken into perspective. It has to be good for the customer. It has to be good for the startup. But it also has to be good for the corporation, and that’s very important. Otherwise, it doesn’t work.
What are the ground rules when starting a collaboration?
I strongly believe that we need to have a close, respectful and honest collaboration. What can be delivered and what can’t be delivered? We had startup companies that promised 110% and potentially that’s okay in these initial talks. But it’s a big disappointment when you come to a corporation where you have to deliver and you have only 80 or 70 percent. The following points are key, to leveling up the cooperation and collaboration between startups, scale-ups, tech companies and insurance corporations like us:
1. Act at eye level
We have to act at eye level with startups when we bring our NDAs and our contracts which are usually over 100 pages. This will not work, because these start-ups don’t have a legal department of the size ours. We straight up bring to the table what is and isn’t possible. We streamline and make these processes slim and easy, so that we are easy to deal with. And 60 collaborations over the past couple of years have given us a lot of learnings.
2. Bring brand know-how, processes and data
When you’re a start-up, you don’t have the customers, you don’t have the data. And believe me, the key challenge in developing an AI algorithm is not the mathematics behind it. It’s the data that can train your systems. It’s the processes, it’s the customer, it’s the information. Finally, the brand is also very important: a strong brand in the area of insurance can help to give it a push. And this is what we bring to the table.
3. Quality instead of quantity
We strongly believe in quality instead of quantity. For sure 60 is not a small number, but we handpick and select our partners. We have quite a rigid process: we only select if technology and the demand of our colleagues comes together, and the quality is there. And then we rather do one collaboration instead of ten, to figure out who’s the best. So we are really in the quality instead of quantity approach.
4. Aim for long-term cooperation and sustainable impact
And last but not least, we believe in a long-term cooperation and sustainable impact. We collaborate to learn, but most importantly, we want to see the impact on our customers. What is in it for the customer and what is in it for us, for the startup company and the corporation? This has to be clear from the beginning. In my experience when this is not clear, it will fail because it has no impact and it will not be lasting.
Do you have any last tips?
Only by working together, we can fully exploit the opportunities for innovation. Many might fail because data, customers and processes are not there on the tech side. On the other hand, we cannot explore all the technologies available. Because you know that when you found 1000 startup companies, you only hear from one unicorn. By collaborating we can reduce failure. We can learn fast, have a substantial impact and make innovation happen. ERGO is very open to doing so.