Digital Insurance Agenda

Innovation Gangnam Style. What Open Innovation Is Really About

Written by Roger Peverelli and Reggy de Feniks - Founders The DIA Community on Mar 18, 2021

When we discuss innovation in Asia, or the rise of ecosystem thinking, we immediately think of what takes place in China, Japan and Southeast Asia. When Roger visited Korea, just before we all had to stop traveling, he not only met a vibrant insurtech community but also experienced that ecosystem thinking is at the core of the large Korean corporations.


Now, a year later, he sat down with Richard Moon, the Head of Open Innovation Division at Hanwha Life, at DreamPlus in the famous Gangnam district, to discuss the importance of ecosystems and open innovation for the future of insurance.

Roger:
When we met last year, I wasn’t only astonished by ‘Innovation Gangnam Style’, but also by the size and the diversity of all the activities of Hanwha. Hanwha is not just insurance; their businesses also range from chemicals to aerospace. Hanwha’s construction division is building the largest dome in the world, and even an entire city. And Hanwha also owns theme parks. So, can you tell me a bit more about what ties the group together.

Richard:
“Hanwha Group is one of the well-known Korean conglomerates. Yes, our businesses span from manufacturing and energy to leisure and service, and the financial industry. We also have quite a range of leisure and service businesses, including golf club resorts, hotels and department stores.  Although they are different businesses, the opportunities for synergies are abundant. When we develop a solar farm, Hanwha Life is able to participate as a financial investor.  Also, when Hanwha Life would like to provide, for example, lifestyle services to our customers, we can work with our hotel or leisure services and create a more or less holistic lifestyle service.”

Roger:
When we met in Seoul, you told me that during your career, you worked across different divisions within Hanwha …

Richard:
“Yes. indeed. Whenever I introduce Hanwha Group, it reminds me of my whole career in Hanwha group. I started my career at Hanwha Corporation, which is manufacturing commercial explosives for construction. Then I worked for Hanwha Systems, which is information technology, integrated services. Since I joined Hanwha Life, I have worked in alternative investment and at overseas offices. I came back to Korea in 2011 and have been looking after open innovation since.”

Roger:
Looking at your career I can imagine that cross-border thinking, thinking beyond the boundaries of insurance, is part of your DNA and it so much fits with Open Innovation …

Richard:
“Probably, yes. I’m fortunate to be in a position which allows me to leverage a broad background, in manufacturing, IT services and the financial industry. If you have experience in different industries, it is much easier to communicate with companies who work in these verticals. Whenever we meet potential partners to develop collaboration ideas, we need unlimited imagination. My diverse experience made me possible to communicate with potential partners and relate their business to ours. Leveraging all my experience in several subsidiaries within Hanwha Group, as the Head of Hanwha’s Life Open Innovation Division, I want to develop new business by converging different technologies and ideas. My overarching vision is to innovate our insurance businesses to a lifestyle solution provider.”

Roger:
Really like that broader perspective! I think it really taps into the customer needs of the future. Now, what we see is, that many companies are exploring Open Innovation, but also that they find it very difficult to make it part of the way of working. So, what are, in your view the success factors of Open Innovation?

Richard:
“Firstly, you need a really strong internal commitment to innovation. If you don’t have that kind of commitment, it is impossible to move forward. The second success factor is that you need to build up trust over a long time. The Hanwha Group’s two core values are trust and loyalty. Whenever we make a business decision, we consider whether it would improve or harm the trust people have in us.
This level of trust is essential if you want to work with external partners. Here in Korea that s even more important. Other conglomerates, like Samsung and Hyundai Motors, not only have businesses like electronics and car manufacturing; Samsung is also active in life insurance and Hyundai is also in securities. So, a conglomerate is not only an attractive partner, but also a potential competitor to others. Having said that, we made it possible for all to work together under our DreamPlus initiative thanks to our group’s core values; trust and loyalty.”


Roger:
Yes. What I found astonishing is that, although everyone in Korea knows that DreamPlus is started by Hanwha, it really evokes ‘Open Innovation’ because also even competitors participate. How did you make that possible?

Richard:
“I think this is because we have been able to build trust and a neutral position, and by helping entrepreneurs grow their business neutrally. Maybe you remember that when you visited our DreamPlus Center, you didn’t see a Hanwha Group logo at the building. It is just an example of how we position ourselves as a neutral or Open Innovation hub, and not as a part of Hanwha Group.”

Roger:
Yeah, I still can remember that! I think that I even asked “Hey, there’s no Hanwha sign here.”
Can you tell a bit more about DreamPlus?

Richard:
“Sure. When we started DreamPlus in 2014. It was our program to help young entrepreneurs grow their business. At that time, the most important reason why they wanted to work with us was the valuable experience they gained by just working with us. They could basically gain some track record working with well-know large companies before they went to market. After we ran a couple of fintech dedicated programs, we launched the DreamPlus Gangnam Center in 2018. DreamPlus is based in the heart of Seoul. The renowned Gangnam city quarter is also known as the ‘Silicon Valley of Korea’. There were already so many startups in Gangnam that we thought: ‘it would be really great if we could create a real Open Innovation center, where all possible players would work together’. And not just Hanwha Life and startups, but also other important stakeholders such as other conglomerates, investors, government as well. Bringing them all together under one roof would be much better. Thanks to our long-term efforts to build up trust and neutrality – I think – it was possible to successfully launch DreamPlus Gangnam. When we opened the center, it was already a kind of Open Innovation hub for everybody, all together in the same center. Right from the start.”


Roger:
Yes. I noticed that the DreamPlus partners also include one of the largest companies in Korea, Hyundai, another diversified conglomerate, big pharma company Bayer and even the renowned social video network TikTok. But that wide variety, that openness, also reflects in the diverse range of startups that are based in DreamPlus Gangnam. I saw quite a few who do not seem to be related to insurance at all.

Richard:
“Yes. One company is even making mattresses. Right now, we don’t have a proper collaboration project with the mattress maker. But in the long run you never know. Suppose we would build up a health care ecosystem for our insurance customers, we would perhaps collaborate with the mattress maker as well. So, we are not working with most of them today, but we believe that these kinds of relationships will help Hanwha Life build up a long-term ecosystem. In the long run, we will be able to create some opportunities to work together. We really want to develop a long term relationship with all the players. Now, three years after the launch, DreamPlus Gangnam Center is home to over 100 companies; including startups, investors and larger conglomerates. In total there are almost two thousand people working in the DreamPlus Gangnam offices.

Apart from DreamPlus Gangnam, we also have DreamPlus Fintech Center which is set up differently, with different programs. When we spot an interesting fintech startup, and if they agree to a proof of concept project, we invite them to the DreamPlus Fintech Center, and allow them to stay 6 months or 12 months, for the duration of the collaboration project. Up to date, we have had about 30 companies collaborating with Hanwha Life in this way.”

Roger:
Wow! Over 100 companies based at DreamPlus Gangnam. And no less than 30 other working with Hanwha Life out of DreamPlus Fintech Center. So, what explains the success of DreamPlus?

Richard:
“At the end of the day, we want to build up a long-term ecosystem. We’re not aiming for short-term success, such as sales increase or customer acquisition for Hanwha Life. Last year, our target was to increase and enhance our partnerships, not to make revenue or make profit. We didn’t pursue our own profit. The success was in building up an Open Innovation ecosystem. We believe it is essential to create a win-win model and a mutually beneficial relationship. Most insurance and financial companies who run this kind of open innovation centers focus solely on solving their problem. This makes it really difficult to build up a long-term relationship.

Having said that, of course, in the long term, we have to contribute to our company’s bottom line, financial performance, as well. So, this year we are changing our performance index to how many customers we make through a partnership. Or how much new revenue we create with the innovative services or products.

So, step by step, we will change our performance index. But it will not compel us to pursue our own profit. We will continue to pursue mutually beneficial relationships.”


Roger:
This will perhaps also introduce new challenges. To create effective collaboration between the parent company and a startup, it’s often difficult to make that really work. How do you cope with that?

Richard:
“Internal commitment to innovation is the most important thing. Our DreamPlus team, has internal partners and external partners they work with. If these partners don’t have a commitment or don’t have the intention to work together, we cannot make it happen. So, first we need to find internal colleagues who are eager to work with external partners, like startups or even other conglomerates. Then we design collaboration programs, which can be beneficial to each other. It’s still challenging and demanding, but you can do this also step by step. That’s another reason why I always say: It’s really a long-term vision, and not just a short-term goal.”

Roger:
Apart from Gangnam, DreamPlus also has activities in San Francisco and Fukuoka in Japan …

Richard:
“While working with domestic startups, we definitely saw potential for them to grow overseas as well. We also noticed lots of other global financial companies working together with technology companies, for example as banks working with Apple, and a Chinese insurance company working with Tencent. So, we thought overseas offices could help Korean startups explore a global market. At the same time, these offices can help us sense the global trend.  Also, our overseas offices are reaching out to global partners who are willing to help to innovate the services of Hanwha Life, or companies who are willing to expand their business to Korea or Asia.

So, different from the Gangnam center, our offices in Fukuoka in Japan, San Francisco in the US and Beijing in China are really small, with just 3 or 4 colleagues who are helping Korean startups to go abroad or helping global players to come to Asia. Our plan is to open DreamPlus centers in Vietnam and Indonesia. And possibly in Singapore and Israel. In Vietnam and Indonesia we have substantial life insurance businesses, and they also need innovative partners to grow their business in each country. The reason why we are considering Singapore and Israel is the same reason why we are operating in San Francisco. First, they want to help Korean players to go abroad. And second, they want to invite global players to Asia.”


Roger:
You mentioned that in the DreamPlus context you are even working together with your biggest competitors. Would you consider working together with other insurance companies as well, for instance carriers from Europe or the US

Richard:
“Definitely. I think we are well positioned to collaborate with other insurance companies from different countries. Hanwha was able to launch DreamPlus and to develop it to the current level, because we are a life insurance company. We, life insurers, invest in long term assets such as real estate, private equity and venture capital. Leveraging these assets makes it easy for a life insurance company to build up an innovation ecosystem. Hanwha Life transformed one of its real estate properties into a physical open innovation hub, DreamPlus Gangnam. By connecting innovation startups with our investment partners, VC and PE managers, we could help startups raise funds and grow rapidly. I believe other life insurers can do this as we did.

I propose openly that life insures should expand open innovation ecosystem by connecting each other’s. If we would find, let’s say, a German insurance company who already created a similar open innovation ecosystem, we could easily connect with each other. Wouldn’t it be great if we would each build up an innovation ecosystem, and then connect these with each other and build up a global open innovation system established by insurers?”

https://www.hanwha.com/en.html/

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