The Company You Keep®

Product Development TacticsProduct Development Tactics

Stephanie Johns-ChinNew Product Development and MarketingGroup Membership Association DivisionNew York Life Insurance Company

Product DevelopmentProduct Development

Tactics

The Constant Flow of Ideas

Effective Use of People

Management of Process

The Constant Flow of IdeasThe Constant Flow of Ideas

Connections

The Pipeline

Communication

ConnectionsConnections

Connections are made from ideas…..

like ripples in a pond

ConnectionsConnections

Popularity of underwear in the 12th century

Invention of the printing press in

14th century

Lead To

How Did?

James Burke, Connections, Simon and Schuster, 1995

ConnectionsConnections

The Constant Flow of IdeasThe Constant Flow of Ideas

The Pipeline

The PipelineThe PipelineSystems/Technology

•Data modeling

•STP/e-signature

•Communication – Cell/Blackberry/Laptop/Wireless Web

•Information/Advice/Price

•Buy – Retail

•Internet Communities

Economy

• Global

• Credit crunch and the Mortgage Industry

• Retirement incomes are largely dependent on stock market

Financial Services Industry

•Branch Banking/Credit Card Companies

•Cross-Sell

•Premium billing vehicles

•Competing products

•Convergence - Banks buying insurance Co’s

Regulatory

• Healthcare

• Gramm-Leach-Bliley (GLB) Act – privacy

• HIPAA

• Pension Protection Act

• Do-Not-Mail/Call/email

• Actuarial Guideline CCC

The PipelineThe PipelineDemographics

•Multi-

• Generational

• Cultural

• Multi-lingual

•Population Distribution –From 1990-2000

Growth of 32.7 million people

Biggest increases in South and West

54% of population live in 10 most populated states

Marketing Channels

The PipelineThe Pipeline

Your Products

•Take a regular look

•Go back to basics

•What about repositioning?

Competitors

•Products

•Channels

•Market Share

•News

•Client Service

•Best Practices

•Ratings

Insurance Industry•Other Sectors (i.e., Life/Health P&C)•Other Lines (i.e., Group Individual)•Research organizations

LIMRA EBRI NAIC iii

•Industry Publications National UnderwriterBank Insurance & Securities MarketingEmployee Benefit Advisor

•Think TanksCorporate Executive Board – IAB

•Trade AssociationAmerican Council of Life InsurersAmerican Insurance Association

The Constant Flow of IdeasThe Constant Flow of Ideas

Communication

• Run a “News Service”

• Keep an Open Door …and Ear

• Share Ideas in Incubation Stage

Effective Use of PeopleEffective Use of People

Leadership

Core Team

Technical Experts

Managing the Team

Environment

LeadershipLeadership

Area with Primary Accountability for Product Development

* LIMRA 2007 Individual Life Insurance Product Development Process Research

LeadershipLeadership

Dedicated Resource Charged with product, market, channel development and competitive analysis

Marketing background – diverse market experience

Alien in their midst

Share information, experiences, insights, ideas and instigate discussion

Manages the process

Core TeamCore Team

Marketing

Keep the team on the smaller side - larger groups generate fewer ideas

Diverse teams way out perform homogeneous teams over the long term

Diversity allows the team to step into the intersection of disciplines, cultures, and domains in which one can specialize through education, work, hobbies or other life experiences.

Technical ExpertsTechnical Experts

Marketing

Other Business Units

Our Business Unit

Managing The TeamManaging The Team

17

Claims

Medical Underwriting

Service and Administration

Actuarial

Financial Underwriting

Herding Cats

Managing the TeamManaging the Team

How Key Individuals Are Held Accountable for Product Development Results

LIMRA 2007 Individual Life Insurance Product Development Process Research

EnvironmentEnvironment

Survey Says…. Four out of five companies have

dedicated product development teams*

For half of these, team members work exclusively on product development*

*LIMRA 2007 Life Insurance Product Development Research

Full Time Focus• Faster timeline• Focused• Stale

Part Time Focus• Exposure to day-to-day• Flexibility in Team composition• Extends timeline

EnvironmentEnvironment

Land of NO!Land of NO!

Stay away from

Avoid passing judgment on each other’s ideas

Be constructive and look for ways to overcome obstacles

EnvironmentEnvironment

Respect Diversity

Ongoing Feedback

Honest Open Communication

Empowerment

Access to key executives

Time for people to participate

Dedicated Resources - Must have a point person

Allocation of Funds

ProcessProcess

Traditional Approach

Recent Trends

I Would Add….

Bumps in the road

Keys to Success

The Tried and True Method Developed by technical areas (underwriting, actuarial, claims)

No market research conducted

Typically - One size fits all

Long cycle time to develop

Build it and they will come mentality

Marketing Department not involved until product is completed

Sold by an Agent (Insurance is not bought, it’s sold)

Traditional ApproachTraditional Approach

Recent TrendsRecent Trends

Companies now have:

Formalized development process

Enhanced testing process

More tightly controlled sign-off

procedures

Improved communication

Outsourced IT function

Quality assurance testing done by

business analysts

Moved tasks from “Day 1” to “Day 2”

87% of companies

implemented new approaches for the design of

new products

LIMRA 2007 Life Insurance Product Development Research

I Would Add…..I Would Add…..

It’s not just Fire and Forget!

Establish

Timeline/Schedule which must be reasonable and defined with some built in flexibility

Build in periodic reviews/vetting process of ideas

Accountability for delivery of assignments

Ensure Measurement

Response Rate

Client Adoption

Profitability

Be Prepared to Re-evaluate and Respond

Marketing is a great place for the process to reside

Bumps in the RoadBumps in the Road

Most Common Reasons for Schedule Changes

Product Design/Pricing 91%

IT 69%

Organizational priorities 66%

Corporate requirements 22%

Legal issues 19%

Admin req. 16%

LIMRA 2007 Life Insurance Product Development Research

Keys to SuccessKeys to Success

Strongest correlation of success is the number of ideas you explore and build upon

Companies that cut R&D costs can actually accelerate innovation, boost growth and increase profit*.

Apple is considered an innovative company Spends only 3% of its yearly revenue on R&D.

Foster an open environment allows for true brainstorming Produce as many ideas as possibleProduce ideas as wild as possibleBuild upon each other’s ideas

Make it fun

*Michael Davies, MIT Sloan School of Management

Final Thought…..Final Thought…..

Don’t get caught up in your underwear!