We are in an era where "Innovation", "Disruption" and "Partnerships" are par for the course in any conversation held in the market, it is important to remember the lack of infrastructure available to incumbents for them to really reap the benefits of more innovative partnerships.
In a world where success is determined on financial performance in the next 3 years, the capability of C-Suite executives to invest in a partnership which may not bring financial returns for over 5 years is extremely limited.
In order to truly embed innovative and disruptive partnerships, it is going to be extremely important that expectations are managed and businesses are not just judged on their pure financial performance, but they will need to recognize that data is currency and that IP is value.
Traditional deal making and partnership capabilities are simply not fit for purpose in today’s environment. Targets cannot be assessed purely on their financial value, but rather on the long-term value or transformative value that they might deliver to the organization. Due diligence and deal assessment skills are certainly useful, but insurance M&A teams will need a far broader set of capabilities if they hope to drive real and sustainable value from partnerships, particularly with tech firms and startups. Insurers will also need to rethink their approach to business case development in order to find the right partnerships for development. They will need to resist the temptation to apply their traditional models – largely developed to support the assessment of distribution agreements – to today’s non-traditional partnerships. They will need to recognize that data is currency and that IP is value.