Photo: Blackman/Donal Iain Smith
There are many forms of innovation, but the most powerful is when it solves the problem users care about. In the words of Dr. Prabhjot Singh, director of Systems Design at the Earth Institute, “We spend a lot of time designing the bridge, but not enough time thinking about the people who are crossing it.”1
This is as true for actuarial work as it is for other corporate functions. Of the eight key market trends listed in a 2017 Deloitte report as essential for the future of the actuarial operating model, three were based on changing customer expectations: customer demographic shifts, growing demand for new products, and expectations for a digitized and personalized customer experience.2 However, instead of designing our products and services around end-users—whether customers or internal stakeholders—we often prioritize the processes inherent in our current ways of working. For example, how often will we design a product based on regulatory constraints rather than focusing on what the customer wants to understand? When making mortality assumptions, are they based on limited data, or are we validating the trends with interviews to predict how probabilities might change in the future?3
Instead, drawing upon the wisdom of Dr. Singh, we should think about “the people who are crossing the bridge.” In an actuarial context, if millennials are renting rather than buying homes—and consequently do not need large mortgages—what other services might they need instead? Alternatively, who are the internal customers for a quarterly report, and how might it be structured to provide the information they need to know quickly? When we have a chance to take a step back, this feels intuitive; but during the midst of our busy day-to-day work, the user’s concerns often become an afterthought. But we want to bring these concerns to the forefront—after all, they are the basis of successful innovation. This article will introduce a simple method to help actuaries keep users front-of-mind.
Types of Innovation
Going back to innovation, on one side we have broad disruptive change.4 This is often primarily attributed to unicorn startups that challenge existing businesses with a new product or service that really “clicks” with the end-user. Here, there are often distinct winners and losers. For example, Netflix’s introduction of home video streaming services allowed consumers to access movies from the comfort of their homes. This convenience “clicked” with users (much as it did with the authors!), so they shifted to the platform, destroying Blockbuster’s business.5
On the other hand, we have iterative innovation, which comprises the many small changes that optimize efficiency and pull the company in line with issues that matter.6 A lot of these may appear small and inconsequential initially, but over time they build to become significant differentiators or even a “Kodak Moment.” Kodak once dominated the camera industry, but then failed to appreciate the appeal of digital photography and how it enabled individuals to confirm they had taken a good photo before the moment was lost. Kodak believed in its own success rather than its customers’ needs, and by the time the company accepted that digital cameras were here to stay, it was too late.7 The moment had passed.
It is always nerve-racking to innovate, but especially when a recession looms. Uncertainty often drives us to retreat to our core competencies and the status quo. However, this is exactly when we should be focused on innovating, in both an iterative and disruptive fashion. And to innovate, we need to truly understand people. This is the approach that has come to be known as “human-centered design” or “design thinking.” Design thinking focuses decision-making around the issues that really matter for the end-user, be that a consumer or a corporate customer. It is only by truly understanding and empathizing with their experience that we can design products and services that will continue to be “sticky” and will accurately serve their needs.
Design thinking might seem like it has no clear answer, but it forces us to keep an open mind and not come to a problem with our own ideas about the solution. If we can make it through the ambiguity, a more compelling product awaits. To help with this journey, practitioners have developed a series of tools that, when combined, create a methodology. At its core, the method balances divergent and convergent thinking, and there are two helpful tools to use along the way: open-ended interviews and journey mapping.
Divergent and Convergent Thinking
Design thinking uses divergent and convergent thinking to uncover user needs. Traditionally, it was believed that based on a person’s personality or strengths, they were either “right-brained” or “left-brained.”8 Those who were labeled as right-brained were considered more creative, big-picture thinkers. In contrast, the left-brained were thought to be more analytical and detail-oriented. Many studies9 have disproved this theory, and the current opinion is that humans have an integrated brain that uses both sides to approach a problem. From this perspective, both sides of the brain have qualities that, when taken together in an integrated form, allow for a more well-rounded outcome. Design thinking appreciates the strength of this integrated approach—hence, the very popular “double diamond” framework (as shown in Figure 1).10 The shape represents the shifting pattern of thought from divergent to convergent thinking as we move through four stages: discover, define, develop and deliver.
Figure 1: A Visual Representation of Convergent and Divergent Thinking
Source: Sketch adapted from the Design Council.
Divergent thinking, which visually represents opening up, involves being collaborative, expansive in thought, iterative, and generative of new ideas or insights.11 This kind of thinking typically is used at the start of a design thinking study, during the discover phase, when we seek to understand the context, listen to user or customer stories and observe behaviors to gather all forms of information. Here, our mindset is open, always seeking out more information. We ask questions and use the “yes, and …” approach, borrowed from theatrical improvisation, to generate new perspectives. Rather than criticizing ideas, someone’s insight is followed by a “yes, and …” to build toward a solution together. Divergent thinking is used again at the develop phase to brainstorm ideas and test prototypes; hence the formation of the second diamond.
Convergent thinking is the second mindset and equally important to the design thinking process. It takes the shape of narrowing in and, when conducted after divergent thinking, the two form a complete thought process that can be represented visually as a diamond. Convergent thinking involves combining evidence, being precise, spotting potential pitfalls and thoroughly synthesizing all information gathered during the divergent thinking stage.12 It provides an opportunity to make sense of the data, and from there make decisions.
In the design thinking process, convergent thinking typically is used in the define phase to clarify a problem and narrow in on a specific focus informed by the previous discover phase. Convergent thinking also is used in the deliver phase to consolidate feedback on prototypes and focus on a final recommendation.
We are often more comfortable using convergent thinking to solve problems; however, it is important not to forget or underestimate the first step of using divergent thinking to accumulate information, ask questions and be curious. Design thinking ensures that both mindsets are involved in the problem-solving process, which gives it its unique human-centered lens.
Common Design Thinking Tools
As mentioned previously, design thinking includes a number of tools that satisfy both the divergent and convergent mindsets. We can use these tools to dig deeper and uncover underlying user needs to build solutions that satisfy those needs.13 The result is an end product or service that has been developed by taking a user-centric approach so that we can be confident in its desirability, feasibility and viability.
Open-ended interviews are a qualitative research tool used in all design thinking projects during the discover phase. Unlike traditional surveys, whose questions prompt binary answers and confirm the interviewer’s biases, open-ended interviews allow for extensive insight gathering, as questions are framed in a way that encourages elaboration and storytelling. The easiest way to do this is to follow up on an interviewee’s response by saying, “tell me more,” or asking, “why is that?” to dig deeper into their emotions. It is these deeper insights that help to inform the design of the final product.
This open approach is carried forward beyond the initial research phase and is even used when gathering feedback on prototypes or ideas to make more informed changes. Performing open-ended interviews requires empathy and focus; the more the interviewee feels heard, the more they will share—and the richer your data will become. The interview might not follow the path you expected, but you might land on something truly surprising.
Customer or user journey maps are another popular tool in design thinking projects. They help us move from the divergent to convergent mindset and are best used after conducting open-ended interviews. Journey maps dissect a situation into smaller steps and map out the user’s journey based on the emotions that come up during their experience. Mapping out the highs and lows of the user journey helps to pinpoint opportunities for innovation.14 Journey maps can be created as an aggregation of different peoples’ responses in the form of a persona, or they may simply reflect the account of a single individual. In either case, working step-by-step is useful when narrowing in on a particular aspect of the experience that, if improved, would benefit the user.
Open-ended interviews and journey maps are two popular research tools in a design thinking project. However, several others can be used to supplement and generate new insights. A great resource to discover these tools is IDEO’s human-centered design toolkit, which can be downloaded for free.
In our day-to-day working lives, we may not feel like innovation is our responsibility. But when we take a step back and look at the number of times our products and services interact with a user, we realize the number of opportunities we have to make them truly human-centered.
Deloitte noted that the future of actuarial science lies in transitioning to: “deliver more strategic, value-added services. Get to know stakeholders and their needs. Learn from leading practices both inside and outside the insurance industry.”15
Design thinking is a simple tool to help achieve this. Using this method to create iterative innovation creates a path toward broader disruptive change. In a world where predictions are increasingly difficult to make, focusing on the people at the center of the products and services will open new opportunities and reinforce the value actuarial talent offers over automated processes. We hope this article has given you a few tools to help you engage with both divergent and convergent thinking to design solutions with your users front-of-mind—so we each can become responsible for innovation.
- 1. Singh, Pradhjot. Design #032 “We Spend a Lot Time Designing the Bridge, but Not Enough Time Thinking About the People Who Are Crossing It.” Medium, March 9, 2018 (accessed July 24, 2020). ↩
- 2. Clark, Matthew, Jason Morton, Bruce Fell, Darryl Wagner, and Tony Johnson. Modernizing the Actuarial Operating Model: Preparing Insurance Companies for the Future of Work. Deloitte, 2017 (accessed July 24, 2020). ↩
- 3. Carmichael, Jack. Morality Improvement Assumptions: A Hot Topic. The Actuary, June 4, 2020 (accessed July 24, 2020). ↩
- 4. O’Reilly, Charles A. III, and Michael L. Tushman. The Ambidextrous Organization. Harvard Business Review, April 2004 (accessed July 24, 2020). ↩
- 5. O’Neill, Megan. How Netflix Bankrupted and Destroyed Blockbuster. Business Insider, March 1, 2011 (accessed July 24, 2020). ↩
- 6. Supra note 4. ↩
- 7. Crook, Jordan. What Happened to Kodak’s Moment? Tech Crunch, January 21, 2012 (accessed July 24, 2020). ↩
- 8. Cherry, Kendra. Left Brain vs. Right Brain Dominance. Verywellmind, April 10, 2020 (accessed June 10, 2020). ↩
- 9. Nielsen, Jared A., Brandon A. Zielinski, Michael A. Ferguson, Janet E. Lainhart, and Jeffrey S. Anderson. 2013. An Evaluation of the Left-Brain vs. Right-Brain Hypothesis with Resting State Functional Connectivity Magnetic Resonance Imaging. PloS ONE 8, no. 8:e71275. ↩
- 10. Design Council. What Is the Framework for Innovation? Design Council’s Evolved Double Diamond. Design Council, March 17, 2015 (accessed July 24, 2020). ↩
- 11. Brown, Tim. 2009. Change by Design: How Design Thinking Transforms Organizations and Inspires Innovation. New York: Harper Business. ↩
- 12. Ibid. ↩
- 13. Patnaik, Dev, and Robert Becker. 1999. Needfinding: The Why and How of Uncovering People’s Needs. Design Management Journal (Former Series) 10, no. 2:3743. ↩
- 14. Babich, Nick. A Beginner’s Guide to User Journey Mapping. UX Planet, February 21, 2019 (accessed July 24, 2020). ↩
- 15. Supra note 2. ↩
Copyright © 2020 by the Society of Actuaries, Schaumburg, Illinois.