Anthony: I'm Anthony O'Donnell editor of insurance innovation reporter, and this is life accelerated a podcast for life insurers who want to achieve digital transformation. Kim, tell us a little bit about your responsibilities as CIO of the U S business at principal
Kim: Absolutely. I'm the CIO for our us insurance solutions at Principal financial group, which includes our life group benefits, individual disability non-qualified and distribution areas. So obviously principal has a number of business units. I'm focused on the insurance side of the house.
Anthony: So you became CIO at a very interesting time, January, 2020, which was right before the pandemic hit. So I was wondering how you live that because you probably got ramped up. You had an agenda with some very specific goals, and then suddenly this a world changing event happened.
Kim: You are very right. Everything had to shift to a remote environment in a very short amount of time. What we found though, was that the investments we had been making in technology and our digital solutions. Allowed us to meet those new demands quickly. So for example, in March 20, 20, shortly after COVID-19 limited in person or interactions and created. Challenges for our underwriting team, we were in a unique position to challenge the underwriting timeline and enhance the overall user experience by using the accelerated underwriting process we were already known for, and then enhancing it with the use of digital health data. To eliminate the need for an APS when it was necessary, which you know, that was something that was extremely difficult to obtain in the midst of the pandemic.
Kim: So I felt like our early experimentation with electronic medical records set us up for the COVID environment and. Honestly created that model for other carriers who are maybe not as far enough along in their experimentation, but could follow. So overall, the pandemic really caused our investments and their adoption to be accelerated. the use of digital solutions went from being an option. For people to choose to almost being a requirement And a necessity that they needed to leverage.
Anthony: And what about the internal environment? it occurred to me when this all happened, that we developed the infrastructure. We needed to work remotely in the wake of nine 11. And, and, and a lot of people didn't use it. And there was a lot of controversy. When remote works and when remote work functions and when it doesn't, I happen to have been working remotely since 2002.
So I've been an advocate of this for a long time, but how did that aspect of it, work for you? I mean, obviously all these companies have the basic infrastructure to do that. They had a few challenges to operationalize it at scale, right. For all your employees. But then what I'm most curious about after that is how it all worked in terms of the productivity of your teammates.
Kim: Right. so first of all, we did feel very prepared. We had numerous people that already worked from home or took advantage of working from home, um, just to fit into their schedule at times. Right. And so that move wasn't I think as big of a shift as everybody thought it could be, there were some things that we needed to make sure the infrastructure was ready for the volume. But overall that was work that could happen fairly quickly and actually did happen quickly. The part that you're getting at when it comes to, and then what else did we discover about that environment? One, I think we realized we could focus more and move more quickly than we probably even realized that we could pre pandemic. So. it gave a hyper-focus to the things that were absolutely critical at that time to be able to move on the other part that I was maybe a little bit more surprised by was how well our agile teams were able to work. Remotely and still work together. They found creative ways to, build that comradery that came naturally inside the office. They found ways to do it digitally and they did that quickly.
Anthony: Yeah. my impressions from the people that I've spoken to is that there was this moment of thinking, how are we going to do this? How are we going to pull this off? There's really no substitute for in-person communication. And then they got organized. They started working, they took care of the technical things, and then they started thinking about the communication.
And then there. Reaction was, oh my goodness. This actually works very well.
Kim: That is absolutely correct.
Anthony: Well, let's talk about digital transformation. What does digital transformation mean at principal? How has principal thinking about the need for digital transformation and what are some of its goals at a high level?
digital transformation has become. All encompassing term to represent all things, technology and the potential that the technology has to transform processes, business models, and culture. For me though, it's important to keep the customer at the center of all transformation discussions. So if we ask.
Kim: Does the work we are doing create a better customer experience at principle, we want to be client first technology focused financial services company that is making financial security more accessible for all to accomplish that goal. We must not only listen closely to the insights and feedback from our customers.
We have to be able to incorporate those insights and feedback. Into our digital solutions in a timely fashion, by listening to our customers, we can identify where that friction is in the experience and look for ways to reduce that friction to accomplish that though, you have to have a modernized cloud first approach that allows you to be agile embracing.
Disruption that comes your way and be able to deliver on those personalized experiences that our customers are going to demand.
Anthony: so this would bear on how this is discussed with the business. Obviously that's a goal. The. Centric approach or the customer first approach is a goal that has to be strategic vision for, from the top and across business and technology. how do you think about alignment with the business? as CIO of the, of the U S business?
Kim: I T is not separate from the business. That principle it can't be in order to move. At speed in order to truly drive to the right business outcomes, the lines that formerly existed, maybe in the past between it and business have blurred, if not completely disappeared. It is part of the strategy discussions, because it is part of the business strategy.
Technology is required for almost anything a business wants to accomplish today. If an organization still treats it like it's an expense or an area to submit a ticket, They are missing out on the real opportunity to transform the business. Our agile teams are made up of product managers, product owners, delivery managers, and engineers. Everyone on that team is accountable for understanding the business outcomes that they're driving to. And everyone is also accountable for understanding the technology that can help drive them. I think back to when I first came to this area and I was sitting in a meeting with the teams and I couldn't tell who was your traditional it person and who was maybe the product manager, because they could both speak to both sides of the topic similar.
Anthony: so let's go back to the, senior leadership. Maybe you could talk a little bit about how the relationship you're describing translates into discussions about major projects in the allocation of budget.
Kim: Right. So technology is a top business priority. Enterprise it spend increased by 35%. Over the past three years, we have set goals at the executive level to say 70% of our applications modernized and 80% of workloads in the cloud. By 2026, you can't do that. If you don't have a willingness to invest in those types of initiatives. So the approach we've taken is to have an enterprise integrated planning committee, and that group provides the leadership and more of that holistic enterprise approach for advancing those strategic initiatives that delivered the greatest outcomes for the organization. It drives a transparency. About where we are investing in initiatives to execute on our strategy. That group works with a very outcome driven mindset, with the intent being to get a better understanding of the value that should come from each of those investments. It also creates a better. Ability to plan for initiatives that are either going to require enterprise funding. So to get a more long-term view into that or that we're going to need cross business unit resourcing for that group helps ensure the execution on the most critical enterprise and business unit priorities.
Anthony: well, let's talk about what your priorities are now as CIO of the U S business. Uh, maybe tell us at a high level what some of your major priorities are.
So number one, helping customers feel financially secure is our purpose. So how do I make sure that everything we're doing is going to help align to that? We began our modernization journey over five years ago. We started that journey by focusing on the applications and the systems that were most critical to the customer experience.
Kim: We use that as a guidepost for where to begin, because you know, you can't start with everything that might need to be addressed. you've got to make some tough choices. For our group benefits area. It was our focus on east service, which provides the employers with efficient benefit management in life.
It was a focus on accelerated underwriting and principle life online, which offers easy customer completion of the life insurance application. So we have continued on that path to modernization, but we've aligned that modernization with what are the highest priority key outcomes for our business and our customers in the past.
I think it has had a bad habit of talking about certain types of technology initiatives, only in technology terms, for example, We have been known to talk about tech debt that really misses the mark. Sometimes tech debt is actually business step. I feel like we have moved beyond that. We talk about the value that comes from a focus on modernizing a capability and divesting from the legacy solutions.
The business value is that increased velocity. For our software delivery teams, greater speed to market, better customer experience a reduction in risk. our business understands the benefits of our top priorities. Modernizing our application portfolio, shutting down legacy applications, API, enabling our capabilities and positioning and leveraging our data.
To deliver on that better customer experience and also create efficiencies in our operations.
Anthony: Well, yeah. You know, you mentioned cloud as well. I wonder if you could give us a little bit of an update as to where you stand on those major areas.
Kim: Absolutely. So for us, we have been on the cloud journey now for a few years, right. The thing that we didn't do was talk about it only as a cloud journey, we talked about the reasons that cloud would be advantageous for the business and why it would enable us to move more quickly in the future, as we were trying to deliver on those capabilities. When you think about what it takes to embark on that, though, you also have to think about how are you going to make sure that your teams are ready to embark on that journey also. So sometimes you hear cloud and people talk about how do I just start using it and you need to be prepared. To have your staff ready to also be able to leverage it in the way that it was intended. You'll you might get some benefit out of some lift and shift, but the real benefits of cloud are about How you can actually leverage everything that it enables at principle. Overall, we have a partnership with AWS and have been looking at how do we make sure we can accelerate our staff's understanding of all of the potential benefits and how they can utilize everything that's available in the class.
Anthony: So I think what's implied here also is that as you move into the cloud, I am following up with something you said here it's a, it reflects a changing it organization. So when we had this whole package software revolution, that meant that that the internal it organization was longer. Producing that, that software, right?
So the question that people were asking at the time was, are we an insurance company or a software company? And now the question that's being asked is, are we a technology infrastructure company? We're an insurance company. Right. But I think what's often missed. Is that what we're seeing as we sort of horizontalized the supply chain here is it has profound implications for the composition of your staff as a CIO.
Kim: it absolutely does. It absolutely. Does. You have to think about. Are you taking everybody with you along that journey? how are you positioning your staff to be best, the most successful that they can be? Is it making sure you have the right composition for a team that focuses more on integrations?
What about a team that has more green? What about a team that's still supporting your legacy application. That's critical also, how are you positioning all of that talent to be most successful and developing them for what their future might look like to.
Anthony: So Kim, you had mentioned e-service and I know that among your recent digital accomplishments is also the benefit design tool. how do these initiatives reflect principles it and business priorities, and how do they position the company to be more competitive?
Principle is dedicated to creating. Solutions for employers to simplify the benefits experience and help with the administration of coverage, specifically focused on how to eliminate pain points for small and mid-sized businesses who don't always have a staff dedicated to managing their benefits. The benefit designed tool leverages principal's day. To allow small business owners to benchmark their benefits, providing a comparison point for group dental, short-term disability, long-term disability and life insurance. Something that honestly, hasn't not been available for the small business employer. We created the tool because it helps small businesses benchmark their group benefit features to better understand what employers like them are actually offering. The results are built as an aggregate of more than 140,000 principals, small to mid-sized customers. And the benefits there they've currently purchased and implemented. And principal understands that small case employee benefits market. And we were uniquely positioned to be a trusted resource for small business and advisors for this type of information. So that was really how the benefit design tool came to be. and really the focus of the.
We've seen a tremendous trend in the increase of, uh, of small businesses. That is to say there are many more small businesses. They're more all the time. And I guess as these small businesses proliferate, if they don't have adequate means of doing what they need to do in that regard, then you could potentially see a benefits gap.
Kim: Absolutely. And this helps them just know where might they start? What are others like them doing and where might they get.
Anthony: And tell us a little bit about the service initiative.
Kim: Principal east service, which is recognized for its web experience provides employers with efficient benefit management employers can track benefit enrollment progress and update employees benefits within minutes. The process is highly automated and most changes made online are completed in real time. So employers can add or terminate members, update salaries, change employees, information ordered dental and vision ID cards, track online transactions and more. both east service and benefit design tool solutions. they both align with that overall goal. We talked about to simplify the benefits experience. Take out that friction. I referenced earlier.
Anthony: they also make you a more formidable competitor.
Kim: Absolutely. part of the reason that you want to do that for your customers, it's great for them. It's also good for the carrier, right? that allows internal efficiencies also, when you can streamline those. Systems and those processes, I think sometimes I'll hear people say, well, that's really an internal focus when you're streamlining the processes. And it's like, well, but it improves the customer experience. If we can do that faster. So those two things are tied very closely together.
Anthony: Now I have another question that I think is related to your experience during the pandemic. And also, I think it's one of the most exciting trends that we've seen in the last decade or so. And that's that we've seen insurers develop greater project discipline through the application of methodologies like agile.
How important is that discipline for taking risk out of it? Initiatives and speeding results.
Kim: is so important that we have a framework that allows us to go from a desired business outcome. Into discovery on how we might achieve that outcome to delivering value towards it. And then finally assessing if the delivery made the movement that we anticipated it to. So basically testing our hypothesis and it has to be iterative.
So our agile teams are key. To our ability to deliver on the desired outcomes. The great thing about agile is that it allows you to accelerate the delivery because you're thinking about things like what's the MVP that I can deliver and start testing. Whether or not, this is doing what I thought it would do and then continue to iterate on, but it also helps us manage the risk appropriately.
So if I'm doing things in smaller chunks, more iteratively, I'm also taking the risk in smaller chunks versus in the old days, when we did The you know, to your projects,
Anthony: the big bang projects,
Kim: where we tried to define everything upfront, which we never got completely. Right? And by the time we delivered things had changed. And so we were wrong, whether we aligned to the initial requirements or not, and When you look back, you think about the risk that was associated with that approach. I'm much more comfortable. Now when a team is working on a sprint and they say, well, we want to test this because our hypothesis is, this is going to work better. And if it doesn't, it was two weeks and they pivot to the next best thing that they want to test. it's a completely different mind shift from a leadership standpoint. Some of the discipline comes in ensuring that we're investing in the teams to position them for success. We have invested in coaching training guidance to make sure that the guard rails are better understood in tools that they need. We also have. Had to switch how we think about where that empowerment happens. We had to empower the product managers, product owners and the teams to deliver on the best path forward. So what is the outcome that we're trying to drive to not go make this change to this specific solution? Let them understand what are we trying to get at and then give them the freedom.
To test a hypothesis on what they think will get them there and pivot when needed along the way and last, but I don't think least we have to continue to drive beyond just the team's agility. We have to drive for that organizational agility. It's important that our overall systems of how we manage work still also allow for the agility and ability to pivot. It doesn't stop with the team.
Anthony: Well, why we're speaking of the teams and the workforce in general, how are you navigating the challenges of attracting and retaining it talent? So when.
Kim: I think about it, what really sets principal apart is the collaborative community we've created, which enables us to attract and retain the best tech talent our strength, our business stability, the diversity of global technology opportunities. It really allows our tech talent to thrive. If someone starts in my division on one of my teams, it doesn't mean that they're going to stay and insurance their whole career. They may go over to our retirement business.
They may take an international opportunity. So they can get that varied experience and still stay within one company. We have a really strong intern recruiting program and the breadth of growth opportunities within the company just generates kind of those higher retention rates. And we have significant tenure among our employees. I think it's also important to day to remember. Everything that employees are looking for. So we have proactive programs and employee resource groups that are focused on supporting diversity, equity and inclusion across the organization. So. When someone starts here, they have the opportunity to not just engage with their team, but also to engage with these different groups, to gain a better understanding of the variety of people that work at principal and to be able to learn from those different groups that exist. You have to be willing to invest in the talent. So we work to provide our employees with paths, for development opportunities to learn. New technologies, leadership topics, business topics. We encourage all to participate in code jam opportunities or immersions or different learning events.
We just, oh a month or so ago, wrapped up a month long session of different technology conference events, constantly focusing on. Nothing stands still anymore. So if you aren't helping your talent continue to learn, and if they are investing in themselves in that way, standing still actually means you're going backwards. Things are just changing too fast. And when you're hiring at record levels in this ultra competitive talent market, especially for those critical roles, you have to be sure that you are creating a culture that makes employees feel valued, that they understand their purpose and that they feel like they can continue to grow.
Anthony: So on the topic of not standing still, how are your relationships with your suppliers, your vendors changing? Obviously we have an emerging cloud environment where you can connect and disconnect from suppliers. And, in many respects, the it organization is more about managing partners than it was before. So how are you not standing still in that?
Kim: Right. You hit on a few things there. So we partner with vendors to provide digital solutions for our customers. Right. But principle can't be everything, in every solution. So how are we leveraging those vendors? The difference now is that it's no longer about tracking with what used to be a handful of large vendors.
The startup world has changed where and how we look for potential solutions. What might be that next disruptor or what might we be able to leverage? So we have to now monitor the InsureTech space and consider how they might play into our overall delivery. So if you think about the difference between the very big vendors and the very small.
You have to really take that into consideration with how you interact with them. A startup can't wait for six months for you to make a decision about whether or not you might want to leverage them. Right. They might only have funding for three. So how do you think about that relationship? A little bit differently. I think that the other shift is. We've moved beyond just how we would traditionally think about suppliers and vendors. Now we have partners with digital platforms that are part of the overall value chain for the customer. We have to figure out how we interact with them. Digitally wherever possible to ensure that that end to end customer experience is also smooth, not just the experience that they might have within our walls, but when they go beyond those walls, are we helping facilitate a better experience by being able to interact with those partners?
Digital the complexity of this space has increased, but things like our supplier and vendor management programs and our use of our innovation group to assist with that monitoring of the startup community truly helps manage through. I think some of that additional complexity. I look at our partnership with AWS and how we've leveraged their understanding of what they've seen in the marketplace of how to bring an employee base up to speed and how we might best do that?
And then partnering with us to build what makes sense for principal to be able to do that internally. Those are different relationships probably than we used to have.
