How to Become a Disruptor That Shifts Markets What can we do now that we couldn't do before, thanks to changes in technology? That's the approach that great organisations are taking to transform the consumer experience. And it's not just the ruthless young upstarts that are doing so - we spoke to three companies founded by industry stalwarts to get their take on how to seize market leadership in a time of significant disruption.

If you want to truly disrupt a market, you need to begin by fostering a disruptive mindset. Here are three key ways to begin:

• Start from scratch. Don't be constrained by working within the realm of what's already available.
• Choose an industry and determine the biggest pain points customers experience. Now solve them in a new way that steps outside of traditionally accepted processes.
• Use technology. Technology is one of the biggest enablers of a disruptive mindset. What is possible today that wasn't five to ten years ago thanks to technology?

Disruptive innovation is the catchphrase that defines the last 20 years. New technologies, business models and media have disrupted the way we do just about everything. Conventional wisdom has it that the new kids on the block are the ones who are going to own the market at the expense of industry stalwarts, but these three amazing South African disruptors are showing them how it's done.

IT'S THE EXPERIENCE ECONOMY, STUPID

Regardless of how the world changes, organisations that consider their customers' emotions and experience first, win. That's exactly what Tautona, BrightRock and ZAR X did. They put themselves in the customers' shoes and asked one key question: "What's wrong?' Few industries are as ripe for disruption as insurance.

When John Holdsworth co-founded cognitive automation business Tautona AI in 2016, he knew that there had to be a better way for insurers to handle client claims. Tautona AI emerged out of a consulting engagement John had with a large insurance company.

With a background in IT, he is a highly experienced technology executive and entrepreneur who has started a number of successful companies. He says he loves the energy and adrenalin associated with start-ups.

He pioneered the use of digital signatures in South Africa, founded mobile payments company PAYM8, and converged voice and data provider ECN, which he sold to Reunert for R172 million in 2011. The experience acquired over this time meant he was ready to take on a massive challenge.

"When a policyholder submits an insurance claim, that action should trigger an instant decision, with the outcome immediately communicated back to the policyholder," John says. "Customers want swift claims handling, communication, and compensation. They want the same instant gratification that they get from online banking.

So that's what we set out do — to revolutionise the entire claims process. We have made traditional claims processing a thing of the past by pioneering a cognitive solution that is making the claims process faster, smarter and more efficient."

The founders of BrightRock, established in 2011, knew the life insurance industry all too well, and they found its methodology wanting. "Traditional life insurance lumps all the individual's needs into one policy," says CEO Schalk Malan. "It's a methodology that has been around for centuries.

We started afresh and looked at how we could design life insurance based on individual requirements. Our cover is designed to exactly match each specific financial need. Because there is no waste, it's more cost efficient and sustainable. And if circumstances change and our customer needs more cover, it's easy to get it because needs-matched design enables the policy to change in line with changing needs."

Suzanne Stevens, marketing executive director at BrightRock, points out that this type of innovation achieves efficiency (cost savings) and effectiveness (higher returns). "By harnessing digital technology, we have made our operations more efficient, and aggressively lowered costs by up to 30% for our customers. Every rand they spend with us works harder for them. That's the benefit of a solution designed around the customer."

The goal of all investors in the stock market is the same — to generate returns from their investment. ZAR X enables information transparency in its market by aggregating and distributing real-time information, and operating its exchange platform for companies to provide financial and other corporate disclosure for investors "We were told that it's impossible to settle transactions on the day of trade, but our model allows us to do just that," says ZAR X's CEO, Etienne Nel.

"We settle in real-time (T+0) when everyone said it could not be done. It's one of our critical differentiators, along with a platform that de-mystifies investment in the capital markets and facilitates financial inclusion for retail investors."

DITCH THE LEGACY SYSTEMS, START FROM SCRATCH

Disruptive innovators invest in digital strategies so that they can find new ways of responding to their customers' evolving needs. The founders of Tautona AI, BrightRock and ZAR X agree on several principles, but one that stands out specifically because it goes entirely against traditional thinking, is the importance of starting from scratch.

"You cannot take a non-digital business model and expect it to work online," says John.

"Instead of using old methods, you need to start from the beginning. Ditch the legacy systems, take a leader mentality and imagine the art of the possible."

ZAR X's Etienne concurs. "Our goal was to make it possible for the ordinary person to buy and sell on a stock exchange, and to trade with as little as R1 000. Starting with a blank slate allowed us to imagine the ideal way to do that, rather than being constrained by working within the realms of what was already available."

BrightRock's founders took a similar approach. "We ditched legacy thinking in favour of creating a product that is intuitive and easy to navigate. An enormous amount of time and effort went into writing and designing that system, and creating the optimal customer journey."

Unlike clunky legacy systems, BrightRock's platform is modularised, and was built according to the agile principle of rapid delivery cycles. The result is a technology stack with longevity, that is also flexible enough to be tweaked when needed.

This iterative, modular approach typically begins with defining the strategy and programme plan upfront, delivering a core capability fast so it can provide benefits immediately, and then continuously improving with regular, incremental capability improvements to achieve the objectives of the strategy.

It's an approach that fosters closer collaboration between stakeholders, improved transparency, earlier delivery, greater allowance for change and more focus on the business outcomes. "The advantage of the technology available today is that you can plug things in and pull them out as required," says Suzanne.

"That's one of the enablers of a truly disruptive mindset. To step away from accepted norms and find new solutions requires curiosity and creativity, as well as a lot of courage to go up against large incumbents in the market.

There is always resistance to new technology, although we are fortunate in this country to have one of the most innovative insurance sectors in the world."

DISRUPTION IS MORE THAN JUST DOING THINGS IN A DIFFERENT WAY

"Disruption isn't just doing things in a different way which doesn't resonate or go any further — it's about changing the game," says John. "Being disruptive means taking a look at an industry or a way of doing things that is set in stone and finding a way to do it differently, giving you an advantage over the incumbents.

The traditional ways of doing things are not always the best. Many of these methods have lost their focus on the customer over time, placing the company's own convenience first."

In the case of Tautona it is redefining the art of the possible. Consumers typically have little contact with their insurance company until something bad happens. When it does, the ability to help them quickly and painlessly will set insurers apart. Tautona can cut the cost of processing a claim by 80% and reduce the time to decide and settle a claim from five days to less than five minutes.

He stresses that this is not about replacing people. The tasks and processes most suitable for automation are typically the most onerous and least enjoyed by employees. Employees relieved of these tasks can focus on more important and rewarding work i.e. analysing instead of processing claims.

SHAKING UP AN INDUSTRY

How do you launch new solutions and educate customers who are used to doing things the way they have always been done? John says resistance to change is inevitable. That's why you need more than good technology.

"When you introduce something ground-breaking to the market, you encounter many different types of personalities asking diverse questions. That demands an approach that is client-centric and entirely customer focused. It also means you have to spend time developing a sound business case to present to decision makers."

A solid business case documents the justification for the undertaking of a project. It's the way you prove to your client and other stakeholders that the product you're pitching is a sound investment. You need to justify the project expenditure by identifying the business benefits the innovation will deliver and that your stakeholders will be most interested in reaping from the technology.

"Essentially, it's about proving you can deliver," says John. "When you have an entirely new proposition, the only way you can hope to get your foot in the door is with a value proposition so profound that clients are forced to take a look at it."

Tautona has convinced a number of South Africa's top insurers to implement their AI-powered claims automation solution. The results to date have been ground-breaking, with insurers dramatically reducing turnaround times and processing fees. As a result, Tautona's sales pipeline is full to the end of the first quarter of 2019.

"But there's no rest for disruptors. Nokia and BlackBerry crumbled because they were slow to react to market changes, and they underestimated the challenge from Apple and Samsung.

The only way to retain leadership is with relentless innovation, that is, a constant flow of new versions and features. That applies in any industry today."

EFFECTIVE COMMUNICATION IS CRITICAL

These disruptors have set themselves above the rest through one surprisingly simple tactic — effective communication. They agree that it simply doesn't matter how world-changing your product or service is if you don't communicate it to the right audience at the right time.

New companies that fail to communicate their remarkable new development will quickly be pushed aside by other disruptors. Without a clear communication strategy that reaches the audience in the industry you're trying to disrupt, you'll set yourself up for failure.

A key question to ask when you are developing your communication strategy is simply whether people understand what you do. "Because the premise for our product was fundamentally different from anything on the market, communication and clear messaging were critical to convincing our clients to put their trust in us," says Schalk.

"It was especially important to educate insurance advisors so they would understand what we were doing, why we were doing it, and how it was better than the other options available. That was key to disrupting the individual life market."

Currently, BrightRock employs 380 staff, has experienced 40% year-on-year growth, and has an annualised premium income of more than R1,3 billion. The company has recently entered the group risk environment with a similar offering that addresses many of the same shortcomings of traditional group risk products.

"The inefficiencies of the structuring of group products has meant that, to remain competitive, insurers have cut the benefits offered to employees, undermining their sense of financial security. Change is needed, and we believe our neeods-matched philosophy positions us to change the group risk market too."

ZAR X's Etienne Nel says challenging a monopoly that has had a 130-year hold on the market required the company to disseminate a lot of information. "We've democratised the process of investing.

For example, we have published many opinion pieces to help guide investors, and to help them understand what we offer and how it works. Given that we have an enormous amount of experience between the three founders, this has been a key element in establishing trust in the market."

But ZAR X has done one other thing that is truly compelling for inexperienced investors — leveraging the power of video communication to show what makes the company different. On its website, five-minute video presentations explain all its listed securities, as well as how the stock exchange works.

"Gone are the days when people want to read 100-page prospectuses on companies," says Etienne. "We have made all the information our clients need to become knowledgeable investors available online for free."

What's next for ZAR X? Etienne says the long-term goal is to build a pan-African stock exchange. "We want to use our advanced technology platform to broaden financial inclusion across the continent and make it much easier and more affordable for ordinary people everywhere to acquire a stake in the success of a business.

Our dream is to give them access to investment opportunities that did not exist before." However we choose to describe digital disruption, one thing is clear: Its most immediate and tangible impact is the way it is radically transforming the customer experience through digital channels, technology, tools and initiatives.

And if you own or manage an organisation, you are in the business of customer experience. Adopting a customer experience mindset means giving customers what they really want. Companies that are able to do this will gain the ability to build new markets while stragglers are left behind.

Tautona AI

Tautona's claims automation solution uses artificial intelligence to instantly approve or refer claims for further investigation. By using machine learning algorithms to identify patterns in the data, Tautona's solution identifies fraudulent claims, enabling insurers to halve fraudulent claim losses.

Tautona also uses Robotic Process Automation to integrate to legacy systems, removing the need for traditional programming techniques. This means that Tautona's claims automation solution can be implemented with minimal disruption to a business. By automating decision-making, communication, and compensation, Tautona enables insurance companies to take a major step towards becoming true digital insurers.

ZAR X

ZAR X started operating in February 2017 and is an alternative stock exchange that seeks to compete with the country's main board, run by the JSE. It was the first of four new exchanges launched in South Africa in 2017, in what is an audacious challenge to the JSE's dominance.

At the beginning of 2018, the Public Investment Corporation (PIC), one of Africa's largest asset managers, bought a 25% stake in ZAR X for an undisclosed amount.

The founders have made it possible for the person in the street to trade, and their aim is to spread wealth among black South Africans particularly, to help address economic inequalities. Using disruptive fintech, the business model is built on the principles of simplicity, low-cost, transparency and agility.

BrightRock

BrightRock was started around a dining room table in 2011 by four people with years of industry experience and importantly — a diverse set of complementary skills. They wanted to make changes to an industry with an age-old methodology by allowing customers to co-create a solution that precisely meets their individual needs, and adjusts as those needs change.

Today, BrightRock is the fastest-growing insurer in the intermediated individual life risk market. It also provides underwriting management services to funeral parlour businesses and, more recently, has entered the group risk insurance market, offering its needs-matched approach to employees.