Insurance Digital Push Productivity Puzzle Lingers – Why the big productivity jump has been slow to arrive

The highly anticipated leap in productivity for the insurance world, following extensive investment in digital capabilities, remains remarkably elusive. Despite the proliferation of sophisticated systems designed to streamline operations, the tangible output metrics aren’t showing the transformative gains one might expect. This puzzling lag isn’t necessarily about the *availability* of advanced technology itself, but perhaps more about the deeply embedded structures and inherent human resistance within large, established organizations. It compels one to ponder whether the digital push is truly about fundamental operational reinvention or merely automating existing, potentially inefficient, processes. The challenge seems to be less about installing the new tools and more about the complex anthropological task of restructuring how work is actually conceived and performed, often encountering inertia that prioritizes familiar workflows over radical efficiency. It appears the significant effort expended hasn’t always translated into a willingness to fundamentally alter the underlying architecture of the business, leaving the promise of peak productivity frustratingly unfulfilled.
Observations regarding the less-than-explosive impact of recent digital advancements on aggregate productivity figures, viewed through a lens encompassing historical trends and human systems:

1. The integration of revolutionary technology into the fabric of human enterprise rarely proceeds at the pace of the technology itself. Our social structures, organizational hierarchies, and ingrained ways of working – the collective ‘human operating system’ – possess a significant inertia. This inherent friction, observable throughout history when societies grapple with fundamental shifts (like the advent of print or mass electricity), means the cultural and processual adaptation required to fully leverage new digital tools lags the technical capability by years, often decades. It’s not just about installing software; it’s about fundamentally rewiring human interaction and decision-making.
2. While digital tools offer impressive theoretical potential, translating that into measurable output requires a sophisticated human interface. There persists a noticeable chasm between the accessibility of advanced software and the complex cognitive architectures workers need to build to wield these tools effectively for tasks beyond simple automation. This isn’t just a ‘skills gap’ solvable with basic training; it points to a deeper requirement for higher-order problem-solving, critical thinking, and collaborative skills that digital systems augment but do not replace, creating a bottleneck in potential efficiency gains.
3. Drawing parallels from past technological epochs reveals a consistent pattern: the full, transformative economic impact of foundational innovations, such as the widespread electrification of factories or the build-out of railroad networks, took extended periods – often forty years or more – to manifest significantly in macroeconomic productivity data. We might currently be situated in the earlier phases of the diffusion curve for the pervasive application of artificial intelligence and complex digital ecosystems, implying that patience, guided by historical context, may be required before truly large-scale effects become evident.
4. Counterintuitively, the sheer volume and velocity of data and digital pathways can introduce their own inefficiencies. Organizations often find themselves navigating an overwhelming informational landscape, leading to decision fatigue, analysis paralysis, or the misallocation of attention on metrics over meaningful action. Cultivating the necessary discernment to filter signal from noise and translate data abundance into streamlined processes requires new organizational structures, leadership paradigms, and human literacies that are still very much under development.
5. In industries fundamentally built on human relationships and trust, like insurance, the digital transition encounters resistance rooted not merely in technical hurdles or regulatory complexity but in the very anthropological requirements of the exchange. Replicating the nuance, perceived security, and reliability of face-to-face interactions or established personal trust networks through purely digital channels presents a profound socio-technical challenge. The effort to bridge this human element adds layers of complexity that can initially slow down the very efficiency gains digital transformation promises, highlighting the non-negotiable human dimension in commerce.

Insurance Digital Push Productivity Puzzle Lingers – Organizational structures as an anthropological puzzle resisting change

Viewing organizational structures through an anthropological lens reveals them as intricate human ecosystems rather than mere functional designs. Within these systems, particularly in established fields like insurance, processes become deeply embedded cultural practices, laden with social meaning, power dynamics, and individual identity. This anthropological reality presents a profound puzzle: how do you introduce disruptive digital methods when the existing ‘rituals’ of work are so integral to the social fabric of the organization? The challenge isn’t simply a technical one of integration, but a fundamental negotiation with ingrained organizational ‘culture’ itself. It’s the difficulty in altering these often-unspoken social contracts and status structures, tied to established workflows, that actively resists the type of true process innovation needed to unlock significant productivity leaps from digital tools.
Here are some observations on organizational structures viewed through an anthropological lens and their apparent resistance to being reshaped:

1. Formal hierarchies within organizations frequently solidify into rigid social strata. These aren’t just reporting lines on a diagram; they embody intricate systems of status, access to information, and influence that resemble power structures observed in various human groups throughout history. Attempting to flatten these hierarchies or redraw reporting lines can feel akin to challenging deep-seated social orders, generating visceral resistance as individuals defend their established position and the familiar pathways of interaction and decision-making embedded within that structure.
2. Many standard operational processes, from budget cycles and approval chains to regular meetings and reporting formats, function less as purely efficient mechanisms and more as shared rituals. They reinforce collective identity, signal inclusion or exclusion, and validate established ways of doing things. Modifying these processes can feel like disrupting the very ‘ceremonies’ that bind the group together, making change efforts hit a wall of cultural inertia rather than just procedural inefficiency.
3. Efforts to implement new organizational models or practices sometimes result in a superficial adoption of outward forms without the corresponding internal transformation. This creates hybridized structures where new labels and methodologies are overlaid onto existing, deeply ingrained patterns of behavior and power. The organization adopts the appearance of change, effectively absorbing the pressure to adapt by creating a complex, layered structure that ultimately serves to maintain the core, resistant underlying system.
4. The actual flow of information, collaboration, and problem-solving within an organization relies heavily on a complex, informal network of personal relationships, trust, and reciprocity that exists beneath the formal structure. When structural changes are imposed from above without acknowledging or engaging this ‘underground’ social fabric, they can disrupt these vital connections. Resistance emerges from individuals protecting the functional, albeit informal, pathways they rely on to operate, which the formal structure often fails to capture or support adequately.
5. Over time, components of the organizational structure – departments, teams, roles – can develop distinct subcultures and a sense of self-preservation. These units may prioritize maintaining their boundaries, resources, and established ways of working over adapting to shifts needed for the broader organization’s survival or efficiency. The structure becomes a landscape of semi-autonomous territories, each with its own norms and defenses, making coordinated, systemic change incredibly difficult as various parts actively resist dissolution or integration.

Insurance Digital Push Productivity Puzzle Lingers – Another instance of the technology paradox repeating history

Here we see another iteration of a familiar pattern: the apparent paradox where significant technological leaps don’t immediately translate into corresponding jumps in measured productivity. It’s a historical echo, resonating with the “IT productivity paradox” widely discussed decades ago, which wrestled with a similar puzzle regarding earlier waves of information technology investment. Despite the extraordinary power and ubiquity of today’s digital tools, and the immense resources poured into deploying them across industries, the aggregate economic output figures don’t yet reflect the transformative uplift many anticipated. This isn’t necessarily a failure of the technology itself, but perhaps highlights an enduring challenge in how human systems absorb and leverage radical innovation. It points to the complex, often messy, and surprisingly slow process by which societies and organizations restructure themselves, adapt skills, and alter fundamental workflows to unlock the full potential of new tools. It seems we are, once again, in a period where the speed of technological invention far outpaces the rate of human organizational adaptation, leaving the promise of efficiency lingering just out of reach as we navigate this latest wave of digital change.
Reflecting further on this historical pattern within the specific context of large, established sectors like insurance:

1. Look at it anthropologically: for many, mastery over specific manual processes or navigating convoluted internal systems isn’t just a job function; it’s a source of identity, skill, and perceived value within the group. Introducing digital tools that bypass these established methods can feel like dismantling a core part of an individual’s professional self and social standing, creating a deeply personal, non-rational resistance far stronger than mere inconvenience.
2. Consider the economic measurement puzzle: current ways of tallying productivity often focus on tangible, quantifiable outputs familiar from manufacturing eras. Much of the potential value digital tools bring in service industries like insurance – improved data quality, faster risk assessment, better client interactions, reducing future errors – is either diffuse, difficult to isolate, or registers as qualitative improvements rather than simple throughput increases, potentially escaping traditional metrics entirely.
3. Cast your mind back to historical reactions to technology shifts: the Luddites, for instance, weren’t just simpletons afraid of machines. They were often skilled craftspeople defending not just their livelihoods, but the intricate social structure, collective bargaining power, and community built around their specific expertise and tools. Modern digital transformations can similarly erode the ‘social capital’ tied to established, manual processes within an organization, fueling complex, layered resistance.
4. Philosophically speaking, many large organizations are still operating on a fundamental management paradigm akin to industrial-age command-and-control: information flows up to be condensed, decisions flow down to be executed. This structure is inherently at odds with digital systems designed to distribute information widely and enable more autonomous, context-aware decisions at the periphery, creating systemic friction that prevents the digital tools from operating at their full potential.
5. That initial dip in output often observed isn’t merely a mild learning curve for new software; it’s a profound systems shock. It involves the messy, overlooked work of truly decommissioning the old ways – which are deeply intertwined – migrating or reconciling decades of data, and resolving unexpected conflicts where new digital processes collide with resilient legacy logic or ingrained human habits. The real ‘cost’ and drag come from this complex dismantling and integration phase, not just training on the new interface.

Insurance Digital Push Productivity Puzzle Lingers – Insurtech founders find legacy systems are more than just code

For those attempting to build new digital capabilities in insurance, the reality is hitting hard: the older computer systems aren’t simply technical debt to be replaced. They are deeply fused with the day-to-day practices, accumulated knowledge, and muscle memory of the people who have operated within their constraints for years. It’s this embedded human element, the intricate ways work has been adapted to fit the old code, that poses a far more complex barrier than merely rewriting software. This means efforts often get sidetracked into building layers on top or patching the inevitable issues, a sort of perpetual maintenance that distracts from the radical rethinking needed to truly unlock better productivity, highlighting a persistent challenge where the human system absorbs and blunts the sharp edge of new technology.
Here are some observations on how grappling with legacy insurance systems reveals challenges extending far beyond mere code:

1. An engineering dive into older insurance platforms reveals they are not just inert codebases; anthropologically, they function as frozen snapshots of past organizational cultures and power dynamics, their very structure reinforcing historical information flows and decision gatekeepers, proving stubbornly resistant to contemporary distributed collaboration models.
2. From a philosophical standpoint, the deep logic and fixed schemas of many legacy systems embody a specific, often outdated, epistemology of risk – a static worldview of how the world works and what data matters. This inherent rigidity clashes profoundly with the fluid, data-driven, and continuously adaptive philosophical stance needed to address modern, evolving risk landscapes and develop relevant insurance products.
3. Historical study demonstrates that introducing novel technologies often stalls not purely due to technical incompatibility, but because existing complex ‘infrastructures’ – and here the legacy system acts as a kind of informational infrastructure – are deeply entwined with established social structures and the perceived value of skills honed for the old way. The sheer inertial mass of this intertwined socio-technical system poses a resistance not unlike societies struggling to transition from, say, complex medieval guild structures tied to specific tools, to more fluid industrial production.
4. From a system design and psychological perspective, the notorious opaqueness and convoluted workflows often inherent in older insurance systems can cultivate a form of ‘learned helplessness’ among users. Faced with unpredictable outcomes and lack of clear feedback loops, individuals may cease trying to understand or optimize their interaction, simply following rigid, prescribed steps, paradoxically undermining potential productivity gains even when interacting with digital tools.
5. Drawing on entrepreneurial experience, the act of replacing a core legacy system within an established organization reveals it is fundamentally more than a technical data migration task. It often necessitates a deep, sometimes uncomfortable, process akin to organizational archaeology or even ‘technological therapy’ – confronting and dismantling deeply embedded assumptions about processes, workflows, and even the unwritten rules of power and decision-making that the old software inadvertently reinforced over decades.

Insurance Digital Push Productivity Puzzle Lingers – Measuring value beyond simple output a philosophical challenge

The ongoing discussion regarding productivity shifts within insurance following significant digital investment highlights a fundamental philosophical challenge: defining and measuring true value beyond simple, traditional output metrics. As this sector increasingly leverages advanced technology, it becomes apparent that tracking mere transaction volume or operational speed doesn’t capture the full spectrum of contributions. The real gains might lie in areas like a deeper, more accurate understanding and mitigation of risk, fostering genuine and enduring client relationships, or enhancing the subtle but critical quality of service delivery – aspects that are inherently complex and resist easy quantification in spreadsheets. The persistent puzzle surrounding lagging productivity figures may well stem from clinging to outdated notions of what efficiency and value look like in a digitally transformed landscape. It requires not just new tools for tracking, but a profound re-evaluation of our conceptual framework for success, moving past the industrial-era focus on sheer volume toward a more holistic understanding of positive impact within the intricate human systems that make up the industry. This challenge forces a confrontation with what we fundamentally believe constitutes progress in the digital age.
Considering the challenge of identifying what truly constitutes value in this digitally augmented landscape, beyond merely counting quantifiable widgets or transactions, throws up a few counter-intuitive points when viewed through various lenses relevant to this podcast:

The inherent structure of human cognitive processing often defaults towards focusing on what is immediately measurable and visible. This cognitive shorthand can subtly bias organizations and individuals toward optimizing for easily countable outputs – like tasks completed or processing speed – potentially overshadowing or failing to even perceive more complex, diffuse forms of value creation enabled by digital tools, such as the enhancement of decision-making quality, the robustness of organizational learning, or the fostering of novel forms of collaboration.

Anthropological explorations of diverse human societies across history demonstrate a wide variance in how labor and contribution are perceived and valued. Unlike the prevalent modern capitalist focus on quantifiable economic output, many cultures embedded worth within social standing, the strength of reciprocal relationships, the fulfilling of communal duties, or the mastery of symbolic processes, highlighting that our current narrow definition of productivity is a specific, culturally conditioned viewpoint rather than a universal truth.

For those engaged in the messy, iterative process of building new ventures (entrepreneurship), the definition of value is often completely different from the steady-state efficiency of established operations. Progress is frequently measured by the speed and quality of learning, the clarity achieved through rapid market validation (even if it confirms a hypothesis is wrong), and the ability to pivot effectively, recognizing that gathering crucial information is often far more valuable in the early stages than maximizing the output of a product or service that may not yet truly resonate.

Looking back at the historical impact of certain cultural and philosophical frameworks, such as how interpretations of the Protestant work ethic emphasized diligence and labor as inherently virtuous acts, we can trace origins for valuing ‘busyness’ or adherence to process as a sign of moral or professional worth. This perspective can subtly decouple perceived value from actual tangible results or demonstrable problem-solving, fostering environments where activity itself, regardless of its ultimate contribution to output, is seen as valuable.

From the perspective of cognitive science, the human brain registers value in work through intricate internal reward systems that respond strongly to factors beyond simple external metrics. Feelings of making tangible progress, contributing meaningfully to a larger goal, exercising mastery over a task, and possessing a degree of autonomy are powerful intrinsic motivators. Focusing solely on simplistic external output scores fundamentally misses these deeper layers of value perception which are critical drivers of sustained engagement, creativity, and the willingness to tackle complex, non-routine problems – the very challenges digital tools are ostensibly meant to help us solve more effectively.