This article originally appeared in Best's Review (subscription required).

Insurers have long relied on lean programs–the systematic elimination of waste within a process–to reduce costs and raise productivity in claims operations, contact centers and other areas. Yet two-thirds of lean programs either don’t deliver the desired level of cost reduction or cannot sustain the savings, a Bain & Company assessment of 17 financial institutions found.

Lean centers on keeping those elements of a product that add value from the customer’s perspective and reducing everything else. The approach was pioneered by automaker Toyota and became widely adopted in manufacturing before spreading to service industries such as insurance. When lean programs fall short, they typically suffer from some combination of the following:

• A fixation on cost. This never inspires people and compromises the quality of the customer experience.
• Short-term design. Sustained improvements require fundamental changes to operations, not one-time fixes of one part of an operation.
• Overreliance on IT systems. When the technology doesn’t live up to its promise, frontline behavior doesn’t change for the better.

Keep Customers in Mind

Fortunately, there is a better approach to lean—one that incorporates the customer’s perspective of the overall experience. It emphasizes process redesign to eliminate the root causes of waste across the entire process, not just incremental redesign of individual steps. Insurers that succeed with lean programs take on the complicating aspects of their organization, including compliance, risk management and regulation, which, over the years, add many checks, processes and steps that no longer add value. A company can usually remove redundant checks and simplify processes, which translate to a simpler, faster and more convenient experience for customers while still allowing the firm to meet stringent risk and compliance requirements.

This more integrated, customer-centered approach is well worth the effort, given the major opportunities to reduce handoffs and repeat calls in contact centers or to promote convenient, digitally enabled customer self-service.

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