Digital Twin: Achieving Transformation

Companies are always need to innovate and transform the way that they do business. Some projects might be easy like building a new web site, changing the handling of incoming mail, or outsourcing letter printing. Other projects are super complex due to the number of things that have to be considered with the project. These projects have an inertia that prevent them from even getting started. And when they do, they often end in the analysis phase when the complexity causes the project to collapse on itself. So how do you get started with these super complex projects?

The simple answer is starting small. One of the concepts out there in digital transformation is creating a digital twin. A digital twin is a digital representation of a physical item. The digital twin allows you to simulate real life to gain better understanding. For example, a digital twin could be tracking the movement of packages in a distribution center. By having a digital twin, operational specialists could analyze the patterns and identify improvements of the warehouse. Experimentation on the digital twin does not have an impact on operations and changes can be iterated on cheaply and efficiently.

Digital Twins can also be done with systems. Sometimes, the complexity and permutations that a system must deal with are so great that a system will never get upgraded. Businesses often have applications that have been entrenched in running the business for years. They are often called “legacy systems” and they hold the business back from transformation due to lack of features. These upgrade/replacement projects are really difficult and fail for the following reasons: Business has built processes around system limitations.

• Calculations have system specific nuances

• Systems support many owners and it is difficult to find a sponsor

• Information around how the system works has been lost over time

• Total number of integrations and reports are insurmountable

Creating a digital twin is a great solution to help modernize a system. Rather than trying to transform or replace the entire enterprise, the goal is to build a new simpler solution that address to address a new market or a small portion of the business. With the narrower focus, the team can design and build with transformation in mind. They are able to iterate on building the best practices into the solution. Great ideas do not get bogged down with the entire complexity of the business. The digital twin can live on in perpetuity in the delivered state or it can continue to grow into a replacement system.

One of my favorite projects in my career at Pacific Life was the Prime Initiative. The Prime Initiative was a digital twin of the life insurance division. During the project, we looked to revolutionize the process of buying life insurance from initial contact to policy delivery. We spent a time looking for a niche market to focus on. We built a website for financial advisors that typically did not sell life insurance and we focused on making it easy for them. To do this, we looked at every aspect of the process and came up with a design that focused on changing 4 key goals:

1. A website with meaningful content and tools to help understand and visualize the benefit of insurance

2. A life insurance product that was unique in the market with the potential of reducing the underwriting time from a month to days in most circumstances

3. An application process that reduced data entry errors and was completely paperless.

4. A new business and underwriting system that would efficiently process business and wisely make underwriting decisions.

The Prime initiative successfully accomplished these goals. An award-winning site was built that was visually stunning and provided new tools to help advisors understand the policy. A new term life insurance product was created that was completely fluid-less (blood & urine). An application process was created that was easy and led straight into an eSignature process with all health-related questions being answered by tele-nurse. The new business and underwriting system resulted in 50% labor savings and reduced our best-case service level from 30 to 2 days.

After going live, the solution began an optimization phase. We made changes to workflow to deal with unforeseen problems and even reorganized some of the flows to make it more efficient. In the past, underwriting was main manual with no analytics. The new underwriting system allowed us to see problems and discrepancies that were never visible. Members of the underwriting team would analyze analytics, make configuration changes, and deploy on a weekly basis. The quality and efficiency of underwriting was constantly improving. The website was under constant revision looking at content, flow, and usability.

The project was a success because we were able to innovate. The team was allowed to operate independently from the business. The project was still forced to live within the confines of an insurance company. The solution had to meet all the requirements from compliance, finance, and underwriting. As a result, we had numerous subject matter experts helping shape our decisions. But the team stayed true to the goals of the project and committed to transformation. The project would never have happened if we tried to implement every product and every permutation. It would have gotten stuck in analysis for at least year before getting canceled.

Beyond the success or failure of a digital twin project, the learning and knowledge gained is the most valuable aspect of the project. Great digital twin projects have dramatic effects on the business. Through experimentation, key concepts are confirmed and technology is proven. Those learning have to be brought back into the business. Proven technology can be used to solve other problems. New business processes need to be integrated into existing processes.

The Prime initiative succeed in all these ways. Design thinking associated with the project was carried into other innovation initiatives. The underwriting system and methodology created for Prime was enhanced to support all Pacific Life products. The new business system was enhanced to support the complexity of our affluent business. The technology used to create the portal was extended to other websites.

Every company needs to move forward and every company fights their own inertia to move forward. Creating a twin of your business is a great approach to build true transformation while business as usual continues. The twin can experiment and optimize as it is developed. The knowledge and experience can help other parts of the business and even change the way work is done. Don’t get stuck trying to solve everything. Make the goal something achievable. After every one sees the success, the learning will permeate into the rest of the business.