Paul Ricard: Hi, everyone and welcome to Oliver Wyman's Reinventing Insurance podcast. I'm your host, Paul Ricard. Welcome to Reinventing Insurance. [Intro Music] Today I welcome Albert Chu, who is the Chief Digital Officer of Sompo Holdings and a Silicon Valley veteran. Welcome, Albert.
Albert Chu: Thank you, Paul. It's great to be here with you.
Paul: Well, very, very excited to have you, and I think we have a lot to cover together, but maybe why don't you briefly introduce yourself first off?
Albert: Yes, of course. So as you may know, I am the group Chief Digital Officer for Sompo Holdings. And for those of you in the audience who may not know, Sompo is one of the largest insurance companies in Japan and also globally. We are a Property & Casualty insurance in Japan. We also have Life insurance in Japan. And outside of Japan we have Sompo International, which is mostly Property & Casualty for commercial.
And, in addition to insurance in Japan, as many of you may know, is a aging, actually a super aging society. So we, Sompo are also in the Healthcare business. Specifically, our business unit Sompo Care owns and operates the largest chain of nursing care facilities in Japan. But anyway, that's about Sompo. I became Chief Digital Officer a year ago. And prior to that I've been in Sompo for a total of three years.
Prior to that, I have been here in Silicon Valley for almost 40 years. I graduated from Stanford, came from Brazil, and loved it here so much, I've never left.
Paul: You've seen a thing or two and been part of a thing or two in these 40 years. Why don't you tell us a little bit about your prior experiences and share a little bit about your journey and, most importantly, what have been some interesting lessons or takeaways from your experiences that you're putting into practice today?
Albert: Yeah, happy to share here. So my first job out of Stanford was at Apple, and this was, to date myself, 1982. I was at Apple for 14 years. I was there when Steve Jobs was there, and I left when he came back.
Paul: When he was there the first time, right?
Albert: When he was there the first time. Right. And at that time when I joined Apple, it was a small company. I was employee #3,665.
Paul: Which I'm sure at the time felt probably big, but compared to today is quite a small number. Right?
Albert: Exactly. Especially compared to Apple today. But I joined Apple, I worked on many of the early projects, but one that I really was very seminal for my career was I helped introduce the Kandji Mac operating system, meaning a Japanese Macintosh OS to the Japanese market. So around 1984-85 was my first trip ever to Japan, to Tokyo.
At that time, I don't know that you would know that so well, Paul, but in 1984-85, Japan was the number two economy in the world, and it was a technology innovation paradise basically. At that time, I remember Steve Jobs at Apple would say that Sony was one of the companies that he admired the most. And in fact, we at Apple were early adopters of many of Sony's technologies. The first Macintosh for example, had a three and a half inch disc drive, which before then all disc drives were floppy disks were five and a quarter inch. So it was a smaller form factor and we were the first one to commercialize it using Sony's technology. But that was just one of many.
My first trip to Japan was amazing because you could see, you could feel the energy of technology and it was also the era of lots of, I would say enthusiasm in the industry, and also not just in technology but financial industry, real estate, et cetera. I remember going to the Ginza and was told that the Sony corner in the Ginza was the most expensive per square meter in the world.
Paul: Wow.
Albert: But I add this detail because as you will see later, Japan has become a major theme in my life. We successfully introduced the Macintosh into the Japanese market, and then I worked on dozens of products throughout Apple and it was really quite – I used to think that Apple was really graduate school for me, and the best graduate school you could have because you were being paid for, tremendously. And I was with a group of very, very smart people and colleagues and that's one of the lessons I've learned, is that who you work with, I guess the key to success
Paul: And Albert, obviously who doesn't know about Apple nowadays? And I think to your point, I feel like it's become a little bit the gold standard for many around, how to think about experience, customer experience. I think many would say that many modern concepts of customer experience were born at Apple. Are there other big lessons learned around this that you're applying today, to this day, and based on what you've learned there?
Albert: Really insightful question here. Several things. One I learned, when I was... in 1982, Apple was a pioneer in trying to bring personal computers for everyone. And in fact, our dream / vision for Apple was that everyone will one day have a personal computer in front of them, whether at work, or the home, or at play. And no less than 40 years, this is very much true.
Back in 1982, it was definitely just a dream, a vision. So one lesson I learned here is that dreams do come true and that it is never, I think never to dream too little. Always do big. And I think that was one of the things that has stayed with me. Another that you mentioned before is around design. And this is something that Apple was so well known for and that Steve Jobs was so well known for. And design not only in the product but also in the user experience and in the customer experience.
One of the design points for the Macintosh was to be able to unbox it and, without really reading a manual, be able to use it within 20 minutes and output something. Back in 1982, in the era of IBM PCs and computers, personal computers of that ilk, you had to read manuals.
Paul: Right.
Albert: You had to take courses, you know how to use VisiCalc at that time.
Paul: I'm sure it was a rite of passage as well.
Albert: Yeah. And to think, yeah, exactly. And to think that to open up a computer, personal computer and be able to use it in less than half an hour in a meaningful way was a dream, and I think we're able to accomplish that. And that is a lesson that I think transcends industries. Right?
Paul: Something that we still need to learn a lot about in the insurance and financial services industry, as well. I think there's a lot more that can be done at that.
Albert: Yeah.
Paul: We definitely didn't plan this for our audience, but I love how you’re both bringing a lot of the Japanese inspirations, both in your own journey, but for example, in the journey of what was on the Mac, and I'm sure we'll get back to this as we talk a little bit about your role today and going forward.
Albert: Just moving on quickly from Apple. I was at Apple for 14 years. I left, as I said, in 1996 when Steve Jobs came back. I left Apple to join AT&T. At that time, 1996, AT&T had just gone through a trivestiture – so it spun out Lucent, and it spun out NCR, and AT&T became a sole communications services company only. But it was also at the time when the internet was really taking foothold here, and AT&T realized that the internet was going to completely change not only the technology base force communications, but also the business model.
My role at AT&T was to help them start the Silicon Valley office, because all the internet disruption and technologies that we saw forthcoming were happening in Silicon Valley, not back in New Jersey and New York where AT&T was headquartered. And I remember so well, one of my first trips to the AT&T headquarters, the mothership in Basking Ridge is meeting with the Head of the Worldwide Consumer Business, and she was in charge of all consumer interactions and polling and surveys. And I was talking about the internet and she said, she looked at me, she listened very carefully and then she looked at me and she said, "You know, every day, every week I take polls with my – I'm in touch with my 75 million customers, AT&T customers. And my customers tell me that the internet is a fad. So thank you very much for coming here, explaining what it is and what it could be, but it's just no. Just go back to where you came from."
And that story also stuck with me a lot. And I think back to your point of what lessons that I'm bringing forward. Things that today may seem implausible can have, disruptions can happen very quickly. I mean, I think Clay Christensen and his “(The) Innovator’s Dilemma” was very much – I was living it when I was working at AT&T.
And so this is something that I also would like to keep in mind as we move into the insurance industry, because the insurance and financial industries may be one of the last bastions of old tradition, partly because we have been – we are regulated, and so we are actually well protected and in certain countries more regulated than others. Things will change very quickly. AT&T was very much regulated now, and it happened very quickly for them to become deregulated, and internet completely disrupted them. And I hope that we can be ahead of the curve in the insurance industry as an industry to help anticipate the forthcoming changes and be able to actually create a better society financial future for all of us because we can anticipate these changes in technology coming.
Paul: Back to your point of dreaming big, right? These things feel very, very different from where we're at today. How likely is this to happen? How close is this to us? How much do we really need to change? I'm sure this is a challenge that you've been facing through your entire career.
Albert: And I left AT&T six years later in 2002. So I was there at the Dot Com Bubble and then the Dot Com Bust. I left in 2002 to join a company called Palm. Many of your listeners may know Palm Pilot, which is what we call at that time an organizer or personal digital assistant. Very, very popular. And I joined Palm specifically to help us spin out the operating system away from the hardware company Palm.
And so we successfully created Palm Source and it was listed on NASDAQ. And the idea was that if we had a separate company that just took Palm OS, we had the vision of licensing that OS to more than just one hardware vendor and also to modernize the OS to make it into in essence what was a smartphone OS.
After leaving Palm Source Access, I became a angel investor in a variety of different startups because my passion has always been to bring technology to market. And actually many of the startups I worked with were Japanese startups, helping them to come into the U. S. market.
And in the process of doing all of that, I got to know the Chief Digital Officer for Sompo, the first Chief Digital Officer for Sompo Holdings. And he was a friend from many years prior and he said: "I am going to start a new innovation lab for Sompo, a large insurance company, in Silicon Valley, because all the major developments in FinTech and InsurTech are surely to be coming outside of Japan as well."
And so he asked me to help him be a consultant, and we worked on many projects together. And through that experience I got to know Sompo very well, and got to see that Sompo is not your traditional Japanese company, and it's not your traditional insurance company. It really had a vision for the future that I thought was very aligned with my prior experiences, whether at Apple, AT&T or Palm, which is the future would be Beyond Insurance. It'll be very different than what the present is.
And Sompo wasn't scared to invest and believe in that future. So, for example, we have a joint venture with Palantir to bring Palantir's solutions into the Japanese market, which essentially puts us into a enterprise software business, because Sompo believes that the future is going to be not only insurance, but insurance plus data, insurance plus AI, and insurance plus other new businesses for which we can bring to the society and change many of our industries, including our nursing care industry or the insurance industry that we're in.
Paul: I like the Beyond Insurance tagline you are having as well around looking both different businesses and different technologies that do this insurance plus. And if I look back to your journey, so you've been at the forefront of the personal computer revolution, the internet revolution, the mobile web revolution, and now you are here to take on insurance and make it a fourth revolution that you're going to be instilling.
Now that we've arrived at your current role as Chief Digital Officer of Sompo, you've started unpacking this a little bit, but tell us a little bit more about your responsibilities, your priorities as Officer.
Albert: So Sam, as I said, I started in the middle of COVID. I joined them officially in August of 2020, and I was first the CEO of Sompo Digital Lab. Then in 2021, April 2021, I was the co-Chief Digital Officer of Sompo Group. And in 2022, April, so less than a year ago, I was named Group Chief Digital Officer.
I'm still based here in Silicon Valley, but I'm in Tokyo every month because that's where my team mostly is at. I think you already know this, Paul, but for your listeners, we have Sompo Digital Labs in Tokyo, in Silicon Valley and in Tel Aviv, Israel. And my role is basically very simple. It is kind of two roles. One is to bring innovation into Sompo, and the innovations that we are bringing into Sompo is in the form of a traditional, you would say digital transformation.
So it is to improve, for example the efficiency of underwriters, the efficiency of our business processes, to reduce cost and also to create new products and services which are expanding our core business. Beyond that, I am also looking into new areas, for example, and creating new businesses based on digital and data. I had mentioned earlier that we have a joint venture with Palantir in Japan.
One example is we are taking the Palantir Foundry platform, working it and applying it to our Sompo Care, which as I had mentioned earlier, we own and operate the largest chain of nursing care facilities in Japan. And by largest, I mean we have 400 nursing care facilities. We have over 80,000 residents. But even though we are the largest in terms of number of residents, we're only 1.5% market share. So with 400 facilities, 1.5% market share means there are about 60,000 nursing care facilities in Japan.
Now, it's a very fragmented industry. And so what that means is that mostly these nursing care facilities are owned by mom and pop type small businesses. With small businesses, one issue is that you can't really scale, and especially if we want to bring technology into the nursing care industry so that we can improve quality of care and improve efficiency, it's very hard to do if you only have one or two or three facilities.
Paul: Makes sense.
Albert: Sompo Care, we're lucky because we have scale. So we use the Palantir Foundry software, we got data from all of our residents. For example, we bought 80,000 smart beds. So now we know every resident, how well they slept at night, what their breathing rate was, what their body temperature was, whether they tossed and turned, whether they went to the bathroom, and every piece literally by the minute data, how they slept.
In addition, we have data on how the residents were eating, their nutrition information, their appetite. We have information about their physical activity, about the caregiver plan for each resident. We got all of this data, we put it in the Foundry platform, and amazingly, we found some incredible insights.
Insights that helped us improve the operation efficiency of our caregivers by 20 to 30%. And so instead of one caregiver supporting three residents, now we can have the same caregiver, one caregiver support four residents with better quality of care and also better quality of life for the caregiver, because they feel more relaxed about what they're doing.
They're doing things in a smarter way. The insights we're getting from the data help us do some predictive analysis so that we know when a resident may be, for example, developing some sort of a issue, health issue and we can anticipate that. And so now we can provide better care for the residents as well.
Now, this is operational efficiency of 20 to 30%. If we can apply it to the rest of the nursing care industry in Japan, not only to our 400 Sompo care facilities for the 60,000, that's a new business for us. And that's what we plan to do. And it's part of my role as Chief Digital Officer, together with our business units, to create new businesses that take activities we did as digital transformation, spending it and creating new businesses for us beyond that.
Paul: Basically you have digital transformation, which has a lot of the, I'm going to say nearer term opportunities for efficiency, for a higher value add in your existing businesses. And then you also have new business opportunities, potentially, that can derive from these digital transformation initiatives like what you mentioned with nursing care. So both of these are under your purview today.
Albert: Exactly. And of course I do this in collaboration with all of our business units. We actually collaborated with Oliver Wyman to come up with what we call this Three Horizon Strategy.
The Horizon One, which is the near term, as you said earlier, is the next one to two years, is digital transformation. How do we take innovations and apply it in Horizon One?
Based on Horizon One, some of these learnings and the things we're using internally can become Horizon Two opportunities, which is in the nursing care example, taking what we have done in our nursing care facility, excelling as a business in the software as a service to the other nursing care facilities. And that's kind of a Horizon Two effort – it's what we call real data platform initiative that we have.
And beyond that, we have a Horizon Three, which is really looking at what I call exponential technologies. And I think it dovetails well with what I think I have heard you and Oliver Wyman talk about the Age of Acceleration. In fact, I think it's almost two sides of the same coin, right?
Paul: Yeah.
Albert: The exponential technologies are really driving a lot of this Age of Acceleration. For us, it's in the area of what we're looking at right now, are Web 3.0 and Generative AI. Everyone's looking at that of course. But examining specifically, for example, what is the role of insurance and reinsurance in a world of a Web 3.0 economy?
And this is where, back to the earlier conversation – today, it's like 1987. I'm sorry, 1984 when I was at Apple and we had the dream that everyone have a personal computer, and that time was just a dream. Is Web 3.0 going to be 20 or 30 years from now? What is the internet going to be like? We don't know. And I would almost say whatever we think today is probably not enough.
Also, when I talk about Web 3.0 or other exponential technologies, I get the same reaction I did when I was at AT&T and someone said "The internet is a fad." Well, it may or may not be, but at that time –
Paul: I've seen that movie before.
Albert: Exactly. And somebody who says, with a lot of credibility, "I talk to my 90 million customers every week and says, the internet is a fad." It makes you, I wonder whether you are right. Right?
Paul: Yeah. Or nobody said that they wanted a device that made phone calls, listened to music, and browsed the internet at the same time.
Albert: Exactly, yeah. So it can all happen very quickly. And I think the macro environment now is happening very quickly. And so it's very likely that disruption may come in a very unexpected and rapid way.
Paul: And I love the term exponential technologies. I feel like it really embeds the potential behind these and the speed at which these concepts can disrupt industry or market.
You mentioned the partnerships. You mentioned partnership, for example with reinsurers, and I believe in your labs also, I believe you partner with FinTechs and InsurTechs. I think you mentioned that as well.
In addition to these external partnerships, which seem critical for you to do a lot of pilots and experimentations at once, can you tell us a little bit more about how you are also bringing the right folks inside Sompo and how you're making sure to build conviction around pursuing these different types of experimentations within the organization?
Albert: Really insightful points, Paul, because one of the roles that I also have is to bring digital education and awareness and talent to Sompo. Sompo is, I think like many of our colleagues in the insurance industry, is a very traditional company.
We have over 138 year history. We have 75,000 employees worldwide. And many of them have done things in a very – in a way that is not digital. And so now we are trying to change the way they work and the way they think.
So this whole mindset change, it's not just about bringing outside talent in, which is of course what in the digital lab we do. We hire a lot from the outside industry to bring that expertise in. Many of whom, like me, do not have any insurance experience. But also to help the current team members, the insurance experts become, have more of a digital mindset, have more of what I would call a Silicon Valley mindset.
And I was told that there is the culture of a kind of conservatism in at least at Sompo, and maybe in many Japanese insurance companies, because we are regulated, and we have to be basically correct every time and we have a responsibility, and I absolutely respect that.
Paul: And I think that is true in many parts of the insurance industry, to your point, because it is regulated and because it is also I think, important to do right by your customer.
And there's a lot of things that you need to make sure you tick all the right boxes, versus rushing to getting something out there that may do wrong by your customer, or obviously may be regulatorily poorly done as well.
Albert: Exactly. So that does not mean we should just keep doing the same thing all the time forever. Right?
Paul: Right.
Albert: We should also be applying some new – as new technologies come in – honestly, as our customers are demanding more and more digital solutions, we are having more and more digital natives becoming our customers, and they do not want to call an agent anymore. They want to do everything online. So we have to adapt to that as well and adapt fast.
Paul: And so can you give us a few examples of how you've done this successfully?
Albert: One example is, as I mentioned before, we have Chief Digital Officers in each of our business units. And I'm sure this is also typical of very large companies. Each of our business units have traditionally been very much what we call stove pipes.They do not often collaborate or share across the business units.
And so one of the things that I have done is I have created a CDO Alliance within Sompo. And so that is getting all the CDOs from our business units together with other digital executives. For example, Digital Marketing – nowadays, marketing is all mostly digital. And so the Digital Marketing Executive and others are part of the CDO Alliance within Sompo, and we gather on a regular basis, on a quarterly basis to share not only best practices, but also to help each other solve our collective pain points.
And we have found that, as a result of that, there are things that each of them can help each other out, whether it's Sompo Japan with Sompo International, or even with our life insurance or our nursing care business. There are digital touchpoints which are common across everybody.
Paul: And in a way that you can break these stove pipes or silos to an extent as well.
Albert: Exactly. And another example is, we just had earlier this month, the first we call it the Sompo Digital Showcase. And it's really – my vision of it was like a mini CES, or if you have gone to CES, you probably went to Eureka Park, which is where the early startups innovations are there. And so we wanted to recreate a little bit of a mini CES just within Sompo.
So we had in our auditorium in Tokyo, we had 20 booths, and each business unit showcased some of their key digital initiatives. And so we had over, I think 1,000 people attend within a three- hour window. And it was, when you walked into that environment, it felt like you were walking into Las Vegas to the CES show.People were buzzing.
They were excited to see that their – not only to show off their digital initiatives that they're working on, but to see that others are doing this. And as a result of that, they had actually a lot of interactions. We had people coming in from the field, we had people coming in from all the businesses. For all those who couldn't attend, of course, this is all filmed and we put it into a little kind of a VR environment so people could experience it.
Paul: And one more thing I'm curious about, Albert, in your current role is… You mentioned more Horizon One items around digital transformation, Horizon Two with the real data platform, for example. Horizon Three with exponential technologies.
I think one thing that I often see Chief Digital Officers struggling with is the balance between the short term imperatives, which are oftentimes linked to pretty clear financial metrics, and then the longer term bets and ambitions, which as we've discussed, needs to be some sort of a portfolio because you don't know what's going to really pan out, but you need to hedge your bets to an extent.
Albert: Yes.
Paul: So I'm sure that's probably something you've experienced through the years, and I'd be curious to know how you're balancing this and helping the organization balance between these competing objectives.
Albert: I'm lucky at Sompo that I have CDOs in each business unit. These CDOs in each business unit are primarily focused around Horizon One. And so they are accountable mostly for each of their DX metric impact for each business. That gives me some time to look at the Horizon Two and Horizon Three in a way that can also support them.
Because then when new businesses come up or these new exponential technologies bring new opportunities, we can then work together so that they can be ready to catch the new opportunities as well.
Paul: There's both the shared responsibility at the top of the house, if I can use that expression. But also through the education and training and engagement, it's almost, again, if I can use an expression, there's a bit of a grass root effort also of everybody leveling up when it comes to digital expertise, digital ways of working, and so on. And both of these things are working together towards these Horizons One, Two, and Three.
Albert: Sompo is a company that is… our tagline is we are a theme park for security, health, and wellbeing.
Paul: I absolutely love that tagline, by the way.
Albert: And what that means is that our purpose is to transform society to bring more security and more health and have wellbeing for all of our customers.
Paul: Back to the Beyond Insurance as well.
Albert: Which is the Beyond Insurance part. And so if you peel the onion a little bit, digital is going to be, and data are going to be key components of making that happen. And so there is that understanding of, yes, we need to invest in digital. We need to create new digital products and not be scared of it.
And so that's why we've been able to do the joint venture with Palantir. That's why we've been able to create this nursing care efficiency that, if we didn't have this purpose and conviction, we would have never been able to do.
Paul: Agility with purpose. I love the two words put together. So Albert, if we look forward, and obviously we have touched on many of these points already. But you talked a little bit about Web 3.0 and Generative AI as part of these exponential technologies.
And we talked about the Age of Acceleration, which I think is something at Oliver Wyman, we believe quite a bit. And we're at an age where there's a lot more happening across all the fronts at once, and it's happening faster than it ever has. So maybe, let me start here: How do you think today is different versus similar to what you've experienced before in the previous big revolutions that you've been a part of?
Albert: Things are moving faster. When I was in my previous jobs, whether it was at Apple or AT&T, there was none of this – we could say, "The internet is coming, the internet is coming." And then you would wait a few years and then have these things were coming. Now we say, Generative AI will change our industry and in months we see results.
Paul: Right.
Albert: So I think –
Paul: The future is now basically.
Albert: The future is now, exactly. A lot of what we're doing at Sompo, a lot of what we're doing in Japan in the area of aging can be brought to others. That's just one example of a societal issue. Aging.
Another is climate change. Japan I'd like to say it's a country of natural disasters, inaudible and earthquakes and Fukushima, nuclear disasters, et cetera. And climate change is not going to decrease. If anything, it's going to accelerate. And that's going to be a global issue.
So Japan, again, being on the forefront has been able to deal, is dealing with all this, and we hope to bring technology to solve many of these issues and bring the lessons learned out of Japan.
Paul: What do you foresee? Maybe what are your biggest personal bets on how the world is going to evolve in the next, I was going to say five to ten years, but what we said maybe three to five years might be a bit more appropriate than, and what role do you think Sompo will play in this?
Albert: Yeah, I think the aspiration, let me take the last part - I think the aspiration of Sompo is to be a key player globally in some of the societal changes that I talked about, like aging, climate change, resilience, et cetera.
I think as an industry, especially financial and the insurance industries, with all the – you know, for example, just recently we've had three bank failures here in the U.S. And who would have expected it to happen so quickly? Silicon Valley Bank basically disappeared in 40 hours.
Many are saying, well, the financial system today needs to change. We can do it the traditional way, add more regulations or whatever, but maybe there will be a major shift in this space. So one of the bets that I'm thinking is that in the insurance and in the financial industry, there will be some very systemic changes. I think much of that may be brought in by Web 3.0, by having more decentralized institutions. And I think it's not going to be – it will be a move towards that, but the move may happen quickly.
And so, one of the bets that we're looking at is how is it that in the future of a Web 3.0 economy of a decentralized economy, what is the role for insurance? How can we facilitate to make the world, the financial world a more secure place for all of our customers?
Paul: Albert, it's been absolutely terrific discussing all of these things with you and unpacking your journey. I think we've heard a lot of words of wisdom from you through throughout this podcast, but I always like to ask for any final words of wisdom from my guests. So over to you, any final words of wisdom?
Albert: Well, I actually would, you said you used the word journey. And one, when I was starting at Apple, one of the kind of quotes that we always had is: “The journey is the reward.” And that has stuck with me.
And I feel like this is true. It has been true through the decades. So my final words of wisdom is, let's just remember the journey is the reward. We should savor and make every moment, every day special because it's part of a journey. And that is my final thought for you.
Paul: That was a great final thought. Albert, thanks so much for your time. Thanks so much for joining us today. It was great.
Albert: Thank you. Thank you for having me and looking forward to more collaborations.
Paul: Likewise. Thank you everyone for listening. That was Albert Chu, Chief Digital Officer of Sampo Holdings. I'm Paul Ricard, your host. Thanks for listening and I'll see you next time. For more information about our Reinventing Insurance series, you can find everything on our website at www.oliverwyman.com/reinventinginsurance. Thanks for listening, and I'll see you next time.
This transcript has been edited for clarity.
