This is the first-ever guest post on How It Actually Works. It's from my Lambda School coworker Ryan Herr. I'll let Ryan take it from here.
Hi, I’m Ryan, a data science instructor at Lambda School. Before Lambda I worked in insurance for 12 years, and that’s what this post is about.
Back in 2012 I joined a new department at State Farm. I was a “business plan development analyst” and put on the “Innovation Team”.
People say that more fiction is written in Excel than Word and, well, that was literally my job.
I wrote plausible stories about the revenue potential of new products, and pitched ideas to executives. Nothing I worked on ever saw the light of day, and almost everything I tried failed.
One of the ideas we pitched was a “smart home” idea.
What if State Farm offered branded products to mitigate risks like burst pipes before they happen? Or technology to help seniors remain independent in their home? Sensors and algorithms could automatically detect falls, help families communicate, coordinate care, etc..
Customers could get peace of mind instead of just indemnification, and the company could get a new diversified source of revenue.
And yet HQ always came back with similar questions:
What if something went wrong?
Would we be embarrassed?
Could we get sued?
Because lawyers ran the company these were answered based on worse-case scenarios, not expected value.
They were optimizing each individual swing instead of thinking about the broader portfolio of swings.
They believed the brand's reputation was worth many billions (probably true) and could all be lost by a single failed product (probably not).
So the smart home idea pivoted, from a branded product to an affiliate marketing coupon. When customers purchased a vendor's product, State Farm took a tiny cut.
It’d be like if you planned to write a book but were afraid your book might be bad, so you just put up an Amazon affiliate link to someone else's book.
The company culture was hypersensitive to risks from failed action, but desensitized to risks from inaction. We needed to take more swings.
So I pitched another idea: imagine we hand out 500 "innovation kits" to employees. Inside each kit there's a $1,000 prepaid card, some training content, supplies.
So people can prototype and test ideas with no red tape. Adobe did this — it's basically The Lean Startup for big enterprises.
We could do hundreds of experiments a year, and one hit pays for the program.
I proposed a pilot at one tenth the scale but was told I needed CEO approval, and there were seven layers between us. I met a couple times with the Chief Legal Officer, who was enthusiastic but noncommittal.
Finally, when I had one foot out the door, I just emailed the CEO and sent him a kit. My boss said it was a "wild-ass shot on goal."
I never heard back and nothing happened, which ultimately proved my point: so what?
If the cost is negligible take as many swings as possible.
Seven years ago data science was already a big trend outside State Farm but, and I know this sounds incredible for an insurance company, wasn't a thing yet inside.
It was obvious that eventually they’d bring on data scientists, so I signed up for the first online courses I could find and started to reinvent myself.
When State Farm officially created a data science team, I hustled my way onto it because I was prepared. With my pivot from business generalist to data scientist, I doubled my income, and I'm much happier with my career.
So all the times I struck out didn't matter. I didn't need a good batting average. I just needed enough swings to get one hit. I wish I could have convinced my company this. But I'm glad to have convinced myself.
You can reach Ryan at email@example.com
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