Developing an operational excellence implementation model for the insurance industry in South Africa.

Abstract

Introduction: The South African insurance industry is perceived as a volatile, uncertain, complex, and ambiguous (VUCA) environment, which is driven by factors such as technological developments and demands. It is a widely accepted notion that, although Operational Excellence (OE) is a fundamental concept in a company’s efficiency and competitiveness in a given market environment, its strategy in a complex and volatile environment such as this one is not well understood. It is in light of these factors that the aim of the study was to design a model for implementing a strategy related to operational excellence in order to ensure its applicability in a VUCA environment in which the South African insurance industry is situated. Methods: The pragmatic exploratory sequential mixed-method design was used in the study, where the first level of a mixed-method design involved in-depth individual interviews with a total of eight industry experts in the South African insurance industry, followed by a quantitative study that made use of a structural equation model, which then aimed to validate and explore fundamental OE construct associations with a total of 311 respondents who answered a questionnaire. Results: From the results, it is evident that digital transformation, communication, employee engagement, and leadership are some of the most important factors that can ensure success in OE. The challenges that were experienced in OE were a lack of skills among employees and change resistance. The proposed framework for OE integrates change management and technology incorporation concepts, which are aimed at inculcating a spirit of innovation and sustainability in organisations. Statistical results revealed a degree of success in OE, and leadership and communication are two areas that need improvement. Conclusion: In order for OE to be achieved in the insurance industry, a flexible leadership style and a culture that adopts technological innovations, as well as a proactive leadership structure, are necessary in order to mitigate VUCA complexities. The proposed framework for OE is a theoretical platform for achieving OE in organizations, and insurance companies can invest in AI-based analysis, training, and development of their staff, as well as in agile methodologies and risk management. This proposed model can be tested in other industries, and its effect on OE in the long term, considering digitalization, can be studied in the future.