Paul Ricard
Hi, everyone and welcome to Oliver Wyman’s Reinventing Insurance podcast. I’m your host, Paul Ricard. 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 why don’t you briefly introduce yourself first off?
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 and casualty insurance company in Japan. We also have life insurance in Japan. And outside of Japan, we have Sompo International, which is mostly property and casualty for commercial.
And, in addition to insurance in Japan, as many of you may know, it is an 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. 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 number 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 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 didn’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. 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 and five-and-a-quarter-inch. So it was a smaller form factor, and we were the first ones 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 in the financial industry, real estate, et cetera. I remember going to the Ginza and being 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 is 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 thing I learned when I was in 1982 is that Apple was a pioneer in trying to bring personal computers to everyone. And in fact, our dream or vision for Apple was that everyone would one day have a personal computer in front of them, whether at work, at home, or at play. And for no less than 40 years, this has been 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, too little to dream. Always do big. And I think that was one of the things that has stayed with me. Another thing 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. 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, on how to use VisiCalc at that time.
Paul
I’m sure it was a rite of passage as well.
Albert
Yes. And to think that to open up a computer, a 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, in 1996, AT&T had just gone through a divestiture – so it spun out Lucent and NCR, and AT&T became a sole communications services company. But it was also at the time when the internet was really taking hold here, and AT&T realized that the internet was going to completely change not only the technology-based 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, was meeting with the head of the worldwide consumer business, and she was in charge of all consumer interactions, 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. 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 I’m bringing forward. Things that today may seem implausible can have… disruptions that 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 the 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 create a better society and financial future for all of us, because we can anticipate these changes in technology coming.
Paul
Back to your point of dreaming big. 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 throughout your entire career.
Albert
I left AT&T six years later in 2002. 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 was what we called 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.
We successfully created Palm Source, and it was listed on the 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 essentially what was a smartphone OS.
After leaving Palm Source Access, I became an angel investor in a variety of different startups because my passion has always been to bring technology to market. And many of the startups I worked with were Japanese startups, helping them to come into the US market. 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.”
He asked me to help him become 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 that the future would be beyond insurance. It’ll be very different than what the present is.
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 an 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 at 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 an officer.
Albert
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 2021, in April 2021, I was the co-chief digital officer of Sompo Group. And in April 2022, 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. 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 are in the form of a traditional, you would say, digital transformation. It is to improve, for example, the efficiency of underwriters, the efficiency of our business processes, to reduce costs 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 on 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. With 400 facilities, a 1.5% market share means there are about 60,000 nursing care facilities in Japan.
Now, it’s a very fragmented industry. And 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. We use the Palantir Foundry software, and 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 of data, literally by the minute, on how they slept.
In addition, we have data on how the residents were eating, their nutrition information, and 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 operational efficiency of our caregivers by 20-30%. 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 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 20-30%. 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, spinning them off 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, near-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 collaborated with Oliver Wyman to come up with what we call the 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 them 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 a real data platform initiative that we have.
And beyond that, we have 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, which is 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 had 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 they say 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, yes. It can all happen very quickly. And I think the macro environment now is happening very quickly. And it’s very likely that disruption may come in a very unexpected and rapid way.
Paul
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, a very traditional company. We have a 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.
This whole mindset change is not just about bringing outside talent in, which is, of course, what we do in the digital lab. 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 have more of a digital mindset, have more of what I would call a Silicon Valley mindset.
I was told that there is a culture of a kind of conservatism in at least 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
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 are a lot of things that you need to make sure you tick all the right boxes, versus rushing to get 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. We have to adapt to that as well and adapt fast.
Paul
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 has traditionally been very much what we call stovepipes. They do not often collaborate or share across the business units.
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 mostly digital. And 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 do to 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 that 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 the first Sompo digital showcase earlier this month. 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 startup innovations are. We wanted to recreate a little bit of a mini-CES just within Sompo.
We had in our auditorium in Tokyo, we had 20 booths, and each business unit showcased some of their key digital initiatives. 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 at 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 actually had a lot of interactions. We had people coming in from the field, and 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
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.
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
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 on horizon one. They are accountable mostly for each of their DX metric impact for each business. That gives me some time to look at 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 grassroots 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 that we are a theme park for security, health, and well-being.
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 well-being for all of our customers.
Paul
Back to the “beyond insurance” as well.
Albert
Which is the beyond insurance part? If you peel the onion a little bit, digital is going to be, and data is going to be, key components of making that happen. There is that understanding of, yes, we need to invest in digital. We need to create new digital products and not be scared of them. 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. 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. Let me start here: How do you think today is different from or 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 that were coming. Now we say, generative AI will change our industry, and in months we will 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, 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 at the forefront, has been able to deal 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 10 years, but what we said, maybe three to five years, might be a bit more appropriate, and what role do you think Sompo will play in this?
Albert
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 the financial and insurance industries, with all the… For example, just recently we’ve had three bank failures here in the US, 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 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 it is that in the future of a Web 3.0 economy of a decentralized economy, what is the role for insurance? How can we facilitate making 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 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
You used the word journey. And when I was starting at Apple, one of the quotes that we always had was. The journey is the reward. And that has stuck with me. I feel like this is true. It has been true through the decades. My final words of wisdom are, 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 I'm 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. 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.
