The sandbox system

By John Parkinson

As comprehensive IT continues to combine with progressive technology to move towards the cloud, AXIS Capital’s John Parkinson outlines how important the role of innovation is becoming – and outlines why the sandbox isn’t just for kids anymore.

Fifteen years ago, if you had any workable knowledge of IT systems and business computing, it was more than likely that you'd pour it straight into the now legendary back-end MS-DOS. That's right, that vacant black-screen parading endless lines of blinking, emerald-green code that remained about as efficient as toasting your bread with a lighter. Thing is, back in those days, MS-DOS was all we had.

Fast-forward to today, and you'd be lucky if a handful of the millennial crowd could even explain the largely defunct program of yesteryear. Yes, today's technology is filled with usability first, understanding a serious second - which works well for consumer technology; but in the world of business IT and security systems, grasping that understanding is equally as important as maintaining a system's usability. One without the other, and you've got some serious kinks in your cables.

Straightening out those kinks while ensuring the cables are as efficient as possible is John Parkinson, SVP for AXIS Capital's Global Program Office. With AXIS sitting between both IT and business levels, Parkinson's role encompasses every project or program that affects either of those runs through the management group that he leads. The biggest problem he faces at the moment? Getting the founders of AXIS - "smart people who know exactly what they're doing in their business context" - to value technology more than they currently do. As Parkinson explains, as pivotal and knowledgeable as they are, they have no "visceral connection to what technology makes possible".

"The challenge they face today is that that doesn't scale very well, so they can't work 24 hours a day. The first time that they can't peer review a risk because there's no time, they have to start trusting technology to do some of the work". The question that needs answering by Parkinson is how to educate his superiors to that they become better decision makers about what technology can do to help them do their jobs. Unfortunately, the solution isn't as clear-cut as the problem.

"We're still crafting an answer to that," admits Parkinson, "but it's a combination of implanting technology-savvy, business-focused people into the operating side of the business, so there are voices they trust that they interact with every day. It's in part listening to how they talk about what they want to do, what they want from a business perspective, what they want to achieve and then translate that into longer-term architectural and platform decisions that IT can make behind the scenes - building the right plumbing, wiring and platforms so that when they come to us in three months, six months or a year, we will already have most of what it will take to satisfy what they need."

What Parkinson alludes to is a change from IT and operations that have been rather reactive in the past, towards listening to more about the longer-term implications of what the business wants to do. In doing so, it is hoped that Parkinson and his team can become better custodians of the capital that's entrusted to them to build the technology behind the proverbial scenes. The hard part? Well, according to Parkinson - and a sentiment that is obvious to anyone in his shoes across the industry - it continues to come back to annual budgets. But with AXIS functioning specifically on a three-year plan now, as opposed to the traditional one-year plan, looking at results every quarter within that time period, it allows for a slightly longer planning horizon.

"The questions that come back to IT and operations about that approach allude to educational opportunities," continues Parkinson. "Everyone is coming and saying 'Why are we doing it this way?' And we have the chance to sit down and say, 'Well we have to make decisions now that we can't change easily for three to four years, so we want you to tell us where you think you're going to be in that time period so we arrive at the same place.'"

In order for this to not only be successful but also as efficient as possible, Parkinson chopped the budget into a number of different pieces and included a 20 percent portion to ensure space for unallocated capacity into the plan. "If you go back and look at the past five years, every year we've done about 20 percent of thing that we weren't told we were going to be doing at the beginning of the year," explains Parkinson. "So history says that we need that 20 percent."

But for all the IT systems, allocated budgets and business motivations floating around at AXIS - and there are a lot - none of it means anything if it isn't supported by the strongest possible network of innovation. Naturally for a man the likes of Parkinson, this gave him the motivation to truly think outside the box - the "sandbox" to be exact.

"Over 10 years ago when I sued to work for Ernst & Young, I ran corporate innovation for a couple of years. I looked at all the literature at the time and decided it was all fantasy. Most people had this consulting model of innovation, where you build something off to one side and you fed it money and pizza until it turned out great ideas. The problem was that never worked."

Instead, what Parkinson came up with was a grass roots innovation program. Essentially, it involved mining about 5000 ideas from employees across the board - from junior executives through to top management - and then throwing them into a system of group voting. Once the 'winning' ideas were extracted, it was time to take them to Parkinson's business "sandbox" to find out precisely what each idea would need to function on a business level. "We built it deliberately crude with manual tools and processes, a little bit of technology that would get the ball rolling, and then just saying to someone 'Okay, go and run a business in the sandbox for 180 days, and if at the end of it you can show us that you've found some customers and the product worked, it was legal and the cost to deliver was less than the cost of all the rest of it', then we'd put some more money in and we'd launch them as a business. In two years we took $400 million of costs out and built $1 billion in new revenue," explains Parkinson.

"Out of about 5000 ideas that went through the filter, we ended up with about 20 that were worth trying out. Roughly 50 percent of the ideas were health and hygiene - better coffee, helping with better parking, the elevators don't work - that kind of thing. We fixed them easily as they mean a lot and don't cost much to do and you get a lot of credibility for it.  We ended up with about 250 ideas that were about new business, so we went through and conducted adjacent analysis. After that, we carved off about 100 ideas that weren't bad ideas, but they were never going to be anything we were going to do, so we sold them to business incubators instead.

"Finally, we looked at the rest and ranked them and said, 'Okay, so if this idea is going to cost $1 million to deploy and it's going to make us one dollar more, then you know it's profitable. But then if we had one that cost a dollar but was going to make us $1 million, then obvious that would take priority". What Parkinson ended up with was a blueprint for working viable innovation into not only technology, the annual budget and the psyche of his superiors - his initial intention - but towards understanding the importance of IT and secure systems within the context of progressive business. And what does he think of the current situation when it comes to the cloud, perhaps the biggest non-entity being preached cross-industry at the moment? "Lots of vapor". And from a man who accrued $1 billion in new revenues in two years, his words speak as loud as his actions.