When I ask my daughter how college is going, she says, \u201cCheck my Instagram.\u201d My daughter, and her entire generation, will be Nationwide\u2019s future customers in only a matter of years. How does an insurance company that has sold products through a network of agents engage with this new generation in an entirely new way?\u00a0 By rewriting major systems, adapting the company culture, and moving beyond business models that have provided over a century of growth. Terrance Williams and Jim Fowler, two senior executives chartered with driving this change, talked with me about the company\u2019s digital transformation.\nMartha Heller: How does Nationwide define \u201cdigital\u201d?\nTerrance Williams (TW):\u00a0 For Nationwide, digital is a means of creating new interactions, new efficiencies, and new business opportunities. It is an acknowledgement that consumer expectations are at a peak level, and Nationwide has to adapt to meet those expectations.\n Nationwide\n\nTerrance Williams, president of emerging businesses and chief marketing officer, Nationwide\n\n\nJim Fowler (JF): \u00a0Digital is understanding that customer needs have changed. When my father needed home, auto, or life insurance, he bought those products from an agent named Bill, whom he knew for most of his life and saw on a regular basis. Nationwide\u2019s future customer will interact with our agents and us through very different channels. They will think about protecting their car, apartment, or business the minute they need to, and will want to make those purchases through digital channels. Companies that figure out how to be there digitally with that customer \u2013 in the right moment \u2013 will win.\nWhat are you doing to be there digitally for that customer? \nTW:\u00a0 We\u2019ve created an new organization \u00a0called the Emerging Businesses Group (think of it as Nationwide\u2019s R&D arm), which creates new solutions and new ways of going to market. This innovation is funded by our traditional insurance and financial services products, which have driven revenue and margins for nearly 100 years.\u00a0\nFor example, we are going to announce a partnership with a major technology retailer which will allow our customers to engage directly with Nationwide by meeting them where they are instead of pulling them into our distribution world. Later this year, we will also launch a separately branded company which will provide a digital platform designed for self-reliant millennials. Millennials will not call an agent on the phone. They don\u2019t even want to get on a computer and to go to a website. \u00a0They will, however, buy car insurance on their mobile device and manage it through an app; this new company will be aligned to their preferred way of interacting.\nJF:\u00a0 Over the past five years, we\u2019ve spent over $1 billion rewriting every one of our transactional systems from policy administration to retirement planning to underwriting and go-to-market. By getting the basics right at the transactional level, we can differentiate ourselves as a technology-enabled company that connects with our customer and members personally.\u00a0\n Nationwide\n\nJim Fowler, executive vice president and CIO, Nationwide\n\n\nWith that foundation in place, we are offering products like Nationwide Express, which allows our customers to receive quotes and buy products in real time; or SmartMiles, a usage-based product that customers use to impact their insurance quote based on how they drive their car.\nWe are also using drone technology. After a big storm, we used to send a claims adjuster with ladders and boots to walk on roofs to inspect the damage and make a quote. Now, we can send a drone to fly over the house and send that information back to the claims adjuster.\nWhat architectural changes have you made to support this innovation? \nJF: \u00a0We\u2019ve been API-enabling every one of the products and services that we sell externally. We launched developer.nationwide.com, an external portal that connects us to other ecosystems and exposes our products externally. We now have over 60 externally and 260 internally exposed APIs that connect us with the data wherever it is. Data could come from a drone vendor that submits video to us or from the agency management system of a registered investment advisor. Those vendors can take the API code we\u2019ve given them, embed it into their system, provide a life insurance quote, and send that data right to our systems.\nWhy are companies suddenly working so much with APIs? \u00a0\nJF:\u00a0 APIs are not a new technical advancement. CIOs have been embedding their products in other ecosystems for more than a decade. The change is in customer expectations. Customers want to buy a car and get insurance at the same time. They don\u2019t care that those products are offered by different businesses. The companies that can use APIs to create one seamless experience will provide the best customer experience.\nWhat is the culture you are building across the company to drive new products and business models? \nTW:\u00a0 We are a 100-year-old mutual company, so we recognize that cultural change will be one of the toughest challenges we will face over the next decade. But we have a long history of evolving. Back in the 1960s, we drove regulation for the mandatory use of seatbelts, which was radical back then. We were also one of the first companies to come out with a mobile app. That said, we are now looking to operate with a level of speed and agility that is different from the past. In our Emerging Businesses Group, we have developed a set of principles to define our changing culture, such as:\n\nTake big swings at big opportunities.\nBe quick to recognize failure; abandon those efforts, but take the learnings and move onto the next innovation.\nPush the boundaries that Nationwide has traditionally used to describe \u201cprotection.\u201d\n\nI won\u2019t stand up in front of a group without talking about the need for change. My message is that our existing models are not sustainable beyond the next decade. The cultural change we make today will drive our growth for the next 100 years.\nWhat culture are you building inside of the IT organization? \nJF: \u00a0Nationwide is a mutual insurance company, which means we are owned by our members. Because of that model, I inherited an IT culture that was already putting the member at the front of every decision. I capitalized on that part of the culture. But we still needed to move from being great at executing on a business need to helping define that need from the beginning.\nI gave the IT team permission to be vocal about how technology can better help meet the needs of customers. My steps in driving cultural change in IT were:\n\nHighlight the fact that we are mutual company, which means we can take the long-term perspective rather than a quarterly one in our investments \u2013 a model that gives us competitive advantage over our peers.\nCelebrate the change they were already driving before I arrived, like rewriting every platform.\nShine a light on some of the \u201chidden gems\u201d already under development by our team.\n\nWhat are some examples of hidden gems?\nJF:\u00a0 One example is developer.nationwide.com. When I got here, a small group of developers had set up a skunkworks external developer portal.\u00a0 That work put us ahead of other insurance firms. I wanted to put a huge spotlight on that - raising up that group to give everyone permission to innovate.\nAnother hidden gem was in agile. \u00a0When I looked inside our claims space, I found a team that was not only agile in IT, but agile in the entire process. The claims department had high performing teams -- a mix of IT and claims people -- who were iterating on our claims process technology and getting new releases out the door in three weeks. The teams were co-located with our claims operations, and their velocity was high. That group has been a shining example that agile is not just an IT need; it\u2019s a new way of working for the entire business.\nWhat advice do you have for CEOs who need to transform their companies? \nTW:\u00a0 Some CEOs gravitate to digital but then return to the models that have always driven revenue. My advice to CEOs is to recognize that a smaller percentage of your revenue is going to come from your core businesses over time, and you need to start thinking about your business model in the long term. This is not easy. CEOs can lose their job if they are down a few quarters, so it can be very challenging to move beyond the models of the past. My advice is to understand your customer better than anyone and let the customer lens drive your evolution.\nAbout Terrance Williams\nTerrance Williams, Nationwide President, Emerging Business Group and EVP, Chief Marketing Officer, has enjoyed a distinguished career with Nationwide. His current responsibilities include helping prepare the company for the future through leadership of the Emerging Businesses Group and driving all aspects of Marketing. Since starting with the company in 1995, Williams has held a broad array of positions touching almost every segment of the business. His accountabilities expanded in 2017 to include the Emerging Businesses Group.\nWilliams earned a Bachelor of Science degree in Insurance at the University of South Carolina, followed by an MBA Walden University. Williams currently serves on the Columbus (Ohio) Regional Airport Authority, and is on the AdWeek Advisory Board. For two consecutive years in 2017 and 2018, Forbes recognized Williams as one of the World\u2019s Most Influential CMOs. Additionally, Black Enterprise named him among the Top 300 Most Powerful Executives in Corporate America.\nAbout Jim Fowler\nJim Fowler is Executive Vice President and Chief Information Officer of Nationwide. In this role, he is responsible for the Nationwide technology strategy, IT capabilities and business transformation programs. Prior to joining Nationwide in 2018, Fowler was Chief Information Officer for General Electric, where he led the GE global information technology strategy, services, operations and internal digital transformation programs. Prior to his 18-year career at GE, he held IT roles with NCR and Accenture. Fowler holds a Bachelor of Science degree in management information systems and marketing from Miami University, and a MBA from Xavier University. He is also a certified Six Sigma Black Belt, and was recently recognized by Forbes with the CIO Innovation Award.