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Research Briefing

Becoming a Serial Innovator of Digital Offerings

Learn about how Munich Re built a foundation to generate multiple digital offerings quickly and successfully.

To remain relevant and mitigate disruption, traditional companies have to engage in multiple fast-paced experiments in digital offerings: revenue-generating solutions that leverage digital technologies to address customer needs. After launching several digital offering initiatives, reinsurance giant Munich Re noticed that many experienced similar challenges. This briefing describes how Munich Re addressed these common challenges by building a foundation for experimenting more systematically and successfully with digital offerings. The foundation has enabled Munich Re to become a serial innovator of digital offerings.

To remain relevant and mitigate disruption, traditional companies have to engage in multiple fast-paced experiments to produce digital offerings: revenue-generating solutions that leverage digital technologies to address customer needs.[foot]Learn about producing digital offerings in J. W. Ross, M. Mocker, and C. M. Beath, “Rethink Your Approach to Digital Strategy: Experiment and Engage,” MIT Sloan CISR Research Briefing, Vol. XVIII, No. 10, October 2018,[/foot]

To drive their digital offering experiments, companies are investing in corporate accelerators, establishing digital innovation labs apart from company headquarters, appointing a chief digital officer or creating similar roles, and increasing hiring of digital talent such as coders, data scientists, and design thinking coaches.

However, global reinsurance giant Munich Re found that these types of efforts didn’t produce sufficient momentum for the company’s digital offering initiatives, because all the initiatives experienced similar challenges around three key resources: funding, expertise, and technological capabilities. In this briefing, we describe how Munich Re became a serial innovator of digital offerings by building a foundation to address challenges that were common across initiatives.[foot]This research briefing draws from MIT CISR’s full Munich Re case study, N. Fonstad and M. Mocker, “Munich Re: Building a Foundation for Innovating Digital Offerings,” MIT Sloan CISR Working Paper, No. 445, August 2020,[/foot]

Resource Challenges that Impede Serial Innovation

Each innovation initiative needs funding to quickly test and learn about the desirability, feasibility, and viability of a potential digital offering so as to build and scale the offering.[foot]Read more about the test-and-learn process in individual initiatives in N. Fonstad, “Innovating Greater Value Faster by Taking Time to Learn,” MIT CISR Research Briefing, Vol. XX, No. 2, February 2020,[/foot] But how to manage the risk of wasting those funds on fancy innovations that collectively might not move the company toward its vision? And how to ensure that viable initiatives continue to receive sufficient funding to scale?

Initiatives invest funds in expertise in data analytics, digital technologies, and methodologies such as agile and design thinking to develop a digital offering in a test-and-learn fashion. But how to ensure that an initiative’s cross-functional experts are sufficiently committed to overcome traditionally siloed decision making and drive the initiative through development like a well-bonded start-up team would?

A product owner wants to get a digital offering to market quickly with functionality that differentiates the offering from competitors. But a fully independent initiative must dedicate significant resources to developing technological capabilities that will provide only basic functionality and no competitive advantage. A digital platform of shared capabilities can accelerate new initiatives via reuse. But how to address concerns that the platform is yet another imposed corporate IT standard that hampers speed to market?

Digital Offering Initiatives at Munich Re

As of 2020, Munich Re had launched more than seventy digital offering initiatives,[foot]Munich Re used the terms “digital products” and “digital business” interchangeably to refer to what we call digital offerings.[/foot] of which ten were on the market or about to be released. Several of these offerings generated new sources of revenue by helping businesses such as insurance companies and brokers deliver much-improved service to their own insurance customers.

An early example of such a digital offering was the Munich Re Internet Risk Assessor Digital Suite (MIRA DS). MIRA DS consisted of a set of digital services that enabled primary insurance companies to automate the processing of life insurance applications—even complicated ones that had previously required lengthy manual handling, such as those from applicants with pre-existing conditions.

Another early digital offering initiative was Realytix. Using a cloud-based platform, Realytix enabled an insurance company to reduce the time it took to underwrite non-life risks—such as related to building a factory—from days to minutes.

Two years after their launch, both MIRA DS and Realytix had grown significantly in terms of revenue and customers. But along the way, as these and other initiatives evolved from ideation through customer testing to market release, they ran into similar challenges around the key resources of funding, expertise, and technological capabilities. To address such challenges systematically, Munich Re built a foundation for digital offering experimentation based on these three resources.

Funding: Target a Portfolio of Initiatives, Fund in Stages

Senior management defined a target portfolio to prioritize initiatives and ensure that they collectively help the company realize its vision to drive the digital transformation “to provide … clients with better, more efficient, and tailored solutions.”[foot]Munich Re, “About Munich Re,” Munich Re website,, accessed May 25, 2020.[/foot] Munich Re’s portfolio looks beyond typical innovation time horizons (e.g., horizon 1–3) and other proxies for risk; it also prescribes which customer needs to address and what business value to create. Digital offering innovations are expected to pursue new sources of revenue by addressing one of five “strategic domains”—cyber insurance, IoT industries, digital cooperation models, digitally augmented underwriting and claims, and mobility—each a specific digital technology representing a set of client needs. In roadshows and online, Munich Re’s global head of innovation communicates the target portfolio, encouraging employees across the company to pitch ideas related to the company’s priorities.

Munich Re created a separate fund for digital innovation of about 100 million euro annually. Employees can apply for a limited budget to jump-start an initiative by answering five questions. Munich Re then employs a stage-gated funding process: if an initiative reaches the jointly set goal for a stage, the initiative becomes eligible for an additional, larger round of funding.

Expertise: Commit Digital Talent, Assign an IT Co-Founder

In 2018, Munich Re’s IT leadership created a new unit within IT, Business Technology, dedicated exclusively to helping innovation initiatives build digital offerings. Business Technology provides initiatives with a range of experts, such as software developers, data scientists, and design thinking and agile coaches. In addition to contributing their domain expertise to build, test, and adapt prototypes, they help to develop sales pitches and navigate Munich Re’s organizational structure.

At ideation, major digital offering initiatives are assigned a senior architect to act as co-founder to the initiative’s full-time business-side product owner. Business Technology formalized the senior architect role with the introduction of Initiative Chief Technology Officers (iCTOs).

The aspired model [is one where] the CEO function is done by someone from the business side and the CTO function is done by someone from [Business Technology]. And in the CTO function, we see also a driving aspect. It's not just [ … ] “wait and see what the requests are.” Hopefully, you engage yourself in shaping the digital component, which to some extent is a big part of the products. So we have a driving and influencing role here.

Dr. Olaf Frank, Head of Business Technology, Munich Re

Having complementary co-founders also helps build buy-in across multiple stakeholder groups, making it easier for initiatives that qualify for subsequent, greater investments to get critical support from those groups.

Technological Capabilities: Let Initiatives Lead and Guide Shared Services

Digital offerings, which are made up of software components, share many technology needs; software components can fulfill functional needs that are common across multiple offerings. This is why companies build digital platforms: they are repositories of software components that enable digital functionality and can be used by multiple offerings.

But individual initiatives for developing digital offerings do not always welcome a centrally managed digital platform. At Munich Re, business leaders of early offerings wanted their initiatives to act as much as possible like a start-up, seeking maximum independence from Munich Re and its central IT unit.

In prior efforts, Munich Re had built a digital platform and then expected initiatives to use the components. This time, Munich Re decided to first let initiatives experience the need for shared components. As a result, early initiatives observed that developing capabilities such as non-differentiating functionality for customer identity management or compliant cloud data storage strained their limited resources and prolonged time to market.

It’s difficult to help someone if they don’t feel they have a problem. So as long as you believe you know what to do, I’m just a pain in your neck if I try to tell you to do something else, right? [Especially, because in the beginning] the hype was “I do everything myself. To get away from the company.”

Dr. Olaf Frank, Head of Business Technology, Munich Re

Munich Re birthed its platform for digital offerings, Excite, from the capabilities the early initiatives developed, and the platform evolved as initiatives progressed and more of them sought help. A year after it was launched, Excite comprised more than thirty shared software components.[foot]Excite services are organized into three layers: digital front-end services, insurance services, and data and analytics. See a detailed description of the Excite platform in Appendix A of Fonstad and Mocker, “Munich Re: Building a Foundation for Innovating Digital Offerings.”[/foot]

Munich Re employs a co-funding model for Excite, with the platform’s cost divided between a central budget and the initiatives using the platform. To get the approval to build Excite, Business Technology convinced the board of management of the potential cost savings from reuse.

Business Technology entices initiatives—rather than forces them—to use Excite components. The platform is pitched as a set of managed shared services that unburden initiatives from building essential yet non-differentiating functionality; for each component, the Excite team developed service level agreements that make clear to initiatives what they get in exchange for what they pay.

I didn’t go out with my board slide and say, “Give me 40 percent of your money, because the board decided so.” The way how I approached it with each and every [initiative] was, “We already have these digital capabilities. What if I take that from you, provide it to you, support you. [I will also create] a roadmap for these, because next year [you may] have to add some capabilities [or] scale up customer support capabilities. I will take care of that and you give me some money for that. We have a clear service description, service agreement on the things we’re delivering to you.” [That is how] I got the buy-in from [initiatives].

Dr. Dirk Heiss, Head of Digital Platforms, Business Technology, Munich Re

Reflecting an orientation toward the success of initiatives and the company as a whole, the Excite team measures its success along four objectives: accelerated time to market for digital products, improved experience for customers using offerings relying on Excite, revenue growth, and cost savings with component reuse.

Taking Learning to the Next Level

To develop a successful digital offering, an initiative’s team must learn how to address a customer need in a manner that is feasible and profitable. To become a serial innovator of digital offerings, as with Munich Re, a company will have to learn how to address systematically the common challenges of multiple initiatives in regard to funding, expertise, and technological capabilities.

Figure 1: Munich Re’s Digital Foundation to Systematize the Innovation of Digital Offerings 




Technological Capabilities

Key Actions per Resource

  • Define a targeted portfolio of digital offering initiatives
  • Make an innovation fund accessible in non-bureaucratic fashion
  • Extend funding in stages based on progress along jointly agreed goals
  • Install an architect acting as a co-founder to complement the business founder for each major digital offering initiative
  • Provide each digital offering initiative with technology and methodology experts who are fully dedicated to the initiative’s success
  • Build a digital platform bottom-up as digital offering initiatives recognize the benefits of shared components
  • Promote the platform to digital offering initiatives as managed shared services that provide relief from developing non-differentiating functionality (and to the board as a cost-saving opportunity)

© 2020 MIT Sloan Center for Information Systems Research, Fonstad and Mocker. MIT CISR Research Briefings are published monthly to update the center's patrons and sponsors on current research projects.

About the Authors

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Nils O. Fonstad, Research Scientist, MIT Sloan Center for Information Systems Research

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Martin Mocker, Research Affiliate, MIT Sloan Center for Information Systems Research


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