Legacy institutions in the insurance sector are navigating a treacherous tightrope, where the immense pressure to deliver consistent quarterly returns clashes directly with the critical need to fund a high-stakes technological reinvention for survival. This is the central paradox facing industry stalwarts: how to keep the current engine running at peak performance while simultaneously building a new one fit for the future. For The Travelers Companies, a leading insurer with a storied history, the answer lies not in choosing one priority over the other but in pursuing both with equal discipline. Guided by the strategic vision of leaders like Executive Vice President and Chief Technology Officer Mojgan Lefebvre, the company has institutionalized a framework designed to master this duality, offering a compelling case study in sustainable innovation.
The Insurer’s Dilemma Juggling Present Profits and Future Proofing
The challenge facing established insurers is profound and structural. On one hand, the demands of the market are immediate and unforgiving. Shareholders expect consistent financial results, agents demand reliable and efficient platforms, and policyholders require seamless service today, not tomorrow. These operational imperatives consume significant resources and demand flawless execution, leaving little room for error or speculative ventures. The financial performance of the present is the lifeblood of the organization, and any disruption to it poses an existential threat.
On the other hand, the technological landscape is shifting at an unprecedented pace. The rise of artificial intelligence, the scalability of cloud computing, and the power of advanced data analytics are not merely incremental improvements; they represent a fundamental reshaping of the industry. Insurtech startups, unburdened by legacy systems, are leveraging these tools to create new business models and customer experiences. For an incumbent like Travelers, ignoring this technological wave is not an option. Investing in long-term transformation is essential for future relevance and competitive advantage, creating a persistent tension between today’s results and tomorrow’s necessities.
The Perform and Transform Doctrine A Framework for Dual Success
In response to this dilemma, Travelers established a clear, enterprise-wide guiding principle several years ago known as the “perform and transform” doctrine. This is not simply a slogan or a technology-specific initiative but a core tenet of the company’s entire business strategy. The framework was designed to create a shared understanding and a common language across the organization, ensuring that every department, from underwriting to technology, recognizes its role in fulfilling a dual mandate. It provides a structured way to think about and manage the inherent conflict between short-term execution and long-term vision.
This dual imperative serves as the strategic foundation upon which all major decisions are built. The “perform” aspect is the engine that drives the business forward, generating the capital and stability needed to fund innovation. The “transform” aspect ensures that this capital is invested wisely in building durable, future-proof capabilities. By explicitly linking the two, the framework reframes the relationship between them: they are not competing priorities but mutually reinforcing components of a single, integrated strategy. Success in one area directly enables and accelerates success in the other, creating a virtuous cycle of operational excellence and strategic evolution.
The Core Pillars of Travelers’ Technology Strategy
The “perform and transform” doctrine is more than a high-level concept; it is operationalized through a set of clear and interconnected strategic pillars. These pillars translate the dual imperative into tangible actions, guiding everything from financial planning and system architecture to sourcing decisions and talent development. They provide a detailed roadmap for how Travelers methodically modernizes its capabilities while continuing to deliver industry-leading results.
The Perform Imperative Funding the Future with Today’s Excellence
The “perform” pillar is anchored in an unwavering commitment to flawless execution against the company’s financial and operational goals. This means delivering strong, consistent returns on equity, maintaining underwriting discipline, and ensuring the absolute reliability of the systems that agents and customers depend on every day. It is about excelling at the core functions of insurance—assessing risk, managing claims, and providing outstanding service—with ruthless efficiency and effectiveness.
This focus on present-day excellence is fundamentally what makes the company’s ambitious transformation agenda possible. The profits generated from strong performance provide the necessary funding for long-term investments in technology and innovation. Moreover, the operational stability achieved through this pillar builds trust with stakeholders, earning the organization the credibility and latitude to pursue a multi-year modernization journey. In this model, performance is not an obstacle to transformation; it is its essential prerequisite and fuel.
The Transform Mandate Building a Durable Competitive Edge
While performance funds the future, the “transform” mandate is focused on building it. This is not innovation for its own sake but a highly disciplined and business-aligned approach to developing new capabilities. Every transformation initiative is vetted to ensure it directly supports and enhances the company’s core goals in underwriting, claims, and customer service. The objective is to simultaneously protect existing competitive advantages and create new, differentiating ones that will sustain the company for the next decade.
This involves a targeted effort to embed new technologies where they can have the greatest impact. For example, AI and machine learning models are being developed to refine risk segmentation and pricing, while digital tools are being deployed to streamline the claims process and improve the customer experience. The key is to ensure that these advancements are not isolated projects but are integrated into core workflows, future-proofing the business by making it smarter, faster, and more responsive to market dynamics.
Foundational Modernization Paving the Way for Scalable Innovation
Travelers’ leadership recognized early on that true, scalable innovation is impossible when built atop brittle, outdated technology. Consequently, a central pillar of the “transform” mandate is the systematic modernization of the company’s core foundations. This involves moving away from rigid, monolithic systems toward a more flexible, “loosely coupled” architecture. This modern structure allows for the easier integration of new tools and capabilities, preventing the organization from being locked into a single technology stack and enabling it to adapt as business needs evolve.
This foundational work extends beyond just architecture. It includes a concerted effort to strengthen the company’s data foundation, improving the quality and accessibility of its vast data reserves to power advanced analytics and AI. Simultaneously, security and resilience are not treated as afterthoughts but are built into the modernization process from the ground up. This pragmatic but comprehensive approach to upgrading core systems is seen as an absolute necessity, creating a robust and agile platform upon which future innovations can be built at scale.
Strategic Sourcing Buy for Commodity Build for Advantage
To guide its technology procurement decisions, Travelers adheres to a clear and pragmatic rule: “buy for commodity, build for competitive advantage.” This principle provides a simple yet powerful framework for determining when to partner with external vendors and when to develop capabilities in-house. For functions that are not core differentiators and where a market solution is readily available, the company opts to buy and integrate, leveraging external expertise to accelerate delivery.
Conversely, for capabilities that represent a durable source of competitive advantage—such as proprietary risk models, sophisticated pricing algorithms, or unique underwriting workflows—the organization chooses to build. This ensures that the intellectual property and processes that set Travelers apart remain under its control. Crucially, this strategy is underpinned by a commitment to fostering strong internal engineering talent. This internal acumen empowers the company to be a smarter buyer, a more effective integrator, and a master of its own technological destiny, ensuring that all technology choices, whether buy or build, ultimately serve the business’s strategic goals.
Beyond the Tech A Human-Centric and Collaborative Culture
A key differentiator in Travelers’ approach is its explicit recognition that successful transformation involves far more than just systems and software. The company champions a holistic view that balances technology with the equally critical elements of people and process. A common failure point in large-scale modernizations is the tendency to simply automate existing, often inefficient, workflows. Travelers actively works to avoid this trap by first reimagining and redesigning the underlying business process to take full advantage of new technological capabilities.
This human-centric view is complemented by a deeply collaborative culture where innovation is treated as a “team sport.” The responsibility for transformation is not siloed within a single department but is shared across multiple key groups. The data and analytics teams work to turn proprietary data into actionable intelligence, the cloud and cybersecurity teams build the secure and resilient platforms for modernization, and the product and user experience teams ensure that new solutions are designed with the end-user in mind. This collective ownership and cross-functional collaboration are seen as essential for driving momentum and achieving sustainable change.
The Strategy in Action Prioritizing for Maximum Impact
The “perform and transform” framework is not just a theoretical model; it is an active guide for day-to-day decision-making and resource allocation. In a world of nearly infinite technological possibilities, the framework imposes a necessary discipline, forcing the organization to relentlessly prioritize initiatives that will deliver the most significant and sustainable business value. It provides a clear lens through which to evaluate every potential investment, ensuring that resources are directed toward projects that align with both the “perform” and “transform” imperatives.
This operational mindset is particularly valuable when navigating the hype cycles of emerging technologies like generative AI. Rather than pursuing reactive, one-off experiments, Travelers uses its strategic framework to assess how these new tools can be thoughtfully integrated to enhance core business functions. The focus remains on driving tangible outcomes in areas like underwriting efficiency, claims processing, and customer service. This disciplined application of the strategy ensures that the company remains focused on what truly matters: building a stronger, more competitive business for the long term.
Reflection and Broader Impacts
The disciplined, dual-focus model adopted by Travelers offers a compelling blueprint for navigating digital disruption. By institutionalizing a framework that explicitly values both present-day execution and future-focused innovation, the company has created a sustainable engine for evolution. This approach provides a clear and pragmatic path forward, allowing a large, complex organization to modernize methodically without sacrificing the financial performance that powers its journey.
Reflection
The primary strengths of the “perform and transform” framework were its clarity, pragmatism, and deep alignment with business objectives. It provided a common language that unified the organization around a shared purpose, demystifying transformation and making it a tangible, collective responsibility. However, such a model was not without its challenges. The inherent tension between the two imperatives meant there was a constant risk that intense pressure to “perform,” especially during economic downturns, could lead to a reduction in “transform” investments. Furthermore, maintaining momentum required overcoming cultural resistance to change and ensuring that the entire workforce, not just leadership, embraced the dual mindset.
Broader Impact
The strategy pioneered by Travelers served as a potential blueprint for other legacy industries, from banking to manufacturing, grappling with similar disruptive forces. It effectively redefined transformation not as a risky, all-or-nothing revolution but as a sustainable and continuous evolution. This approach was far more palatable and achievable for large, established incumbents, demonstrating that it was possible to innovate from a position of strength. By proving that operational excellence and strategic reinvention could be pursued in tandem, the model offered a powerful alternative to the “disrupt or be disrupted” narrative that often dominates conversations about digital change.
The Enduring Blueprint for Sustainable Innovation
The core lesson from Travelers’ journey was that successfully balancing today’s results with tomorrow’s technology required more than just a list of projects; it demanded an integrated, disciplined framework. The “perform and transform” doctrine provided exactly that, creating a system where present performance and future transformation were not in conflict but were mutually reinforcing. Flawless execution on current business goals generated the capital and credibility to invest in the future, while those investments, in turn, were designed to create a more resilient and competitive enterprise.
Ultimately, this balanced model offered a clear blueprint not just for survival but for leadership, demonstrating how established giants could harness their scale and data advantages to innovate sustainably. It was a strategy that recognized the realities of the present while actively and intelligently building for the complexities of the future, providing a powerful roadmap for any incumbent seeking to thrive in an age of perpetual technological change.
