May 25, 2021
Evolving a business in the financial services industry can be a steep hill to climb. But Principal Financial reached the summit of digital transformation to become a more customer-centric, knowledge-based, and technology-driven brand. Hear from former CIO Gary Scholten as he breaks down the strategy behind Principal’s digital evolution, what benefits it’s had for their customers, and how it fundamentally changed their employee knowledge base.
[1:37] In 2020, Gary retired from an 18-year stint as CIO at Principal Financial. This is rather extraordinary because the CIO role has famously been known as shorthand for “Career Is Over.”
[2:15] If you think back to the early 2000s, you will notice a lot of our technology has changed. One of the challenges of embarking on a digital transformation in 2002 was that most of the technology that exists now in our digital world such as mobile apps, clouds, and blockchain weren’t even around yet. As the technology evolved, Gary worked with business leaders to make sure that business strategy evolved as well. At Principal, this meant developing a strategy dedicated to putting the customer experience at the center of their work.
[3:35] Gary explains how once you start to develop your technology strategy from the view of the customer, you actually make it more simple.
[5:35] Gary’s role as CIO not only entailed pushing Principal to adopt a digital strategy but helping customers and employees access their benefits more easily. These “nudges” were a new kind of customer engagement that helped them take greater advantage of the benefits available to them. In the enrollment process, based on the questions, they could guide users who both wanted to DIY the process and those that desired as much assistance as possible.
[7:15] Was it hard for Principal’s employees to adapt to customer-centred digital strategy? Yes, Gary says. When he first started, about 75% of employees were transaction workers and 25% knowledge workers. When he retired in 2020, more than 80% were knowledge-based roles, due to both automation of transactional work and the economy.
[9:18] Knowledge-based roles are fundamentally different from transactional, and you need fundamentally different skills to fulfill them well. Gary speaks about redefining job descriptions and hiring practices to prepare for this digital development change.
[10:10] Principal rebranded IT to now be more of a technology community where critical thinking and a comfortability around analytics were two important skills.
[13:21] We’ve seen attempts at big cultural shifts from many transformers across many industries, but it’s no easy task. Any culture change takes time, but why are financial services so slow to move the needle? Financial service companies tend to be great at innovation in finance, but digital presents a different kind of innovation. The more they see how this makes the customer's life better, the more they will tend to put resources into efforts that really move the dial.
[15:06] Gary shares his advice for CIO’s: get an ally in Senior Management, have a consistent message, and talk in business terms. The CIO should embrace their role and encourage others to get tech-savvy in a welcoming way. Gary also recommends digital immersion trips with management and getting regular feedback.
[18:00] Principal was ahead of the curve when virtually the whole world had to shift to remote work overnight, a lot of it thanks to Gary.
[20:34] Gary talks about the importance of diversity and inclusion from a workforce perspective at Principal. The war for talent has always been a problem for leadership, and another remedy was to aggressively recruit talent. However, he knew that diversity must be far more than a recruitment strategy. It would take wanting to actively look at unconscious bias, and really knowing that the more diverse a company is, the wider perspective you get.
[23:08] So after Gary’s 40 years in technology, does he believe it can make the world a better place? Yes. For example, Principal helps people get ready for retirement, when not many people are soundly prepared for the future. If you make things simple enough and help guide the choices in the right way, it can change the world.
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