Innovation November 4, 2009, 1:54PM EST

Facing Disaster, Trustmark Launched a Renaissance

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David McDonough, chief executive of Trustmark Insurance

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"We are a health insurance company. It tends to draw people who are rather conservative, and they are paid to think conservatively," notes McDonough, 56 , who knows the type well after 30 years in the industry. Realizing that he would need help getting some employees to think about creativity rather than risk management, he interviewed consultants, ultimately choosing Play over more traditional players.

Play, founded in 1990, has brought its philosophy that sustainable innovation begins with inspired employees to clients such as General Electric (GE), General Mills (GIS), and Procter & Gamble (PG). The Play team repeated the executive's downtown tour for Trustmark's top 25 managers, and, later, another 250 managers. (Neither party will say how much Play was paid.)

In the Da Vinci Den

While McDonough says it is hard to trace a new product or process back to any single thing, the company's medical group has since moved into the health-care advice space, and introduced Care Champion, a Genius Bar-like service to answer members health or benefits questions 24/7.

In addition to the creativity workshop, Trustmark created six internal teams to review issues such as rewards and recognition and the physical office environment that would play an important role in the company's Renaissance initiative. Each was given a starting budget to implement their ideas, and "they could come back and ask for more," says McDonough, who will only say that the company ultimately spent hundreds of thousands.

The Environment team created the "Da Vinci Den," a comfortable space filled with tinker toys and magnetic word boards to spark thinking and encourage collaboration—a radical change for a company Play's Saunders described as "cubeville." The Idea Architecture team created a "think tank" on the corporate Web site where employees can post and discuss ideas and even submit them to management, while the Idea Generation team came up with a board game called "Ask, What If?"

Lots of Innovation

New ideas are vetted by McDonough and his strategy team, and he says seven new products or services have been introduced as a result of the Renaissance initiative. He points to a new accident insurance product developed by the voluntary division and a health and wellness outreach program from CoreSource, the company's third-party administrator. Year-over-year sales in those two businesses jumped 18% and 16%, respectively, in 2008.

In addition to new products, McDonough points to innovations in distribution channels and compensation practices. As a mutual company like State Farm, Trustmark doesn't have publicly traded stock. So over the past two years, it has created phantom stock that estimated the value of the company as a whole—which is approaching $1 billion, says McDonough—as well as each of its seven divisions. Beginning in 2009, executive compensation is tied to how well the phantom stock performs.

The company's overall financial picture suggests that Renaissance has yet to lift the top line: Trustmark reported total operating revenues of $830 million in 2008, down from $889 million the year before. Though to be fair, it was a hard year, and even industry titans Aetna and Cigna (CI) saw earnings fall. "This little thing called the economy came in the middle of all of this, but I think we'll see an uptick next year," says Kate Martiné, senior vice-president of human resources, corporate communications, and administration.

On a Journey

But new products, new and expanded lines of distribution, and new lines of business accounted for 38% of new revenue for 2009, according to Trustmark, which won't release 2009 financial results until after yearend. Martiné adds: "This is a journey."

Jessie Scanlon is the senior writer for Innovation & Design at BusinessWeek, where she covers the intersection of design and business.