June 1, 2010 at 8:23am
The Blue Cross Blue Shield Federal Employee Program (FEP) uses an innovative meeting process to quickly access the most untapped resource in almost every company, and then uses that resource to transform a hierarchical bureaucracy into a collaborative community that achieves unprecedented extraordinary performance.
In 1998, I was given operational responsibility for the Blue Cross Blue Shield Federal Employee Program (FEP), a business alliance of the 39 independent Blue Cross Blue Shield Plans and one of over 250 health insurance options available to federal employees and their families. Although we enjoyed a 43% market share, covering 3.6 million customers with annual premium revenue of $6 billion, there were signs of trouble. Expenses were exceeding revenues, operational performance and customer satisfaction indices were on the decline and at unacceptably low levels, and the BCBS Plans were becoming increasingly dissatisfied with the executive leadership team. The charge was clear: improve customer, operational, and financial performance and improve the working relationships within the business alliance.
As I surveyed the landscape of my new responsibilities, I realized that a major source of our business problems was that we had been using a command-and-control management approach, even though we lacked command authority over these independent business partners. As a result, meetings were ineffectual political debates, major initiatives always had lots of "bugs," and the leadership challenge could best be described as "herding cats." Furthermore, in addition to our internal issues, we were keenly aware the the recent sudden increase in the pace of change that began affecting every industry in the mid-1990's was only going to make our challenge more difficult. It didn't take long for us to figure out that if we were going to manage great change, we needed to change how we managed. The foundation for our management change was the Work-Thru, an innovative meeting process that gave us access to the collective knowledge resident in the diversity of our business partners. Work-Thrus taught us that nobody is smarter than everybody and showed us that, when a business has the capacity to quickly access its collective intelligence, it can make a leap to extraordinary performance.
Key Innovations & Timeline
One of the first applications of the Work-Thru was the design of a new product option, which was part of a growth strategy to expand into segments of the federal employee market where FEP had been historically weak. Work-Thrus bring together a diverse group of between 40 - 50 individuals to participate in facilitated sessions of small group exercises and large group discussions that are designed to foster better conversations, more effective listening, greater participation by all, better processing of ideas, real consensus, clear accountability, and focused action - all in a short period of time. One of the keys that make Work-Thrus so effective is the diversity of the participants: a blend of levels from executives to specialist, a blend of functions from marketing, finance, systems, operations, etc., and a blend of geography from urban to rural or from region to region. By assembling a microcosm of the business in one room, we were able to identify and resolve critical issues to everyone's satisfaction before beginning work on this important project. We discovered "what we didn't know that we didn't know" at the start rather than at the end of the project, and as a result, we "got it right the first time." These cross-functional dialogues enabled a shared understanding that translated surprisingly easily beyond the Work-Thru sessions to drive a consistency in execution that had alluded us when we had previously tried to centrally manage. Work-Thrus were the management foundation that turned our dysfunctional hierarchical bureaucracy into a seamless collaborative community. Within the first year, we had improved our performance indices by almost 10 percent and by the end of the second year we had achieved a 23% increase and a complete turnaround.
Challenges & Solutions
When we first began using Work-Thrus, we were concerned whether or not the innovative ideas discovered by 40 - 50 Work-Thru participants would translate well to the thousands of workers scattered throughout all 50 states. As we searched for a solution, we noted that the dynamic that drove both the penetrating insights and the incredible speed of Work-Thrus was the power of having "everybody in the same room at the same time." Well, we thought, what if we could bring together the hundreds of interested workers from all over the nation into the same conversation? Thus, we created the "Town Hall Conference Calls" where the results of Work-Thrus were shared, questions were answered, unaddressed concerns were identified and handled, and the initial Work-Thru consensus was extended into a shared understanding among all the call participants. We were pleasantly surprised at how, time and again, these calls proved to be very effective communication channels. In time, we came to understand that it was actually the way we processed ideas in Work-Thrus that enabled the speedy path to shared understanding among large numbers of workers. By assembling a diversity of perspectives in the facilitated conversations of the Work-Thrus, all the various interests and points of view were effectively integrated into a cohesive consensus. As a result, as the nuances of the issues and the collective thinking of the Work-Thru consensus were put in context on the Town Hall Conference Calls, all the callers was able to see how their particular interests were built into the solutions. This meant that there were no unresolved political issues to derail the project. Instead, we had built a broad-based bottom-up shared understanding that enabled extraordinary performance.
Benefits & Metrics
Work-Thrus changed our management paradigm. We were no longer attempting to control top-down hierarchical bureaucracies; we were facilitating bottom-up collaborative communities. And by discovering how to quickly access our collective knowledge, we did achieve extraordinary performance that was sustainable. Over the ten year period from 1998 through 2007, FEP increased its market share from 43% to 59%, the number of customers increased from 3.6 million to 4.6 million, the medical loss ratio (medical expenses/premium revenue) improved from 106.2% to 90.6%, the operational performance index increased from 78 (120 pt scale, with 100 = excellent) to an unprecedented high of 104, and BCBS Plan satisfaction with the FEP leadership increasing from 79% to 97%.
Three key lessons:
- The quality of the conversation determines the speed of the work: One of Work-Thru's key benefits is that its facilitated format achieves a fast consensus on critical issues that would otherwise remain unresolved in endless political debates.
- There is nothing as powerful as getting everybody "in the same room at the same time": Both the Work-Thrus and the Town Hall Conference Calls demonstrate that complex and difficult issues can only be resolved when the full diversity of different points of view are part of a common collaborative conversation.
- The most untapped resource in most companies is the collective knowledge of its own people: This most valuable resource is already fully paid for; however, accessing collective knowledge is only possible if business leaders learn how to facilitate collective learning processes.
The credit goes to the many colleagues in the Blue Cross Blue Shield organizations throughout the United States because they are the ones, who through their engaged participation in our many Work-Thrus, showed us the incredible power of collective knowledge and taught us that nobody is smarter than everybody.