Innovation Conf Presentation Final 02

Innovation:Vision, People, and ProcessDavid RobertsonPortfolio ManagerProgram Management Office [PMO]Strategic Planning & Transformation08.25.08

2008 Health Care Product and Service Innovation Conference

A nonprofit independent licensee of the BlueCross BlueShield Association

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Introduction: Vision, People, and Process

Hello, my name is

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Introduction

Excellus BlueCross BlueShield [Excellus BCBS]:

Headquartered in Rochester, New York, Excellus BCBS is a division of Lifetime Healthcare, a $5 billion family of companies that finances and delivers health care services across upstate New York and long-term care insurance nationwide.

Provides health insurance to nearly 2 million people and employs more than 7,000 New Yorkers.

New York state's largest nonprofit health plan.

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Introduction: Objectives

Explore the human element of innovation.

The art and science of process.

A few key points to consider when establishing an innovation culture and management process.

Share insights gathered through secondary research and personal experience.

Create an open forum for others to participate sharing their successes and lessons learned.

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Introduction: Topics

Leadership with vision and employee empowerment.

Cultural readiness for innovation.

Setting boundaries and process management.

Defining innovation and setting expectations.

Research findings on best practices.

Lessons learned.

Insights through experience.

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Innovation: Definition

in·no·va·tion: noun - 1 : the introduction of something new; 2 : a new idea, method, or device.

Ideas + Action = Innovation

Statistic: 7.1 million Google hits for “definition of innovation”

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Innovation: Definitions

Incremental innovation: Continuous, small, improvements to existing products and services providing greater efficiencies and delivering more value to customers.

Architectural innovation: Applying technology or process advancements to fundamentally change components or elements of a business.

Disruptive innovation: Radical advances in business that alter the basis for competition in an industry, often rendering traditional products or services obsolete.

The Ambidextrous Organization, Charles A. O’Reilly III and Michael L. Tushman, Harvard Business Review, April 2004.

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Innovation: Vision, People, and Process

Vision

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Vision: Definition

vi·sion: noun - a thought, concept, or object formed by the imagination.

A description of what leadership wants to achieve in the future -- medium to long-term. Managed through a series of objectives.

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Vision: Leadership

The personality of a company is defined by its leadership and their ability to communicate a vision.

Get your best people behind the effort.

Engage employees – open communication.

Assess the corporate readiness for cultural change -- survey.

Build a common language and make the vision and goals relevant to all employees. What’s in it for me?

Authenticity – being true to oneself and genuine.

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Vision: Case Study

Eastman Kodak Company

Since the Kodak film-era lifers “didn't get it”, incoming CEO, Antonio Perez, replaced several executives to ensure an aligned vision within senior leadership to get Kodak on its new track.

Antonio Perez believes in “The Rule of the Thirds” – 1/3 will readily support a change, 1/3 can be convinced, and 1/3 will be unwilling to make the change.

To gain the support of the majority, a group of skeptics were formed into the “R Group” - "R" for rebels. This group offered suggestions on how the company could improve. Those discussions contributed to the strategy for new digital services and new methods of commercializing existing technology.

Since this “R Group” was a part of the conversation and driving change, these key influencers spread the word that Perez was a “good leader”.

Mistakes Made On The Road To Innovation: Led by CEO Antonio M. Perez, Kodak is struggling to reinvent its business model. It’s not alone, Steve Hamm and William Symonds, BusinessWeek, November 27, 2006.

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Vision: Cultural Lessons

Relationships and environment within an innovation team is directly influenced by the enterprise.

Strategy that includes incremental innovations and continuous improvement can energize and motivate individuals, creating ownership and more receptiveness to change.

Alignment of culture and strategy -- reward risk-taking.

One of the secrets of success for companies that demonstrate high rates of innovation… they try more often.

Competition and allocation flexibility are important principles in building a highly adaptive organization.

Innovation: The Classic Traps and Lessons by Rosabeth Moss Kanter

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People

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People:

“Managing innovation means cultivating an environment where lighting can strike twice.”

Paul Saffo, Research Director at the Institute of the Future (think tank)

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People: Environment

Factors for success: Employee empowerment

Aligned incentives

Rewards and recognition (learn individual needs)

Common language

Continuous learning and shared knowledge – information access

Positive culture with supporting leadership

Shared commitment

Resource assessment and development

Well defined goals and metrics to evaluate results/performance

Collaboration

Authenticity

“Taking the talk and walking the walk.”

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People: Factors for Success

diversity

metrics

tools

vision

objectives leadership

process

culture

incentives

education

information

results &

health

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People: Case Study

Wegmans Food MarketsConsistently voted as one of the best companies to work for in the United States, Wegmans Food Markets is committed to being an innovator in the retail food industry.

In defining and communicating the company’s value, Wegmans empowers staff at all levels to make decisions that improve their work and benefit the customers and company.

“Our people are what set Wegmans apart.”, Jo Natale, Wegmans spokesperson.

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People: Leadership Styles

Command/Control vs.

Collaborative/Autonomy

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People: Common Language

Building a common understanding and making it relevant

Are employees aware of the goals and expectations?

Are the messages and practices of leadership aligned with the goals?

Are the performance metrics aligned with the goals?

The Collective Goal

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People: Assessing Skills

What are your strengths and skills?

What are the strengths and skills of the innovation team?

Are you leveraging these strengths and skills?

Aligning team members to increase performance?

Test your perceptions…

StrengthsFinder 2.0By Tom Rath, Gallup Press, 2007

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People: My StrengthsFinder Top 5

1) Analytical – challenges others to “prove it.” Logical.

2) Activator – only action can make things happen. “Just do it.”

3) Connectedness – Certain that things happen for a reason.

4) Deliberative – Careful and vigilant. Identifies and manages risks.

5) Individualization – Keen observer. Draw out the best from others.

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People: Personalities

“Connector”

Individual with strong inter-personal and communication skills -- able to interact with various levels.

Identifies opportunities to connect multiple stakeholders to help develop ideas.

“Innovation ambassador” that is able to translate ideas to be understood by others -- gaining acceptance.

Flourish outside the formal business processes -- flexible and adaptive.

Extensive formal and informal networks.

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“Integrator”

Strong organizational and project management skills.

Support the vision of the innovation strategy.

Coordinate the efforts of cross-functional teams through development to implementation.

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“Leader”

Strong creative spirit that is driven by the desire for continuous improvement.

Willing to take risks.

Engages mainstream business in regular formal and informal conversations -- develop support, gather feedback and build a strong foundation for innovation.

Creates a supportive, creative and collaborative culture -- breaks free from the traditional management styles.

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Innovation teams established without attention to interpersonal skills are less productive due to…

difficulties in embracing collective goals

inability to leverage individual strengths

lack of communication to share knowledge and experiences

Statistic: MIT researchers have found that to build the trust and interplay required among team members to spark innovation, they have to be together for at least 2 years.

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People: Value Differences

Lunatic Fringe+

Activators=

Creative Action

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People: Skills/Personalities Lessons

Innovation requires strong leaders with great relationship and communication skills.

Understand the skills of team members and leverage the strengths and support their weaknesses.

Keep strong teams together through the development of an idea. [2 to 3 years to develop high performing team].

Innovation will flourish in supportive cultures that encourage collaboration.

Engage internal and external stakeholders throughout the process to gather insights, drive collective creativity, anticipate risks, design solutions and create ownership.

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Process

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Process: Definition

pro·cess: noun - a series of actions or operations conducing to an end; especially : a continuous operation.

A collection of related, structured activities that produce a specific service or product.

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Process: Objective

To establish a method to gather, evaluate, and recommend ideas for the enhancement of commercial products and services or to introduce new innovations in support of continuous improvement, positive customer experience, and profitable growth.

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Process: Why?

Defined path and boundaries for idea development.

Categorize and priorities ideas to maintain balance.

Standards for evaluating ideas against vision and culture.

Assess, mitigate, accept, or transfer risks.

Support collaboration and communication.

Promote efficiency and continuity in execution platform.

Help reduce waste and re-work – time and money.

Collects and distributes shared experiences and knowledge.

Supports continuous improvement through lessons learned.

Evaluate current culture to determine best method and tactics.

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Process: Project Management Institute [PMI]

With more than 265,000 members in over 170 countries, the leading association for the project management profession.

Recognized for the advocacy programs to recognize and embrace project management to achieve business results.

Promotes career and professional development and offers certification, networking and community involvement opportunities.

Nearly 260,000 certified, the Project Management Professional (PMP) credential is the most widely recognized — and only global — certification in the profession.

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Process: Program Management Office

What is a PMO? Centralized business unit that provides

governance and guidance to projects to promote efficiency and quality within defined boundaries to increase the chances for project success (on time, within budget and scope).

The PMO structure, mission, and process varies in complexity based on company size and corporate culture.

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Process: Excellus Corporate PMO

Background: Formed in 2005 [currently, staff of 12]

Objectives:

Guidance to strategic projects -- promote the use of standardized methodology, best practices, collaboration, and enterprise assets

Corporate risk management

Continuous improvement

Quality management

Enterprise process governance

Training/education

Measure key performance factors [budgets, quality, schedules, change requests and lessons learned]

Performance monitoring and reporting

Resource analysis

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Process: Case Study

Harvard Pilgrim

In 1999, the Boston-based health insurance company was placed in State-supervised receivership. A core team of dedicated leaders developed and executed a turn-a-round plan. To drive this plan, project management was introduced as a business competency, enabling the health plan to improve decision-making, encourage accountability, and enhance communications.

In 2004, Harvard Pilgrim was named the #1 Health Plan in America by the National Committee for Quality Assurance (NCQA). Recently, Harvard Pilgrim was recognized as the highest rated plan in the Northeast for member satisfaction according to the JD Power and Associates 2007 National Health Insurance Plan Satisfaction Study.

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Process: Lessons Learned

Tight controls can strangle idea development. Example: 3M and Six Sigma (Reference BusinessWeek article).

Traditional planning, budgeting, and reviews can squash the creative spirit that is essential for innovation.

Companies should expect deviations from plan and accept risk(s).

Encourage innovation outside normal planning cycles with special reserves for unexpected opportunities.

Flexibility, customized treatment of the innovation process – to respond to market opportunities or unexpected obstacles, follow the rhythm of the project rather than a fixed quarterly or annual calendar.

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Metrics

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Metrics: What is success?

Define success during initiation and measure outcomes.

What is success? And how do we know when it is achieved or not?

Determine success by the actual results of the effort.

Did the results remain steady, improve, or decline based on the implementation of the innovation or enhancement?

Share successes and learn from failures.

Do teams complete Lessons Learned session to gather and record shared experience at the end of each effort? How is the knowledge transferred and maintained?

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Metrics: How to measure success?

Input: Efforts toward innovation.

Output: Volume of ideas, number of products or services launched over a period of time. Tracking of different innovation efforts could provide valuable insight into which succeed or not; and why – lessons learned.

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Metrics: How to measure success?

Effectiveness: Impact or outcome of innovation efforts – revenue generated from new product, service or change, profitability, market share, brand value or customer satisfaction.

Efficiency: Improving innovation performance based on established efforts – time to market, time to profit, resource utilization, increase in revenue per employee, and change in margin per product or customer.

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Metrics:

Corporate: The majority of companies align innovation initiatives around delivering organic growth and revenue growth targets as the primary methods for defining the innovation goals, measuring progress, and reporting results.

^market share ^revenue

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Metrics:

Business Unit or Team: Measurements can vary due to the different responsibilities and perspectives.

What metrics fit your culture, drive the desired behavior and support the organization commitment to innovation?

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Metrics: Excellus PMO

Continuous Improvement:

1) Project performance – Reduce slip rate to ensure effort remains on time, within budget and scope.

2) Process improvement – Evaluate current state to determine opportunities for improvement.

3) Quality management – Auditing outputs and team effort.

4) Lessons Learned – Shared learning and centralized records.

5) Training – Facilitating education programs for the various project members from sponsors to core team members.

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Metrics:

One of the challenges of developing a culture and management process to nurture innovation is the measurements to evaluate the performance of innovation.

Metrics for evaluating innovation are varied and numerous due to the complexity of innovation and the intangibles that are inherent in the creative process.

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Conclusion

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Conclusion: Case Study

Google

A culture of innovation supported through encouraging engineers to take 20% of their time to develop new products or services, or enhancement current offerings.

Employee comments…

"It's an incredibly open and progressive environment.”

“Individuals are provided with the opportunity to grow in a nurturing environment, to contribute both as an individual and as part of a large team - despite the growth and size of the company, you still feel as though you matter and people actually care about you. I think about the work I do and the contributions I make and feel good about it."

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Conclusion

“To beat the forces of commoditization, a company must be able to deliver the kind of unique customer value that can only be created by employees who bring a full measure of their initiative, imagination, and zeal to work every day.”

Gary Hamel, Director of the Woodside Institute, a nonprofit research foundations, and founder of Strategos, an international consulting company.

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References:The Ambidextrous Organization, Charles A. O’Reilly III and Michael L. Tushman,

Harvard Business Review, April 2004.

Innovation: The Classic Traps, Rosabeth Moss Kanter, Harvard Business Review, November 2006.

The Why, What, and How of Management Innovation, Gary Hamel, Harvard Business Review, February 2006.

Building An Idea Factory: Inspiration is fine, but above all, innovation is really a management process, Robert D. Hof, Peter Burrows, Steve Hamm, Diane Brody, and Ian Rowley, BusinessWeek, October 11, 2004.

3M’s Innovation Crisis: How Six Sigma almost smothered its idea culture, Brian Hindo, BusinessWeek, June 11, 2007.

Mistakes Made On The Road To Innovation: Led by CEO Antonio M. Perez, Kodak is struggling to reinvent its business model. It’s not alone, Steve Hamm and William C. Symonds, BusinessWeek, November 27, 2006.

The Innovator’s Solution: Creating and Sustaining Successful Growth, Clayton M. Christensen and Michael E. Raynor, Harvard Business School Press, October 9, 2003.

The Ten Faces of Innovation, Tom Kelley and Jonathan Littman, Currency Doubleday, 2005.

Empowerment Takes More Than a Minute, Ken Blanchard, John Carlos, Alan Randolph, Berrett-Koehler Publishing, Inc., Second Edition, 2001.

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Suggested Reading:

The Ambidextrous Organization, Charles A. O’Reilly III and Michael L. Tushman, Harvard Business Review, April 2004.

Innovation: The Classic Traps, Rosabeth Moss Kanter, Harvard Business Review, November 2006.

The Why, What, and How of Management Innovation, Gary Hamel, Harvard Business Review, February 2006.

Building An Idea Factory: Inspiration is fine, but above all, innovation is really a management process, Robert D. Hof, Peter Burrows, Steve Hamm, Diane Brody, and Ian Rowley, BusinessWeek, October 11, 2004.

The Innovator’s Solution: Creating and Sustaining Successful Growth, Clayton M. Christensen and Michael E. Raynor, Harvard Business School Press, October 9, 2003.

The Ten Faces of Innovation, Tom Kelley and Jonathan Littman, Currency Doubleday, 2005.

Empowerment Takes More Than a Minute, Ken Blanchard, John Carlos, Alan Randolph, Berrett-Koehler Publishing, Inc., Second Edition, 2001.

Why We Do What We Do: Understaning Self Motivation, Edward L. Deci with Richard Flaste, Penguin Books, 1996. (Currently on my night stand.)

Simple Solutions: How "Enterprise Project Management" Supported Harvard Pilgrim Health Care's Journey from Near Collapse to #1, Lisa DiTullio, 2007.

Thank you

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Innovation Conf Presentation Final 02

Business

Transcript of Innovation Conf Presentation Final 02