Accelerating Change: Rapid Prototyping for Merging Acquisitions

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Accelerating Change Rapid Prototyping for
Merging Acquisitions

• Organization Design Forum
• April 22, 2008
• Claudia Murphy, Craig McGee, Todd Christian

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The Market late 2005

• Many Disease Management providers
• Several Wellness Management providers
• A few emerging Health Assessment options
• Escalating health insurance costs continued to
  get press and commensurate attention among
  employers

No one was yet offering an integrated set of
solutions many people are moving back and forth
into well, sick, and chronic populations.
A hypothesis emerged Keeping people from getting
into health trouble, and helping them get back to
work if they do, may benefit the employer and
employee.
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Nationwide Better Health early 2007
Primarily known for
Five companies
Health promotion and education programs
Ancillary insurance products, typically sold in
conjunction with other benefit plans
Productivity solutions, including software for
tracking leave and absence
Disease management and education programs
On-line health assessment education programs
Organization Design Forum 2008 Annual Conference
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Business Context

• Two legacy businesses spent much of 20052007
  doing divestures and downsizing
• Three new companies acquired 20062007 each at
  various stages of integration
• During summer 2007, created an integrated Sales
  function highlighted need for integration of
  other functions Can we deliver what were
  selling?
• Strong pressure for profitability and growth
• Largest share of revenue and profit Specialty
  Health the legacy business with the least in
  common with all others

Organization Design Forum 2008 Annual Conference
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Strategy

• Create greater customer focus
• Leverage existing strong relations with customers
  maintaining existing branding and operational
  systems where necessary, but migrating to Better
  Health branding and standardized systems
• Leverage technology and infrastructure across
  different product families
• Look for opportunities to cross-sell different
  product families longer term

Organization Design Forum 2008 Annual Conference
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Original Organization
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Consulting Issues

• Lack of integration among the 5 companies
• Integration efforts were challenging
• Many projects little apparent prioritization
• Limited resources/commitment in acquired
  companies
• Widely differing cultures in 5 different
  locations
• Transitioning successful entrepreneurs into a
  large corporate environment independence and
  autonomy had an impact on trust

Organization Design Forum 2008 Annual Conference
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Consulting Issues

• Commitment to have integrated organization in
  2007 the sooner to respond to market opportunity
• Lack of leadership team familiarity with
  organization design
• Three primary areas of focus identified
• Creating coherent culture
• Developing an effective leadership team
• Creating new organization design

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Consulting Exercise

• Each table is a consulting team that has been
  asked to help Holly Snyder and her leadership
  team with moving the company forward. It is
  July. The go live date is January 1.
• As a team discuss the following questions and be
  prepared to summarize your discussion
• What approach(es) to the organization design
  process would you suggest?
• What are the advantages and risks of your
  approach(es)?

Organization Design Forum 2008 Annual Conference
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The Approach We Took

• Leadership Team Development/Alignment
• Rapid Prototyping model for organization
  design

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Leadership Team Alignment
Round 1 June 11, 2007
Round 2 December 10, 2007
MBTI History Wall
5 Dysfunctions of a Team Celebration Operating
Guidelines

• Our concerns
• Are they spending enough time on developing the
  leadership team?
• There were distinct factions/styles among the
  leadership team
• The Design Team is developing a design they may
  not be ready for

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The Design Process
June
July
Preparation (June 15 July 23)
August
Design Session 1 (July 24 July 25)
Design Session 2 (August 2-3)

• Contracting with Pres.
• Establish decision-making
• Deliberate selection of the Design Team high
  performers, big thinkers, not the Leadership Team
• Consultant data collection

• Org design overview
• Review of the business
• Straw models and draft initial design
• Cross-pollinate and integrate designs

• Review previous model
• Define work group accountabilities
• Define RACI model
• Validate roles against work processes
• Rationale
• Critical success factors

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The Design Process
September
October
November
December

• Presentation to Leadership Team
• Approval of Design Concept

January 08

• Next Level Design/Staffing
• Implementation Planning
• Announcement to the Company

• (Nov. 19 Dec. 18)
• Micro-design/role clarification
• Product Management
• Client Relationship

Quick Start Training
Organization Design Forum 2008 Annual Conference
Structure In Place!
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Attributes of New Design

• Reduced direct reports to President
• Established Product Management role to steward
  integration of different product lines
• Integrated Operations of all entities under one
  reporting structure
• Established Client Relationship role to provide
  strong account management leading to longer term
  revenue growth
• Strengthened Client Implementation role
• Expanded Chief Medical Officer role to create
  greater credibility with potential clients
• Centralized IT to better leverage resources

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The Tradeoffs

• Detailed analysis versus quick concept
• Structure focus versus broader design
• Isolated design team versus broader engagement of
  all associates
• Quick implementation versus allowing people to
  accept/understand the change
• Decision-making by President versus aligning
  leadership team

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Quotes from Participants

• 1.     What was it like for you at the beginning
  of the process?  
• Anxious, excited, ready to get into it.
• I wondered how everyone would respond together
  because we not only came from different parts of
  the organization, many people were also meeting
  each other for the first time as well.
• Relief that we were getting the work started and
  that we were on a fast track.
• At first, it was challenging to understand the
  extent to which we were going to beinvolved in
  the redesign efforts.  There were a lot of
  different opinions being offered and information
  being shared.
• I felt like a valued member of the team and was
  able to learn so much about other parts of the
  organization and how the different companies were
  operating.
• 2.     What surprised you most?  
• The huge amount of work to convert our company
  over to one structure. It surprised me that our
  team was really looking for a new way of doing
  things. (Leader)
• How quickly we were able to come to a cohesive
  recommendation.  I questioned whether 2 2-day
  sessions could get us there, but Claudia/Craig
  coming to the table with 3 sample scenarios so we
  could hit the ground running, as opposed to from
  a blank slate helped a great deal.
• The speed with which the design team generated a
  recommendation.
• My biggest surprise was the time table.  We had
  a lot to work out in a short time.  Additionally,
  I was surprised that the majority of our
  recommendations were accepted so quickly. 
• Everyone came to the table to do whats best for
  the company as a whole.  No one brought
  individual agendas and worked together towards
  the greater good. 

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Quotes from Participants

• 3.     What did you learn?
• Generally, quite a bit more about all the other
  businesses, their processes, and their
  infrastructure.  Different in many ways and the
  same in many ways.
• The team was able to put aside their biases, and
  also the fact that they/their team could be
  impacted by the recommendation, to do the right
  thing and come up with the best solution for
  NBH.
• I learned to think about the best structure
  differently. I also learned to really listen and
  think about peoples perspectives. (Leader)
• I learned a lot about how the different designs
  of the companies had implications on the culture
  and functioning of the company. Additionally, I
  learned a lot about the companies we had recently
  acquired.
• 4.     What would you have done differently?  
• Nothing.
• To be honest, not too much.  Unique to us, we
  had to spend some time learning about each other,
  and the various LOBs (Lines Of Business) to get
  to a common foundational point (other companies
  might not have to do this).  I think this took
  almost 1/2 of the first day that could have been
  used otherwise in other engagements.
• 1. Started sooner in the year.  2. Better
  aligned the macro work with the job mapping work
  that was taking place simultaneously. 3. Included
  a representative from Finance on the design
  team.
• I would have spent more time flushing out some
  of the details behind our recommendations.
• I think we should have designed a more
  comprehensive communication plan.  Even though we
  had a communication plan I dont think people
  felt they knew enough about the process and what
  was happening.

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Quotes from Participants

• 5.     What are you most proud of?  
• We set out to accomplish a goal (new org
  structure), and we accomplished it.  We have
  quite a bit more to do, but the first step is the
  most important and we took it.Our
  recommendation was utilized (for the most part)
  within NBH.  It made the sessions/time all
  worthwhile.
• Our new Leadership Team They rock! (Leader)
• The recommended structure itself--  The
  structure is appropriate for NBH's phase of
  evolution.
• I am most proud of the fact that we came to
  consensus and worked as ateam to complete our
  objective.
• The commitment of the group to get the best
  product out in such a short period of time.  It
  was a huge amount of work!  
• People lower in the organization were hungry for
  a change. The design team became our ambassadors
  and were our greatest assets. (Leader)
• 6.     What are the current challenges that you
  see?  
• We don't know what we don't know.
• Implementing the reorganization all at once
  (although I know it's staggered to some degree)
  and quickly so we can reap the benefits.  I do
  believe it's the right structure, the quicker we
  can get there and get through the growing pains,
  the sooner we'll reap the rewards.
• Getting the Operations moving quickly enough to
  manage all the problems of the past.
• Redefining jobs that were recently created
  through the job mapping process---This is not
  personally challenging but disconcerting for
  associates.
• Working towards total integration. The products
  and operations still exist in silos (although
  there has been a lot of progress).  Additional
  challenges exist around shifts in
  responsibilities for individuals and positions
  needed to support the new design.

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Accelerating Implementation

• It is the end of September what might you do to
  help the client accelerate implementation?

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Accelerating Implementation

• Robust implementation and communication plan
• Regular meetings for leadership team
• Strong team of all HR Business partners to
  support implementation
• Additional design/alignment work to ensure role
  clarity
• Very clear communications package for leaders to
  explain design and rationale
• Quick Start package for leaders/HR

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Accelerating Implementation

• Micro-design work sessions
• Designed to
• Operationalize key roles
• Product Management, Client Relationship,
  Operations
• Develop broad, consistent understanding of role
• Develop accountability and support for role
• Who attended Hollys leadership team
• Focused of what the new activities and
  responsibilities were going to be
• Leaders reactions
• Renewed sense of team
• Acceptance of shifting of roles..but, not really
  fully understanding what the shifts meant
• Not matter what we design, whats going to be
  required is a high degree of collaboration

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Accelerating Implementation

• Quick Start Kickoff Meeting Design
• Designed to
• Accelerate effectiveness of newly formed teams
• Provide new leaders with a tool to establish
  goals and objectives with new team
• Develop stronger sense of personal relationship
  among new team
• Based on participative design methodology (Fred
  and Merelyn Emery)
• Provide meeting design and all material to
  conduct a 2 day kick-off session
• Trained HR Business Partners and Leaders to
  delivery Quick Start Kickoff Meeting

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If We Were to do it Again.

• What we would keep

• Where we need to be creative

• Rapid prototyping messaging
• Use of straw models
• Clear focus and strong facilitation of design
  sessions
• Team taking charge of recommendations

• Understanding of how the work would flow
• Engaging the leadership team during design and
  implementation
• Engaging more associates throughout the
  organization
• Finding time with the leadership team
• Engaging Corporate HR more fully

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• Other Questions?

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Thank You!

• For more information or if you would like to
  discuss further, feel free to contact any of us.

Todd Christian Associate Vice President, Staff
Administration Nationwide Insurance christt9_at_natio
nwide.com
Terri Hill Chief Administrative
Officer Nationwide Insurance ODF Advisory Board
Member hillt3_at_nationwide.com
Claudia Murphy Claudia Murphy Consulting,
Inc. 602-795-4600 claudia_at_claudiamurphy.com www.cl
audiamurphy.com
Craig McGee, Ph.D. Solutions 970-416-0809 cmcgee_at_s
olutionsconsulting.org www.solutionsconsulting.or
g
Organization Design Forum 2008 Annual Conference