Read this article about Blue Cross Blue Shield of Michigan, one of our finalists, in the category Best Achievement in Operational Excellence to deliver an outstanding Value Creation or Innovation Execution Project, selected by the independent judging panel, for the 2019 Business Transformation & Operational Excellence Industry Awards program. Click here to read articles on other finalists.

Early in this decade, Blue Cross Blue Shield Michigan (BCBSM) faced increasing competition in a challenging landscape — the Affordable Care Act significantly changed the regulatory and market environments, competition from for-profit insurers was increasing, and the rising cost of care was a growing burden for individuals and employers. These created threats to BCBSM’s market position, but also presented opportunities to strengthen its competitive position and performance.

To meet these challenges, in late 2015, a 3-year program – Strategic Business Transformation (SBT) was launched, and aimed to achieve financial outcomes across the company, over $300M in value and targeted improvements.

Enterprise transformation programs are challenging; research shows that 70% fail. To beat the odds, the SBT Program Office (PO) recognized that they needed to definitively answer the question, “How will we know we’ve met our objective to achieve $300M in value?”  To answer this question, BCBSM began a systematic journey using a value-based methodology to ensure the program initiatives delivered measurable results.

The program was divided into 8 workstreams, with 150 initiatives to address process pain points, capability gaps, and inefficiencies; each workstream had an executive owner ultimately responsible for delivery of the initiatives and achieving measurable value. BCBSM created an implementation framework to assess the status of the program initiatives; this implementation framework not only laid out the initiative lifecycle, but it also intentionally indexed on the estimated initiative value to be delivered.

With initiative leaders, the PO assessed what was at stake for each initiative and confirmed that the expected outcomes were worthy of precious enterprise resources. To ensure the appropriate return on strategic investments, it’s important to be confident that the anticipated results will be realized before the commitment of time, resources and budget.

While there is a certain art to business transformation, the BCBSM value-based management approach assures that the evaluation of change initiatives moves from subjectivity to objectivity. Through a rigorous process, value estimation is established up-front with consideration of expected impact, capabilities and value drivers. Ongoing reviews reinforce implementation delivery, initiative progress and value accountability, while allowing for in-process adjustments. Post-implementation, a rigorous process verifies that committed value is realized, substantiated and sustained. By partnering with the BCBSM Finance team, the PO closed the loop and ensured that financial value delivered was tied to annual budgets, preventing costs from sneaking back in.

Beyond achieving the program’s stated goals, the value management discipline inherent in the program had a positive impact on the BCBSM corporate culture. For business groups, successfully completing an initiative via this value-based process became a tangible symbol of the credibility and integrity that is the foundation of the overall BCBSM culture of operational excellence. Today, departments and business owners look to the Value Management system to validate the integrity and effectiveness of their own internal processes.