BCS Financial: Leading a Dynamic Cultural Evolution from Within

Volume 6, Issue 1, 2011 casestudyBCS Financial: Leading a Dynamic Cultural Evolution from WithinIn 2008, BCS Financial Corporation seemed to As Beacham joined the organization in 2008,be on top of their game. Built on 60 years of healthcare reform was on the brink of becomingsuccess, they’ve enjoyed underwriting profits for the a reality and the landscape in which they werepast 20 years and an A.M. Best Rating of “Excellent.” operating was about to change dramatically.They seemed to have a solid foundation, so why BCS is owned by all Blue Cross and Blue Shieldchange? “Why change?” asks Scott Beacham, primary licensee companies. Collectively, thesePresident and CEO of BCS Financial, “Because companies are both BCS’ governing body and theirour business sector is changing. As a multi-line clients. Therefore, as Blue Cross and Blue Shieldinsurance company licensed to do business across organizations change, so must BCS. The leaders atthe United States, we’re operating in one of the most BCS recognized early in their evolution that they haddynamic industries, in one of the most dynamic times to change. And change they did!in history.” Overall Comparison The Critical Success Factors at BCS Financial Led to Sweeping Culture Change 2009 2010 2009 2010 External Focus External Focus 90 72 90 27 49 27 39 20 94 74 64 16 Beliefs and Beliefs and Flexible Assumptions Stable Flexible Assumptions Stable 21 24 74 70 19 23 31 34 71 77 67 61 Internal Focus Internal Focus N = 80 N = 93 When BCS first received their 2010 Culture Results, they thought there must be some mistake. How could they have improved so dramatically? Then they began to talk about all the things they had done over the past year, and recognized that they had many reasons to celebrate. BCS Insurance SB 2009 28-Jun-10 All content © copyright 2005-2011 Denison Consulting, LLC. All rights reserved. l www.denisonculture.com l Page 1

This is the story of BCS and the five critical employee by name, engages them in conversation,success factors that made their change possible: and regularly asks them, “How are we doing?”Leadership, Core Values, Quality of Process, Actions He encourages everyone in leadership roles to doLeading Plans, and Organic Ownership. Their story the same. Beacham admits that it is hard to hearis focused on strong leadership from above and feedback at times, but the leadership of BCS hasempowerment from below. In the words of the never wavered in their energy or their commitment;people of BCS, “Whose story is it? Our story.” he makes sure of that.Critical Success Factor #1: Leadership Best Practices in Leadership“You can’t wish change; you have to make it Barbara Osterman, President of Human Solutions,happen,” states Beacham. “It’s about the hearts LLC, is a partner with BCS and offered coachingof the people who have to make the change. Very and feedback to the organization as part of theirsmart people can come up with business strategy, process. She offers some best practice advice inbut it’s through a truly dedicated team of people that this first Leadership Chapter. “One of the importantyou create positive change from within.” things that BCS did was to shift focus from ‘getting work done,’ to creating an environment for people toBCS had a rock-solid platform. However, it was just do great work. It’s a subtle shift, but very different.that: a platform, a plateau with a proven record. Second, senior leaders were whole-heartedlyThey needed to progress. In order to find the committed to this process. If the people in thegrowth they were looking for, they needed to bring organization see any wavering at the top, that’s antogether their strategic platform with their culture indication or an excuse for them to maintain thetransformation process. The success of the past status quo.” Barb Osterman60 years didn’t make any difference in the vastlychanging healthcare world. It was time to evolve. Critical Success Factor #2: Core ValuesBCS leaders committed themselves to blending Mike Kichka is the Director of System Integrationtheir strategic and culture goals for the good of their and the leader of the Culture Team at BCS. In hisorganization and its people. words, “This initiative is all about our ‘heart’ and strengthening our core values. We are confident thatBeacham often says, “If you have their heart, I with the right people with the right attitude, we willguarantee you’ll have their mind.” As a leader, be successful in changing our culture.”Beacham is very concerned about engaging thehearts of his people. “Engaging people is going To begin their Dynamic Evolution, BCS createdout and having the courage to ask them, ‘How five work groups called the Spheres of Influence:are we doing?’” Beacham takes his daily “walks Growth, Service, Finance, Communication, andaround the block” as he calls them. He knows each Creativity. The Spheres are made up of cross- Spheres of Influence With the creation of the Spheres: Growth, Service, Finance, Communication, and Creativity, and the Culture Team, BCS created cross-functional teams E C R Communication U U L T T that were accountable to the strategic goals of the company. They were U L R U E C Growth Service Finance expected to create goals and objectives to drive profitability and performance within the organization. This gave employees a line of sight not only to their own functional departmental goals but also to the organization’s goals, E C R U U L T increasing communication, creativity and teamwork within BCS. T L U Creativity U R C E All content © copyright 2005-2011 Denison Consulting, LLC. All rights reserved. l www.denisonculture.com l Page 2

Key Positive Forces: Core Values BCS FINANCIAL CORPORATION 2 011 When BCS started creating their Key Positive Forces or their core values, they started with 36 BCS Key Positive Forces Building a Strong and Positive Culture with an Extra Degree of Effort … Everyday! words that meant something to them. Through CARDINAL VALUE Trust many meetings and conversations, they pared them down to these 12 key words. Each of Perseverance Attitude these words has a specific meaning; they are more than just words on a plaque on the wall. Focus Belief The employees of BCS define what each of CARDINAL VALUE CARDINAL VALUE these values means to them specifically. If you Reputation Integrity walk through their halls and ask any employee what “Perseverance” or “Belief” means they Teamwork Commitment will give a consistent answer. Almost every workspace in BCS has some form of the Key Leadership Responsibility Positive Forces, whether it is a poster such as CARDINAL VALUE Respect this one or the compass. Their values are as important to them as their strategic plan, their E V E R Y D A Y profit margin or their sales projections. O U R S TAT E OF B E I N G O U R STATE OF DO INGfunctional groups of employees. Each Sphere’s Additionally, BCS developed 12 values called Keymission is to create strategic and tactical Positive Forces (KPFs) serving as guiding principlesimperatives to drive profitability and performance, for business operations. “These KPFs are theimprove vertical and horizontal communication, and cornerstones of the initiative and vital to improving ourenhance enterprise-wide teamwork and creative ability to manage our day-to-day operations,” saysthinking. Shortly after creating the Spheres, BCS Kichka. “The most crucial aspects of this initiative areestablished a Culture Team with its own strategic the attitude and belief that we can change, and theand tactical imperatives. The Culture Team’s commitment and perseverance to make it happen.mission is to motivate and inspire employees and Scott clearly communicated that all of these efforts arebring meaning to BCS’ core values. The volunteer- important. However, the employees will know BCS hasbased Culture Team started with four members and changed when they experience the change on ahas since grown to 12. daily basis.”One of the mantras you’ll hear and see walking Best Practices in Core Valuesaround the BCS office is “212 Everyday,” which “Core values are about a state of being, an aspirationalstarted with the Simple Truths book 212°: the state. The first thing to do is to define your coreextra degree by Sam Parker and Mac Anderson. values. Not in a senior executive meeting, but in yourThe idea is that at 211 degrees, water is hot. organization. When we look at BCS’ 12 core values,At 212 degrees, it boils. Boiling water produces we each have a different idea of what those mean.steam. And steam is powerful enough to move Groups within BCS developed statements to go alonglocomotives. By applying an extra degree of effort, with each of their core values so that people withinamazing things can happen. Hence, BCS’ “212 the organization know what it means to demonstrateEveryday” initiative was born to motivate employees “respect” and live it. BCS found a way to supportand elevate the passion within the workplace. They these in everything that they do.” Barb Ostermanbranded the initiative, developed a logo and themeto identify the initiative, reinforced the message,and supported its long-term objective. All content © copyright 2005-2011 Denison Consulting, LLC. All rights reserved. l www.denisonculture.com l Page 3

Critical Success Factor #3: Quality of ProcessGreg Petit is the Manager of Marketing Services at Letting Quality of Process Take the LeadBCS. Petit has been with the organization for 20 Financialyears and witnessed the amazing transformation C E L E B R A T I N G O U R I N N O VA T I V E I D E A S A N D A C T I O N S D E C E M B E R | 2 010 Insurance Companyat BCS firsthand. Petit, along with many otherswho have been with the company for over 20 Creativity | Think as Innovators | A Mindset Critical to Producing Effective Customer and Business Solutionsyears, established his roots while the company If a single idea is like a spark, a shared idea is like a spark in a combustion chamber … the combustion chamber of our collective experience. The resulting power is explosive and capable of changing the world. How lucky we are to work at BCS where every idea is valued and respected! As 2010 draws to a close, the Creativity Sphere is thrilled to introduce our first issue of Aha! We hope this publication inspires you with its wide range of ideas leading to innovation in business products, practices or processes. Whether you recognize yourself in the spark of the Aha! moment or the turbulent energy of the combustion chamber, you are an integral component of our Dynamic Evolution. Creativity iswas structured in a very traditional hierarchical the life-blood of our organization. Creativity celebrates possibility. Every idea tells a compelling story of a company alive with creative passion. | Our company. Our ideas. Our future. Federal Home Loan Inspiration: Noticed an unmet need for a low-cost line of credit, realizing that the same solution usedmanagement style, one that was successful for 60 Bank Membership by the banking industry from prior work experience, could be applied to our insurance industry. Idea from/idea coordinated by: Joe Castellon Idea: Become a member of Federal Home Loan Bank to facilitate low-cost borrowings. Alternative to commercial line of credit. Dramatically reduces interest cost associated with borrowings. Protects balance sheet by maintaining investments that would otherwise have to be sold. Supportive of The Leadership Path to 2 014.years. “Many of us grew up in an environment of Creative input: Joe Castellon Results: Approved at 2-17-10 BCS Board meeting. Currently being utilized by Finance Department to accommodate short-term cash needs in BCSI & PLIC. Inter-Departmental Inspiration: Cyber Risk implementation planning assignment coupled with historical inefficiencies‘this is not how we’ve done this before.’ We went New Business Checklist/ in the new business process. Implementation Plan Idea from/idea coordinated by: Yvonne Lee Idea: An inter-departmental tracking mechanism to follow and manage the processing of new sold business, keeping the entire process proactive, on track and on time. Creative input: Sharon Dold, Chad Chaffin, Chuck Burke, Tracey Crenshaw, Terry Harris-Jones, Mike Kichka, Rich Behrens, Lou Georgopoulos, Diane Sowellfrom quietly minding our own business to something Results: Checklist for each new piece of business will remain ‘active’ until the newly sold ‘live’ business is fully implemented. Ongoing diary of all activities, documents and lessons learned is being kept for future creative application. Business no longer handled on a ‘surprise’ basis. Activities related to implementation no longer fall through the cracks. Cross-departmental communication throughout the entire process makes for smoother implementation and better customer service to our client.radically different,” comments Petit. By trusting and engaging in the quality of processLeadership began collaborating with employees they were undertaking, instead of focusing onfor the first time: respecting their ideas and giving the outcome, the employees of BCS embracedthem the room to innovate. This was very new for their empowerment. They were able to create aBCS employees. The walls became permeable and decision tree that ultimately led to 15 product,employees were allowed to lead in the process. practice, and procedural innovations that savedPetit recalls some backroom discussions during the organization both time and money.this time: “Do you think these Sphere groups aregoing to last much longer?” Soon they saw thatthe new way of doing things was there to stay not only because their people realized that theirbecause it was integral to the corporate vision, ideas were valuable, but also because it encouragedmission, and the balanced scorecard. “We also them to make their ideas operational as quickly assaw that the Spheres were being staffed by cross- possible. At the end of 2010, the Creativity Spheredepartmental representatives and found ourselves published their first Aha! report featuring 15 ideasworking together and listening to each other, and leading to creativity in products, practices, andwe were actually enjoying the process.” The people procedures; this translates to saving valuable timeat BCS were engaged and accountable for their and money for the organization.actions in new ways. “It was very different from theold structure of isolation and staying out of trouble,” Best Practices in Quality of Processrecalls Petit. “We had a brand new attitude. Now, it “The key in quality of process is to invite employeeswas about trying to add value and provide excellent into the challenges that you face and then to trustservice for each other.” them. You hear the word ‘organic’ a lot in the hallways of BCS. At first, the employees of BCS wereQuality of process became the key to everything. waiting for this to go away. Leadership had to make itEmployees had to trust the quality of the process real for them and engaging them in the process wasbecause the learning that was occurring was more the way to do it. They couldn’t sacrifice the quality ofimportant than a preconceived outcome. Petit process because they had a date for an outcome.also heads up the Creativity Sphere. This group Much of what we had planned in the strategicchallenged itself to develop a decision tree. On the planning process didn’t happen when it wassurface, a decision tree sounds very business-like. planned; it happened when it was ready to emerge.But as they worked through the process, their goal It didn’t mean that we let those goals go, but webecame clear: “We came up with an idea notation asked people to learn while they were working. Thisprocess providing all employees an analysis tool was new for them and learning only happens whenguiding them to implement their ideas autonomously they are engaged and allow those conversations toif possible or collaboratively if necessary.” This was take place.” Barb Ostermana turning point for the group and for the organization All content © copyright 2005-2011 Denison Consulting, LLC. All rights reserved. l www.denisonculture.com l Page 4

Critical Success Factor #4: couldn’t have answered those two questions, I can’tActions Leading to Plans imagine how we could have achieved what we did in the first year and what I whole-heartedly believeIn the past, BCS made their strategic plans we’ll achieve for years to come.”primarily in their functional groups: marketing,financial, and information technology, etc. With thecreation of the Spheres: Growth, Service, Finance, Best Practices in Actions Leading PlansCommunication, and Creativity, along with the “At BCS, this is where the employees started toCulture Team, they were able to create cross- understand that the work they were doing in thefunctional teams to think in a broader context of the Sphere Teams was intersecting with the strategicorganization. Jim Drew, Assistant Vice President plans. Action plans are about execution andof Communication, comments, “As a community, accountability. To be successful, they need towe were able to shift our thinking so that we come from the people who are doing them, thedidn’t just have functional goals in mind, but also people who know best what needs to be done,the corporate goals represented by our Spheres. so you are able to hold those people accountable.This allowed us to recalibrate how we worked as The BCS scorecard focuses on Growth, Service,a group and realign into cross-functional teams and Finance, which you would see on almost anyto create our strategic map framework.” Through business scorecard, but also Communication andthat process, they created their strategic map, Creativity. In this way, BCS weaved together thecontaining both strategic and cultural goals. This business and the cultural outcomes to achieveone page document took about a year to produce. business results.” Barb OstermanContent wise, it is not long but very well thought outby the entire organization. Everyone, leaders and Critical Success Factor #5: Organic Ownershipemployees alike, now buy into it. Throughout their Dynamic Evolution, employee empowerment was a critical component. TheIn many ways, BCS’ actions lead their plans. employees owned the process. Many organizationsBecause they had gone through this process of faced with issues of empowerment wonder wherereflection, they were able to transition their strategic to start and how to give their employees theframework into the organization’s first balanced empowerment for which they are looking. Trust isscorecard. The scorecard became a natural part always a critical factor in issues of engagement.of the organization on the strategic side. On thecultural side, BCS had taken their first Denison Cindy Jenkins, Senior Accountant and memberOrganizational Culture Survey in 2009, about six of the Culture Team at BCS, talks about howmonths into their transformation process. They Beacham empowered employees, “The employeesrenamed the Denison Organizational Culture Survey of BCS became empowered the day that Scottthe BCS Pulse because it measures the heart of the asked us one simple but courageous question,organization. ‘How are we doing?’ He wanted honest results on the Pulse, whether it was good, bad, or ugly. ThisBased on the Pulse results, the Culture Team gave us an opportunity to have a voice and madedeveloped a 50-page analysis document, including us feel like our opinion mattered. After we receivedsurvey results and focus group feedback. Feedback the results, Scott challenged us with anotherwas collected through a series of safe harbor question, ‘How can we do it better?’”discussions, lunch and learns, and other sessionsspecifically designed so that people could feel free Along with empowerment came accountabilityto collaborate, share their feelings, and discuss the for actions. In his own leadership role, Beachamresults in a very transparent manner. Drew states, stressed that the cultural change was owned by the“Going through this process, I think one of the employees, giving them the chance to be leaders.biggest successes we achieved was being able to As a result, employees were empowered andanswer two critical questions very effectively: Whose encouraged to take ownership and be accountableplan is this? Ours. Who created it? We did. If we for what they did. On an individual level, the action All content © copyright 2005-2011 Denison Consulting, LLC. All rights reserved. l www.denisonculture.com l Page 5

and operational plans that were derived from the Best Practices in Organic Ownership BCS Pulse results and their balanced scorecard “People have run through all five of these success were incorporated into employees’ personal work factors: engaging them, allowing them to make a goals. This helped to show employees how they difference, hearing their voices, their ideas, and fit into the bigger picture, reinforcing their values, truly listening to what they have to add to the their “212 Everyday,” and the fact that they can business process. It’s about leaders creating the make a difference in their organization. environment for people to excel. Many companies say their people are their greatest asset; BCS Teamwork and communication were also lives it.” Barb Osterman enhanced through the Sphere Teams. Because the teams consisted of employees from different departments, it gave each team a broader lens to Whose Plan? Our Plan! look through when implementing the operational The BCS cultural transformation was organically plan. This also created a forum that has opened achieved through a quality of process, rooted in up communication across departments. core values, that empowered leaders from within Employees better understood the upstream and to actively create the organization’s strategic plan. downstream effects of their actions and found Beacham has been highlighted over and over ways to streamline their processes and help again by his employees as a great leader, but if each other. Many Spheres have sought feedback you ask him, he gives credit to the BCS team. outside of the team to get ideas and provide Beacham says, “If you walk through the hallways feedback. This stimulated creativity, promoted of BCS and ask any of the employees, ‘Whose the exchange of ideas, and provided a healthier plan is this?’ They’ll say: ‘It’s our plan.’ ‘Who atmosphere for teamwork. has to execute this plan?’ ‘We do!’ The sense of pride that our people have in this will allow us to Finally, recognition has been a key factor to continue to perform now and into the future.” sustain momentum. Recognition has taken many inspirational and motivational forms including posters, awards, or simply saying thank you and sharing in team accomplishments and milestones. Related Resources Denison Consulting. (2005). ResearchNote: Denison Consulting. (2010). ResearchNote: Overview of the Denison Model. Ann Arbor, MI: Balanced Profile, Better Organizations: Learning Author to Balance. Ann Arbor, MI: Author Denison Consulting. (2009). CaseStudy: Sutter Parker, Sam & Anderson, Mac. (2006) 212° the Connect: Cultivating Culture at the Start. Ann extra degree. Aurora, IL: Simple Truths; www. Arbor, MI: Author simpletruths.comContact Information Copyright InformationDenison Consulting, LLC Copyright 2005-2011 Denison Consulting, LLC121 West Washington, Suite 201 All Rights Reserved.Ann Arbor, Michigan 48104 Unauthorized reproduction, in any manner, is prohibited.Phone: (734) 302-4002 The Denison model, circumplex and survey are trade-Fax: (734) 302-4023 marks of Denison Consulting, LLC.Email: TalkToUs@denisonconsulting.com Version 1.0, February 2011 All content © copyright 2005-2011 Denison Consulting, LLC. All rights reserved. l www.denisonculture.com l Page 6

BCS Financial: Leading a Dynamic Cultural Evolution from Within

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