Lean Innovation within UnitedHealth Group

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UnitedHealth Group's Kunjorn Chambundabongse and Pathfinder's Todd Wyder share lessons learned from their collaboration on applying the lean startup approach to a large innovation portfolio.

Topics include:
* How a lean innovation approach provides a more efficient way to determine which ideas merit further development and to rapidly bring the right ones to product/market fit.
* How business model analysis, rapid cycles of hypothesis testing using minimal experiments and feedback from real customers can help you decide when to pivot, when to persevere, and when to allocate your innovation budget to other ideas.
* How to manage an innovation portfolio to maximize returns
The biggest challenges they faced and how they attacked them
* Changing Culture and Mindset
* What's Next.

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Lean Innovation within UnitedHealth Group

  1. 1. Lean Innovation at UnitedHealth Group Presented by Chicago Lean Startup and Pathfinder Software
  2. 2. A little about 3
  3. 3. Fortune 17 Workforce: 150,000 28,000 Physicians, Nurses, and Clinical Practitioners 12,000 Technologists Manages $150B+ in health care spend annually 4
  4. 4. 250,000+ Plan Sponsors 85 Million Consumers 780,000 Care Providers 5
  5. 5. OUR HEALTH BENEFITS BUSINESS OUR HEALTH SERVICES BUSINESS “Health in Numbers” “Good for the System” Helping People Live Healthier Lives UnitedHealthcare Community & State UnitedHealthcare Employer & Individual UnitedHealthcare Medicare & Retirement UnitedHealthcare Military & Veterans UnitedHealthcare International Making the Health Care System Work Better for Everyone OptumInsight OptumHealth OptumRx 6
  6. 6. What if we used [insert technology] and added [insert core asset] and gave it to [insert market] so that they could [insert something cool]? INNOVATION MAD LIBS 7
  7. 7. What if we used smartphones and added our Rx data and gave it to consumers so that they could track their medications? NEW IDEA 8
  8. 8. OMG!! $$ $$ 9
  9. 9. What if we used fancy charts and graphs and added claims data and gave it to consumers so that they could manage medical expenses easier? NEW IDEA 10
  10. 10. OMG!! $$ $$ 11
  11. 11. from to idea profit BUSINESSPLAN FINANCIALMODEL PRODUCTMANAGEMENT WATERFALLENGINEERING THE TRADITIONAL PATH 12
  12. 12. GO FOR LAUNCH!! 13
  13. 13. BUT THEN 14
  14. 14. Customer Adoption Product Features Design Marketing Partners Sales Cost Structure Funding Support Priorities Revenue Streams Time UNCERTAINTY GREMLINS = UNCERTAINTY 15
  15. 15. No business plan survives first contact with customers 16
  16. 16. Innovation at Big Companies: Types Sustaining (easier) Breakthrough/Disruptive (really hard) Driven by core strengths Growth Strategy Precedent (M&A, Build) Established R&D, IP Models Disruptive innovation combative with Core No “one model” 17
  17. 17. Innovation Antibodies: Heavy governance Functional Silos Not Invented Here Liability, Brand Risk Protecting the Core 18
  18. 18. Lean Startup to create startups Portfolio Management Entrepreneur-Centric Approach Experiments and Learning Phases and Milestones Changing Culture 19
  19. 19. Portfolio Management Sourcing Filtering Measuring throughput potential performance Staged-Risk Funding 20
  20. 20. INNOVATION PORTFOLIO ideas problemvalidation problemsolutionfit 10customers 100customers 1,000customers scale 21
  21. 21. Entrepreneur Centric Founder Teams Entrepreneurs In Residence (EIRs) Low-Cost Dev, Lean UX/Design VC-Like Board Coaching, Mentorship Co-Located Teams 22
  22. 22. Experiments and Learning Customer Development Getting Used to Failure Designing Experiments MVPs Interpreting Results 23
  23. 23. Phases and Milestones Problem - Market Fit Problem - Solution Fit Product - Market Fit 24
  24. 24. HIGH LEVEL STAGES Goals Methods Outcomes Validate the Customer Validate the Problem Interviews Field Research Secondary Research Establish Patterns Market Size, Sales Model Early Adopter Archetype Problem Importance Validate the Solution Minimum Viable Product (MVP) Cohort Analysis A/B Testing Customer Acquisition Testing Paying Customers Distribution Models Revenue Models Validate the Business Sales/Marketing Funnel Customer Acquisition Optimization Customer Acquisition Costs Lifetime Value Churn Pricing Cost Structures Validated Business Model Position for Scale/Growth Stages Problem-Market Fit Problem-Solution Fit Product-Market Fit Funding Strategy Leverage Op-Ex Cap-Ex Cap-Ex Follow On 25
  25. 25. Changing Culture Getting Used to Failure Recognizing and Managing Uncertainty Resourcing Comfortable Being Uncomfortable Be Bold and Pioneering 26
  26. 26. GARAGE PROGRAM tools Facilities Resources Mentorship Process Tools Metrics Idea Entrepreneur Idea IdeaIdea Idea Internal Idea Sources: • Idea capture systems • Innovation Groups • Business Segments EIR Sources: • Dedicated Entrepreneurs In Residence (EIRs) • Segments can provide (but must dedicate full-time or provide sabbatical) Entrepreneur Entrepreneur UHG’s Garage is a service focused on identifying, nurturing and accelerating the commercial viability of innovative internal business ideas. The Garage manages a small, discreet portfolio of seed-stage business ideas through a disciplined, entrepreneur-centric process designed to rapidly de-risk ideas in the market, and provide paths for commercialization, follow-on and exit. Garage Mission: • Build and sustain a culture of experimentation that enables the growth and scale of new health businesses, products and services • Reduce the cost of innovation • Increase innovation portfolio throughput through staged-risk funding, rapid iterative development • Diversify portfolio through option value • Off-grid space • Collaborative culture • Casual environment • EIRs • Developers, Designers • Data/Analytics Experts • Clinical • Regulatory, Legal • Program Management • Advisors, Mentors, Coaches • UHG Leaders and SMEs • External SMEs • Learning- Driven Process • Lean Startup • Customer Development • Staged-Risk Funding • Business Model Validation • Highly Adaptive Agile Development • Lean UX • Infrastructure • Continuous Deployment • Innovation Accounting • Cohort Analysis • A/B Testing • Validation of business model assumptions • Financial analysis EIRs are matched to Ideas based on domain knowledge, passion and entrepreneurial talent 27 27
  27. 27. Some Results 60 pipeline candidates 12 “projects” started 373 Customer Interviews Conducted 7 closed in Phase 1 < 3 months 25% move to Phase 2 28
  28. 28. MVPs 29
  29. 29. 30
  30. 30. 31
  31. 31. Key Learnings Create air cover Align to top strategic risks Bring Legal in Regular coaching! Ask for forgiveness, not permission Start “lean”, experiment and iterate Measure everything Find the right people 32
  32. 32. THANK YOU Kunjorn Chambundabongse (KC) kunjornchambundabongse kunjorn Todd Wyder Pathfinder Software 33

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