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Lean Innovation at UnitedHealth Group, Kunjorn Chambungdabongse, Optum

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Learn how a group of corporate innovation leaders, change agents, and intrapreneurs implemented a Lean innovation incubator inside a Fortune 14 organization. Hear the story of The Garage, challenges to innovation in the enterprise, and lessons we have learned along the way.

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Lean Innovation at UnitedHealth Group, Kunjorn Chambungdabongse, Optum

  1. 1. Corporate Innovation 2.25.2016 Lean Startup NYC Enterprise Summit
  2. 2. Pac Man style
  3. 3. This is your company. Look at me! I’m huge.
  4. 4. This is your competition. Look at us! We’re huge.
  5. 5. This is you versus your competition. Chomp! Chomp! Chomp! Market share! Oh, him again.
  6. 6. Meanwhile in startup land… Look at us! We’re tiny. And starving!
  7. 7. Startups come attacking! Look how cute they are! Let’s get ‘em!!!
  8. 8. But the battle is different.
  9. 9. Traditional battle We’ve improved efficiency by 2.1% We’ve added a new button to our portal. Crap.
  10. 10. Startups attack bits of you. Our shiny new product is 10x better! attack! attack! attack! attack! attack!attack! Ours is full of clouds and unicorn dust! Ours has robots and we give it away!
  11. 11. And then tiny little startup gets big. Fast. Whoa I’m huge.
  12. 12. And starts chomping your market share. Burrrrp
  13. 13. “There’s no chance that the iPhone is going to get any significant market share,” “No chance.” Steve Ballmer, 2007
  14. 14. “Neither RedBox nor Netflix are even on the radar screen in terms of competition,” “It’s more Wal-Mart and Apple.” Blockbuster CEO Jim Keyes, 2008
  15. 15. “An iPhone belongs in your pocket, not on the road” Porsche CEO Oliver Blume
  16. 16. Big huge company needs innovation Go be more disruptive and innovative! (What does that mean?)
  17. 17. Go be more disruptive and innovative! (What does that mean?) And then…
  18. 18. Probably looks something like this.
  19. 19. Submit all your ideas and become a hero! Sweet! We are so innovative. What a great company. Strategy 1: Magic Ideas Box Magic Ideas Box
  20. 20. Strategy 1 FAIL: Process and procedures for magic ideas box: All ideas submitted by employees, both foreign and domestic must complete Form 495b on our sharepoint site located at http://intranetpagesfullofforms.company.net and is only accessible if you are behind our company firewall or if you have completed Form 863z located at http://intranetpagesfullofforms.company.net and signed our waiver of rights and been approved by your manager to submit ideas. After submission, your idea will progress through our stage-gate process developed by our top process-driven experts. Stage-gates ensure that ideas conform to our idea-generation policy and that we don’t go pursuing any crazy sounding ideas. After completing steps 1-6 of the stage- gate process, you may or may not hear anything back about your idea. If your idea passes step 7, it will then be reviewed by a committee of senior leaders who have all the qualifications for judging the merits and benefits of pursuing your idea. Step 8 is where the committee determines if the idea fits their business unit strategy, and if it doesn’t your idea will be killed and you may or may not be notified. If your idea passes all 16 steps of the stage-gate process (we’re not sure what the last 8 stages are for but they sounded pretty good), you will be invited to pitch your idea to our executive panel. This will require a 40 page powerpoint and must include a full business plan and CBA of which we’re confident you have all the expertise to produce. The executive panel will judge your idea based on its conformity to our business strategies of which we have hundreds of powerpoint decks that we can show you. If your idea is chosen, we will put your picture on our intranet site to make you a star among your peers and to let all other employees know how innovative we are being, and then you will have the privilege of working on this idea in any spare time you have while maintaining 100% of your normal work duties without any extra compensation.
  21. 21. Make your stuff more cloud-like and digital and sexier. That’ll show ‘em! Strategy 2: Upgrade
  22. 22. Yikes. @**$*! Strategy 2 FAIL: Um…
  23. 23. Act like a startup. OMG! We are so cool. We get to be entrepreneurs! Strategy 3: Act like a startup
  24. 24. We can’t have that. Try to be more in-the-box. We’ve done it! But it might eat our own business. Strategy 3 FAIL:
  25. 25. Hi unicorn.com team, we’d like to acquire you. Cha-ching! Strategy 4: Buy them
  26. 26. Try to be more like us. But our culture is what made us great. Now we’re just OK. Strategy 4 FAIL:
  27. 27. Let’s do an accelerator so we can find cool startups! Brilliant! Strategy 5: Do an accelerator
  28. 28. Strategy 5 FAIL: We didn’t get the best ones. What do we do with them now?
  29. 29. These are not bad strategies.
  30. 30. Just sometimes poorly executed.
  31. 31. And often without the big picture in mind.
  32. 32. Let’s talk about Strategy 3: “Act Like a Startup”
  33. 33. Some of the stuff you’ll run into
  34. 34. (I’ve dealt with all of them)
  35. 35. Manager stuff Innovators Management Our first eight ideas failed. Unacceptable.
  36. 36. Legal stuff Innovators Lawyers Totally brand new product! We don’t have precedence for that. Might get sued.
  37. 37. Procurement stuff Innovators Procurement We want to use external services and new vendors! Oh, no, no. Those are not approved.
  38. 38. Finance stuff Innovators Finance Can we have some money? What’s your 5 year pro- forma? We made it up. Denied.
  39. 39. PR stuff Innovators PR We’re going to explore a totally new market. No way! Our competitors might make fun of us.
  40. 40. Business Unit stuff Innovators Business Unit Will you sponsor our rad new product? That’s not in my one- year plan, sorry.
  41. 41. Marketing stuff Innovators Marketing Check our sweet new product! Stop it. That might tarnish our sacred brand.
  42. 42. Technology stuff Innovators IT Can we open-source and do agile? We do big expensive, lengthy IT.
  43. 43. Sales stuff Innovators Sales Will you help sell our new product? We don’t get commissions for that.
  44. 44. Account stuff Innovators Accounts We’ve talked with CustomerX and… Who gave you permission to talk to them??!
  45. 45. Security stuff Innovators Security Can we punch holes in our firewall? No. He’s on our list now.
  46. 46. Recruiting stuff Innovators Recruiting We need more entrepreneurial people. We don’t know how to source those.
  47. 47. Human Capital stuff Innovators Human Capital We have entrepreneurial people. We don’t have job codes or development programs for them.
  48. 48. Real Estate stuff Innovators Real Estate We need collaborative space where teams can mingle. We have cubes so people don’t have to see each other.
  49. 49. There are strategies you can take.
  50. 50. Management Strategies Do some homework Know your organization and what motivates it Growth trajectory - declining or growing? Gauge pressure from startups Know how innovation has worked in the past Create a PMT
  51. 51. Legal Strategies Invite them to happy hours Implement regular office hours Create a playbook and framework Get comfortable with a little risk
  52. 52. Procurement Strategies Invite them to happy hours Show them what cool stuff they can help with Carve out a procedure for: non-vetted vendors new services/technology Legal will definitely be involved
  53. 53. Finance Strategies Understand your BU’s financial goals and metrics Build a tranche-based model Start small Add a team member to your PMT
  54. 54. PR Strategies Don’t talk to media Be prepared to get into trouble eventually (when someone does talk to media) Damage control Start off-brand if you can
  55. 55. Business Unit Strategies Understand their 1-3 year strategies Where are their gaps? Know some failed initiatives Where are the laggards? Be prepared for politics
  56. 56. Marketing Strategies Create market-listening sessions Show them how big Lean Startup is Help establish thought-leadership Do things off-brand Don’t use focus groups Do 1:1 interviews
  57. 57. Technology Strategies Understand risk-level of your innovations Don’t invest in big IT until you have many customers Ensure MVPs are also MVAPs (awesome) Use agile Teach IT how to reduce waste with Lean Startup
  58. 58. Sales Strategies Infuse your innovations in EBC/Experience Centers Wow and impress clients For more mature products, create incentives Invite them to happy hours Understand where they’re getting beat up in market Go along to client meetings
  59. 59. Account Strategies Invite them to happy hours Hire one of them Showcase innovations for them Provide regular updates of cool new stuff Go along to client meetings
  60. 60. Security Strategies Create a separate network Don’t flaunt data protection rules Protect your data and customer’s data Ensure regulatory compliance
  61. 61. Recruiting Strategies Invite recruiters to fun events Maintain your own network of candidates Run/participate in Lean Startup Challenges
  62. 62. Human Capital Strategies Use all the wrong job codes Entrepreneurial comp is not easy Create your own development plans Use lean startup on your own team
  63. 63. Real Estate Strategies Don’t need anything too fancy Have your team make it their own Beg if you have to Regularly invite C-Level clients to your space Beg some more Invite more C-Level clients to your space
  64. 64. Final Thoughts Find those who figure out how to do vs. how not Find those at fringe, not core Measure everything - interviews, experiments, burn, throughput, revenue Continuously improve
  65. 65. Innovation Lifecycle
  66. 66. Validate the business model Product sales/market Operational and support model Strategic and BU Alignment Build sustainable revenue pipeline that meets product, profit, organizational goals Final decision on ultimate landing organization is determined. Test and validate solutions Decision points at each sub-phase. 1. Solution/Market 2. Product/Market 3. Revenue Growth Validate market needs and solution ideas Discover GM ongoing reviews of active concepts in formal Discover phase. PMT and BU review progress against goals (Sales, Revenue, adoption, organizational readiness, Market readiness) and makes decisions on go- forward, Pivot, Shutdown BU Sponsor is required at all decision points. PMT meets as needed as each project advances to next sub- phase. Once BU Sponsor is obtained per project, Sponsor joins the PMT for sub-phase reviews. Innovation Lifecycle Governance Model Portfolio Management Team (PMT) • Bud Flagstad • KC • Bob Plourde • Bob Berkopec • Dr. Shawn Merys • Finance Resource (Eric Clarke) Full Concept Brief (Discover Output) is reviewed for each concept that has completed the Discover phase. PMT selects concepts to advance to Incubate phase. Discover Incubate IntegratePMT PMT (+ BU) PMT + BU < 3 Months 6 - 18 Months 12-24 Months up to 70 / year up to 10up to 30 Full Concept Briefs (FCB) are prepared for each concept that completes the Discover phase within the quarter. During meeting, PMT approves “solution ideas” to advance to Incubate phase. Overall portfolio is reviewed for capacity, financial, funding, IOI and resource availability to factor in to decisions. Frequency: Monthly PMT meets formally as each project nears sub-phase decision point. Pre-read materials are sent and EIRs present formally at each meeting. PMT then approves decisions to advance to next sub-phase. Overall portfolio is reviewed for capacity, financial, funding, IOI and resource availability to factor in to decisions. Frequency: as needed per project, or quarterly, whichever is sooner. PMT plus BU Sponsor meets as needed to review and approve at major decision-points. Frequency: Quarterly. Sooner if warranted for critical decisions. The PMT is a small, odd-numbered decision-making group that reviews and approves IRD projects as they move within and between the phases of IRD’s Innovation Lifecycle. The PMT is accountable for management of IRD’s Innovation Portfolio. Each member of the PMT is responsible for participating in all meetings, in-person or by proxy. PMT PMT sets broad areas of interest annually as part of strategic annual planning. Advisors from BUs • Optum Marketing • Optum Insight Advisors will have input and contribute to overall portfolio guidance, but not have direct decision-making authority.
  67. 67. Thank you kunjornchambundabongse kunjorn Let’s connect

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