Health insurers are caught between rapidly rising costs and growing resistance by government and consumers to absorb those costs. Given that lower levels of service are unacceptable, our client, a major US insurance company, turned to alliances to support innovative business models that could help them better respond to market pressures.
New to partnering, a deep not-invented-here mindset pervaded the company. This bias led decision makers to reject attractive alliance opportunities in favor of internal development or acquisitions. The problem was compounded by unclear criteria for valuing alliances and comparing them to build, buy and other partnering options. Decisions were haphazard and rarely well supported. As a result, it was difficult to align various parts of the organization following any decision. Implementation suffered.
The executive team recognized the need for a more systematic way to evaluate all its options and the opportunities that best served their strategy. They approached Vantage for help in creating such a process and aligning the organization. Further, they sought to clarify roles and responsibilities for alliance management function, and its relationship to the operating units.
Vantage began by identifying the individuals and groups involved in alliances — those identifying opportunities, negotiating agreements, and managing alliances day-to-day. Using interviews and working sessions with the relevant constituencies, we mapped the organization's decision-making process. We considered both the substance and process of those decisions, and then looked at the outcomes of the decisions to evaluate their effectiveness.
Using this information, Vantage drafted a framework for comparing the three approaches — build internally, acquire, and ally. We also crafted criteria to determine which was more appropriate in a given situation and developed guidelines to apply the criteria to different types of opportunities. Working with the client team, we refined the draft model and helped to build understanding and alignment across the organization.
In addition, Vantage helped restructure roles and responsibilities for all the groups involved in the build-buy-ally decision-making process. We developed highly specific job descriptions, including critical competencies, hiring criteria, training needs, and performance evaluation criteria.
This new build-buy-ally process more tightly links strategy formation to execution. The restructured alliance function provides more integrated support to the alliances. Since implementing this approach the client has realized:
- Cost savings and faster time-to-market through alliances
- Improved execution due to better alignment across different groups
- New opportunities as the company is increasingly recognized as a more attractive alliance partner