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How do you turn around the largest privately underwritten health insurance program in the world? If you're Rod Collins, you flatten the organization.
In the mid-1990s, Collins led the business operations for Blue Cross Blue Shield Federal Employee Program, which then served about 4.5 million federal employees. When he arrived, the organization had experienced almost two decades of low growth and low performance. Collins and the rest of the leadership team quickly realized a hierarchical leadership strategy wasn't working.
So, with the help of intuition as well as experimentation, the leadership team ushered in a management style that rewarded collaboration and turned managers and supervisors into coaches and facilitators. "We turned around the business in about 18 months," said Collins, who spent his last five years there as the chief operating executive. "The best part of it was we sustained it over a decade and continued to grow."
Collins, now director of innovation at consultancy Optimity Advisors, has since become an expert in business management styles that champion peer-to-peer networks over top-down leadership structures. In part one of this two-part Q&A, we asked Collins to discuss holacracy, the "bossless" management style recently decreed by Zappos CEO Tony Hsieh -- and the flap that followed this edict.
If a flat organization isn't introduced by the CEO of the company, as in the case of Zappos, would it be possible for, say, a CIO to successfully introduce this to just the IT department?
Rod Collins: This was a challenge we had inside Blue Cross Blue Shield Federal Employee Program. We were a relatively autonomous business unit with this unique challenge of having to bring together all of these different Blue Cross Blue Shield plans into an alliance. And we were a unit inside a larger organization that remained hierarchical. But because we had this identity as a business unit and had a dedicated mission, we were able to set up this network structure within the alliance and we were able to craft our performance procedures, if you will, in such a way that we could lead a network and at the same time, do it in the context within a larger hierarchy.
Can you provide an example of how you operated between the two management styles?
Collins: We did not have the ability in our organization to redo our performance system. That was something that was determined by the human resources group in the larger hierarchical organization. But what we could do is we could decide what measures we were going to put in. And so for example, we made the decision that we weren't going to list individual tasks in the performance tool; instead, we're going to focus on cross-functional tasks. By designing evaluations that way, we were complying with the hierarchy's structure by having performance tools, but we designed the measures to be cross functional, to drive collaboration, and be consistent with working as the network.
Rod Collinsdirector of innovation, Optimity Advisors
For CIOs interested in moving in this direction of a flat organization structure, where do you recommend they get started?
Collins: If a CIO is going to do it -- and they're in a good position to do it -- they've got to start with their leadership team because the consciousness of the group is limited by the consciousness of the leadership. They set the system, they set the processes. One big difference between hierarchies and networks is how power works. In the hierarchy, power is about being in charge. In a network, power is about being connected. What the CIO has to have a sense of is this: Will this group of people get comfortable with the notion that power is about connectivity? Because when you do, you give up being in charge.
One of the things you've talked about when tapping the collective intelligence of these networks is eliminating debate because, and I'm quoting you here, 'debate tends to solidify the entrenched position.' How do you eliminate debate?
Collins: Say we're going to start a major systems project. What you want to do is get a microcosm of your business in the room. You're going to have people from your systems area, your business area, you want people who are close to customers -- anyone who will be impacted by this -- you want them in the room. When you gather them together, you want them in equal numbers to each other.
Once you get them in the room, you'll have some type of opening presentation. You'll either have a starting point or an orientation; we would always tell people they have 20 minutes to deliver what they want to deliver without interruption. When they'd finish, there'd be a period of questions. We'd have people oriented to the fact that they could only ask clarifying questions -- they couldn't express an agreement, or a disagreement, or another point of view, or an 'I've got a better way.'
Those kinds of responses are at the root of what makes meetings so dysfunctional: We listen to reply, rather than listen to understand. So we forced them: You have to listen to understand.
So, people were asked to reserve judgment until they were sure they understood what was being said. Are there tangible ways to measure how that approach helps outcomes?
Collins: The power of collective intelligence is that you get to these optimal solutions fast. When we first started holding these two-day sessions, the most common comment on the evaluations was, 'I cannot believe how much work we did in so short a period of time.' That's the function of having the network in the room.
Nothing is as powerful as getting the whole system in the room because, as issues come up, you can say, how will this affect you? Even if the representatives are not the leaders of the group, it doesn't matter. As long as the voice is there, it seemed to work. By having them there, we could say, 'We can't stop until these four people are all comfortable with what we're going to do because all four people are impacted.' In hierarchies, you don't realize who is impacted until sometimes you're halfway through the project.
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