How do innovation teams build constructive working relationships with the business units?
That’s the focus of our forthcoming research report, out later this month. And among the people we sought out for advice was Jim Winkler, the Global Chief Innovation Officer at Aon Health. Aon Health is part of Aon Hewitt, the human resources, consulting, and benefits administration firm headquartered in Chicago, with 35,000 employees.
Aon Health delivers healthcare and benefits solutions for employers, covering nearly 10 million current employees and retirees worldwide. “Within that business model,” Winkler explains, “I lead a global team focused on innovating solutions that improve health and manage cost.”
Origin and Structure of Our Innovation Team
We have had various forms of an innovation practice or team for the last five to ten years. But the specific iteration that I have responsibility for — which is really across all of our health-related businesses — we put this together two years ago.
Aon has several different healthcare-related lines of business – we provide services to employers, to consumers, to medical providers, hospital systems, etc. Prior to us putting this together, each business had its own product development function. They did their own market research and would create solutions, and I actually led that function for our healthcare consulting business.What we were finding was three things that were not working effectively in that model, which is why we created our new model.
First, we [did] not always share the same foundational point of view. …We were developing solutions based on points of view that were maybe not contradictory, but certainly not perfectly aligned. So we needed a centralized function that owned that thought leadership and point of view development, so that what we do in the market all ties to a common story.The second [thing] was we were not optimizing our IT and product development resources. So we might need half a full-time employee to help on a project for one line of business, and half a full-time employee to help on a project for another line of business. Instead of having one person that could work on both, each line of business would go out and hire a person and we’d be semi-overstaffed. By creating this centralized innovation and product/solution development function, I’m much more optimized and can deploy resources a lot of different ways.
Then the third [thing was to be able to] really deliver solutions in partnership with third-party firms, and obviously, InnoLead follows this pretty regularly, there’s a massive amount of venture capital flowing into healthcare, a lot of innovation, a lot of start-ups. We would often be executing partnerships that would deliver a particular solution with the same vendor in multiple places in the organization. [We weren’t] leveraging our scale, or [we’d] end up with competing partners in the same kind of category within health, which is then confusing to the marketplace.
So by centralizing this innovation function, we now manage a centralized approach to thought leadership, a centralized approach to the core product development function, and a centralized approach to how we manage third-party partnerships. My organization is not very big, it’s really those core functions. One additional function is around data analytics to validate what we do.
Business Units Lend Expertise — and Sometimes Funding
When we are building a solution, we go into the lines of business to extract the subject matter expertise that we need for a particular product for a particular point in time, and that line of business sort of loans us that resource. [They are] typically the line of business that’s going to benefit from the solution that we’re building. So we borrow their people periodically. It’s all done virtually; we don’t have a lab or a specific location. They might be was spread all over the country or perhaps globe.
[Funding] varies a little bit depending on the solution that’s being built. If a solution is going to disproportionately support one particular P&L, then that P&L usually funds it. But when it’s a broader solution that really [spans] across lines of business, we take a central approach to deciding how to prioritize and fund that, and then allocate the costs to lines of businesses as appropriate.
Setting the Innovation Agenda
We [set the agenda] through an on-going process, on a monthly basis, and then [we have one] big annual [planning] event. This sounds very corporate and very tedious, but it works. We have a product governance committee that is made up of each of the core line of business leaders – each of their Chief Operating Officers — and then the product and IT folks that are on my team. We will literally talk through new things that have emerged.
We actually just had our [monthly meeting], and we were reviewing one new proposal, a new solution that one business unit wants to move forward with, and we were doing updates on three really big ones that we’ve been working on for months. We came to the [realization] that we did not have the resources to start this new project, and part of the dialogue we had to have was, “Is that okay?” Obviously [it wasn’t] to that particular business leader, as he wanted his thing funded, but we had to look at it in a broader context. Ultimately, what we ended up finding in this particular situation was, if we slightly modified the scope of what he was looking for and got comfortable delaying a portion of one of our other big projects, we could fit it all in in [the 2016] calendar year.So, the line of business leaders have an important role in that discussion because obviously, they own the P&L, and they’re the ones accountable for growth. They’re mutually accountable to their own line of business growth and to the collective [Aon Health] business. It’s a very tactical monthly conversation that we have.
Once a year, as part of our budget-setting process, we have a day-long innovation session. [There are a] whole bunch of steps that lead up to it, including a reformulation of our thought leadership and our point of view. We do a refresh of what’s happening in the market, what should we be thinking about, and what solutions we need. Then, [there’s] a day-long session with our line of business leaders and a lot of our product executives, folks from IT, etc., walking through where we see the marketplace evolving, the competitive landscape. We have a person from our sales team spend an hour on what they’re seeing competitively in the market, what our main competitors are doing, or where we are in the sales process.
Then, [we present] both our short-term product roadmap — the nips and tucks we need to do next year — and our big three, bet-the-ranch kinds of solutions that could take us a while to build. [We] ask, “Is all that stuff still the right stuff, based on everything else we just talked about, in terms of the external market view?” The line of business leaders are very vocal participants in that process.
How We Define Innovation
When we were putting this team together, I don’t think I can put a number on how many hours we spent debating the purview of my function. Was it innovation? Was it product? Was it just “big I” innovation, or is it also “little I” innovation? And we decided it’s both. … Thinking about how to take that flavor of vanilla and insert chocolate chips in it, my team [does that.] Thinking about whether we should have a completely different dessert altogether instead of ice cream, my team absolutely owns that.
Maybe in the first part of that analogy if the spoon breaks, the line of business has to get a new spoon. I’m not fixing that for them. We’ll figure out the chocolate chips and then we’ll figure out should you have a different dessert? In the course of a year, my team of 15 or so people might touch 80-100 “little I” innovation things and our vision is that we have three to five “big I” innovation things going on at any point in time, ideally in a cadence where one of those “big I”s is going to launch next year, and another one is probably 18-24 months away, and another one is still very much in that concept testing stage and hasn’t really gotten out of PowerPoint yet.
Examples of Successful Interactions with the Business
One of the solutions that we created in the marketplace that’s very innovative is called a private healthcare exchange. It’s a different way for employers to deliver healthcare benefits to their employees. We were the first in the marketplace with it four or five years ago. We created a business unit around it, and that business unit became very focused on how do we protect ourselves as a startup in big Aon from kind of getting polluted, if you will, by everything else that’s going on? So we built some artificial walls around it, and that really worked for a period of time, until the marketplace started to follow [what we’d done.] Our competitors developed versions of a private exchange and … that then caused us to have to take a step back and say, okay, well let’s look at this differently.
One of the key pieces to that is employers are interested in offering a broader array of benefits that the company sponsors, but employees might pay for themselves. It might be things like critical illness insurance that you buy on top of a high-deductible plan, or legal counseling or pet insurance, these sort of voluntary elected benefits. That function within Aon sat in a different part of the firm, not in the consulting business. By pulling our process together, we took the people that own those different pieces, the exchange team, our consulting team, some of our other product, IT, systems, and benefits administration folks together and said, “How would we create a different model where we could take our private exchange, which really serves the large complex employer, and bring it more down-market to the mid-size employer, where this elected/voluntary benefits piece is really important, and put all those pieces together into one compelling solution?” So my team helped drive that, along with key leaders from each of the business functions. We launched a new solution we call our mid-market exchange last year, which came out of that process.
We take great pride in saying that the initial product version was actually built before the Affordable Care Act was passed, and like to say that the administration took the concept of the changes from us. It’s not really true, but we had the first product roadmap for that back in 2009. And then we went live on our own population, or own employees in 2011, and then full market launch in 2012. It’s a great example of a space where there was an absolute advantage to us being first, but that advantage has an expiration date, and we have to constantly re-innovate those solutions. It’s interesting to say we were first but that doesn’t necessarily mean you’re going to win the RFP today.
Speed, Balanced With Getting It Right
If you were to ask our sales team, they would say we’re not fast enough, and some of our clients would probably say [that too.] We try to balance that with competing priorities, which is always a challenge, and making sure that what we launch, we launch correctly. We’re more formalized and disciplined and structured in concept testing now than we were even a year ago. That adds a step to the process; it slows you down a little bit. But you get yourself away from [being] eight smart people in a room thinking each other are brilliant and therefore, the solution must be awesome to, “We just ran that by 10 clients and none of them really liked it, so maybe it’s not so awesome after all.” Yes, it’s an extra step in the process that can slow you down, but it allows you to make sure that what you launch is more effective and more compelling, and therefore, more likely to sell. So we try to balance [speed] with getting it right.