Will this new team be able to do a better job than the initial array of contractors and government managers? Team theory sheds light on how they just might be able to deliver on their promises.
Business Model Constraints
In the previous article in this series, we discussed how a company’s capabilities (composed of resources, processes, and values, or RPV) can constrain innovation even while successfully sustaining other portions of the business. We outlined how U.S. Government-sponsored social programs have traditionally either provided funding directly to service providers to operate, purchased goods or services directly from contracting organizations, or gathered and published data.
The health insurance exchanges, meant to provide a platform for connecting individuals to private insurance companies, do not fit under any of these three categories that government RPV is aligned to address. Thus, attempting to use resources, processes, and values meant to deliver different types of projects, Healthcare.gov understandably stumbled.
Changing Resources, Processes, and Values
How can an organization shift their RPV to support a new innovative project? Team theory, first developed by Kim C. Clark and Steven C. Wheelwright, provides a framework for understanding how to structure a team to accomplish innovative goals inside a company. Appropriate team structure is defined by how well the new innovation matches the implementing organization’s current RPV.
Clark and Wheelwright outline four types of teams.
- Functional teams: Drawn around disciplines such as finance, manufacturing, marketing, etc., functional teams work best when the resources, processes, and values of an organization are completely aligned with the desired project outcomes. Detailed specifications define in advance what each group is supposed to do, and there are no independencies.
- Lightweight teams: Lightweight teams are composed of members who remain within their functional unit but whose work is coordinated by a project manager in order to deal with predictable interdependencies.
- Heavyweight teams: When an organization’s RPV does not align with the new innovative project, heavyweight teams are required to bring to pass successful completion. Heavyweight teams are needed when unpredictable interdependencies may arise, such as those between the many components of Healthcare.gov. In these circumstances, different components need to interact in ways that cannot be clearly anticipated or specified in advance, requiring novel interactions outside the day-to-day routine of the organization. Members of a heavyweight team should be co-located and led by a manager who wields significant clout in the organization but is himself relatively autonomous.
- Autonomous teams: These teams exist entirely independent of the formal structure of the organization and are empowered to develop entirely novel business models, priorities and profit models that may disrupt the parent organization.
Why a Heavyweight Team for Healthcare.gov?
Healthcare.gov’s success is based on successfully coordinating many different components. The front-end website must interact correctly with the data back-end. The data back-end needs to collect and verify information from the IRS, CMS, many other government agencies, state databases, and insurance companies. Further, customers must be able to interface with the website, and insurers must be able to set prices based on both regulation and customer interaction.
Because the interactions of each of these parts are somewhat unpredictable (after all, the government has never done anything like this before), fixing Healthcare.gov will require a heavyweight team with sufficient authority and autonomy to requisition resources, change processes, and direct value prioritization.
Building a Successful Heavyweight Team – Challenges in the Government
Creating this type of team is difficult in any organization, but it is especially challenging in government.
To understand why, first consider a typical business. A manager, committed to driving high-margin products to consumers in order to increase a company’s bottom line, will typically have little interest in a project without proven results. Because the new innovation has unpredictable interdependencies, it may represent a risk to the manager’s bonus income or even to his job if the project fails. Hence recruiting individuals to work on a heavyweight team that confronts difficult problems is risky, and businesses are often disinclined to give such heavyweight teams the resources and autonomy that they need to succeed out of fear of their potential failure.
In business we talk about margins, but government introduces a different driver: political capital. While constituents and legislators are often concerned about politicians’ fiscal conflicts-of-interest, political conflict-of-interest is much too often overlooked.
Consider the test just a week before the launch when Healthcare.gov failed when just a few hundred people tried to log on simultaneously. Imagine that you are the high-level appointed official who gets news of the crash from the federal employee who got news from the contractor. You have two choices: either delay the launch of Healthcare.gov and incur the President’s and the public’s wrath, or allow the website to launch as planned, hope for the best, and blame the contractors for poor implementation.
If you take the first option, you may lose your job and future political career, and you may have to find more money to pay for the extra required contractor time. If you take the second option, you keep your job and preserve your political capital. Not just that, but the contractor is happy as well – after all, they are not motivated by political standing, but by monetary payments, and they’ve already been paid. And the rollout might go well anyway. The choice is a no-brainer.
Short Term and Long Term Fixes
In the short term, fixing Healthcare.gov will require ensuring that the new team has enough authority to command resources for their own disposal. This will require insulating them both from the conflicting economic interests of disparate contractors as well as from the political interests of legislators and executive officials. Jeff Zients is a good appointment because he has clout within the government bureaucracy, but it will be important to ensure that he, not the contractor companies, have the most control over the contracted employees working on the website.
Long term, preventing problems such as these will need to involve more comprehensive fixes. We do not have all of the answers, but offer two ideas for further consideration.
- A system must be devised that enables the creation of true heavyweight teams comprised of government officials and contractor employees. Currently, these teams are only created when the President gets mad or with a precipitating catalytic situation (such as the impeachment of Richard Nixon and the subsequently created reform team).
- Careful thought must be given to aligning the values and priorities of contractors and politicians. Contractors are economically motivated, and politicians are to some degree politically motivated. Better alignment (probably implemented by a heavyweight or autonomous team) can prevent Healthcare.gov-type situations where both political priorities and payment incentives can be satisfied while still delivering a substandard product. Introducing discovery-driven planning-style funding based on key milestones into the contracting process may be a step in the right direction.
We are hopeful that Zients et al will be able to function as a heavyweight team that can finally bring government and contractor RPV into alignment to fix Healthcare.gov. Let’s extend the discussion beyond fixing the exchanges into how to prevent similar problems in the future while encouraging world-changing progress and innovation.
