Luna Tractor has had the great pleasure of working with a small health insurance start-up here in Melbourne this year. This is their story.
The competitive landscape for health insurance in Australia is dominated by a small number of large incumbents that have been in business for many years. Below that are about 30 smaller players who have as little as <1% market share. Many of the business practices of these players are rusted on through highly proscriptive regulation, legacy systems that are common across players, and old mindsets. New brands pop up now and then, but they are bolt-ons to older players and typically somewhat contained by old practices. Even when new products come out, the bulk of an insurer’s book remains “old school” on the former products. There has not been a material new entrant since Medibank spun out of the HIC in 1975.
A small team of innovators came together in 2011 to break into this oligopoly. Setting themselves a tough deadline to be in the market in 2012, the main business challenge that emerged was to develop an effective operating model – a way for a group of seasoned insurance executives and subject matter experts to collaborate at high speed to reach their goal.
We set the company to work using the principles of Agile and Systems Thinking from the start. Instead of each subject matter expert retreating to their office to write board-level strategy papers to present to VCs and partners, they settled into their future headquarters around large Ikea tables with laptops and built a war-room. They defined themselves by this highly collaborative, communications-heavy set of business practices.
The rhythms of Agile serve them well. Daily conversations about everyone’s work-list (from CEO to office support) help avert risk and surprises. Weekly demonstrations of achievements, most of them not software at all but related to building online distribution, new products and governance, get everyone on the same page, and are platforms for the one-hour retrospectives and planning that follow every Friday.
Everyone has cards on the wall, separated into swim-lanes that reflect the key business objectives such as license approval and product development. The board is constructed using a customised ‘Hurricane’ model, ranging from 6 months out to today, in ever increasing levels of certainty and detail.
There were initial doubts about the suitability of Agile from some of the seasoned professionals on the team – having only ever worked in command and control businesses at senior levels, some perceived they were being asked to trivialise their work with index cards, scissors and coloured dots. There was a strong desire to see Gantt charts and more traditional sources of comfort. These concerns soon vanished when the blunt accountability of speaking to their peers every morning about their achievements and work for the day became apparent as the main purpose of the system.
Any concerns that the new way of working was ‘soft’ were dispelled in the many tough discussions about progress at stand-ups. As the team often reflected, it was far better to have many smaller moments of debate, receive timely feedback and correct their course than have a big ‘oh shit’ moment a month later.
In no time new boards sprang up around the walls, developing products in a shared way, and to the team’s delight their distribution partners, new IT team, Board of Directors and the industry regulators expressed their support for this ultra-transparent and interactive way of working.
With time pressure obvious, everyone focuses on delivering the minimal viable product that can be brought to the table for discussion, or validated with customers and experts. That ‘product’ might range from an actuarial analysis, to a regulatory document, competitive information, or a set of accounts – a desire to boil the ocean and deliver a gold-plated answer when 80% would enable an informed decision has long gone from the culture.
The whole business is now being built on this foundation, to be customer-focused and fast-moving. The team’s ability to collaborate, solve problems and correct their course in short cycles is a major competitive advantage they will never lose – and it is clear they will take these into the operational phase of the business in 2012.
Time to competency at working this way? Eight weeks, with one Luna Tractor Partner coaching four mornings a week initially, eventually only dropping by on Fridays for demo, retro and planning sessions.
The new company estimates their return on the investment in Luna Tractor’s executive coaching to be at least 10x.