Scaling up a transformation

Scaling up a transformation: An interview with Eureko’s Jeroen van Breda Vriesman

McKinsey Q, Mar 2011

A member of the executive board describes how the Dutch insurance group first transformed its health division and then started to roll out the changes across the entire company.

The Quarterly: Why did Achmea launch a transformation of its health division in late 2006?

Jeroen van Breda Vriesman: Liberalization was a great challenge for all health insurers. Our offensive strategy worked—we gained a lot of market share—but we knew we would face two tough challenges. One was to fix our profit-and-loss numbers and meet our budget in the coming years. The other was to play the role envisioned by the legislators: to improve the health system in terms of better quality and prices. Going from one market system to another is a big shift for a company, but it does create a strong sense of urgency and it can be a driver for organizational changes.

The Quarterly: Where did you start?

Jeroen van Breda Vriesman: We started with profit and loss, and that meant transforming our operations, including customer care and the front and back offices, which now had to cope with a much larger customer base. Even before liberalization, our operations performed below their potential. They were not meeting cost benchmarks.

The Quarterly: What role did strong leadership and the lean concept play for changing mind-sets and culture?

Jeroen van Breda Vriesman: Having really good people in all the right places was the prerequisite for the success of the program, which we named “Sens” (Samen Effectief Naar Succes) in our internal communications. In Dutch, that’s an abbreviation for “together effectively toward success.” Starting at the top, we identified existing managers with the right mind-set and put them in positions that were critical for the change effort. We also trained managers who were underperforming or lacked the required mind-set. Occasionally, we hired external staff for certain tasks.

Interestingly, two of the division’s general managers approached the task in different ways. One set out to improve efficiency, focusing on culture and behavior, without the help of lean experts. The other general manager put a lean system in place and this helped him achieve results, including cultural change. Both of these managers met the 25 percent efficiency target. The only problem was that we couldn’t duplicate the improvement achieved by the manager who did it on his own. But we were able to ask the manager who was using lean to help others implement it in the same way. That has proved to be the beauty of lean. It helps you to continuously improve your company in a very systematic way.

The Quarterly: What more does it take to truly change mind-sets and behavior?

Jeroen van Breda Vriesman: Strong top-down leadership is very important, but it’s not enough. You must also have a vision and a strategy that explains to people why they are working according to lean principles—that it’s not only about meeting a budget, that it’s actually about creating a better company. With a vision—one that employees trust—you can make incredibly big changes in a short time. Without this vision, if you push lean just as something top management wants, it will probably not be around for more than a couple of years.

The Quarterly: How did Achmea create the vision and strategy for its health division?

Jeroen van Breda Vriesman: More than 400 managers and key players in the division were involved. This process was important because doing it together created a sense of common ownership. This made it easier to communicate across the division why things had to change and in what ways.

The Quarterly: What do you mean by trust?

Jeroen van Breda Vriesman: We mean that people in our company need to trust themselves, players within teams have to trust each other, and teams also need mutual trust. This is very important for lean because if teams don’t trust each other, they will end up duplicating work.

The Quarterly: How do you measure the impact of the lean program in the health division?

Jeroen van Breda Vriesman: We measure it in three ways. One is financial impact, which, by the way, is not only costs but also turnover in terms of gross written premiums because you get more of that when you deliver better quality. The second thing we measure quite frequently—every two weeks on teams where we implement lean—is employee satisfaction. Typically, satisfaction drops in the first six to eight weeks because employees need to get used to the new way of working. Satisfaction levels then stabilize and are usually higher one year into the program.

The Quarterly: Turning to the company-wide transformation, what was the case for change?

Jeroen van Breda Vriesman: Because of the success in the health division, we decided in the summer of 2008 to implement lean across Achmea. Then, the financial crisis hit our industry, which created a sense of urgency and added momentum to the effort. We did something that I’m really proud of: we budgeted only the costs of the implementation. We didn’t put the potential efficiency gains in our budget. Why? Because we wanted continuous improvement to be the main topic of discussion—not just meeting the budget.

The Quarterly: What is the key to getting senior managers really excited and committed to a big transformation like this one?

Jeroen van Breda Vriesman: It’s very important they understand that continuous improvement is not a program with an end point. It’s about coming to work every day with a new mind-set. To understand and really feel that distinction is very important.

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