We’re a Network, Not a Hierarchy

In the late 1990s, I had the opportunity to lead the Blue Cross Blue Shield Federal Employee Program (FEP) operations, the world's largest privately underwritten health insurance arrangement. At the time, FEP covered more than 3.7 million US federal employees and their families, which represented 43 percent of the available market among the federal workforce. This was significantly lower than the 62 percent market share that FEP held in the mid-1970s when, due to the need to significantly raise rates to cover rising benefit expenses, FEP’s market share plummeted to 39 percent in two years. Despite the introduction of a new product option as a recovery strategy, over twenty years, FEP only recovered a mere four points of the lost market share and struggled operationally and financially. Our challenge was clear: End two decades of low performance and restore FEP to a solid growth position.

As we assessed what needed to be done differently, an early insight turned out to be the linchpin that would generate a very successful turnaround: We’re a network, not a hierarchy. So, we better learn how to lead a network.

Blue Cross Blue Shield is not your typical business organization. It’s a confederation of the separate Blue Cross Blue Shield companies distributed across the United States. FEP is a joint venture of all the Blue Cross Blue Shield organizations whose purpose is to deliver a seamless health insurance product in the federal employee marketplace, which includes scores of insurance options in this unique, individual choice market. The challenge for the Blues was to achieve seamlessness across the thirty-nine separate companies participating in this joint venture. Our inability to successfully coordinate at the level we needed across this large number of organizations clearly contributed to our performance woes.

Up to this point, our basic management model was an adaptation of the common top-down, hierarchical, command-and-control structure. Although there were attempts at building consensus before taking action, agreement generally eluded us as these thirty-nine organizations would often put their local interests ahead of the welfare of the overall program. Without a workable consensus, the administrative office in Washington, DC would formulate top-down directives that were not always well-received by the various participating Blues. Instead of compliant implementation, many of the Blues pushed back, making it clear they didn’t report to the administrative offices in Washington. Consequently, far too much of our interaction was focused on fruitless discussions about who was in charge. Clearly, this was not a formula for operational excellence.

As we began the work of learning how to effectively lead a network, we realized we were in unchartered waters. The body of management knowledge in which we had all been trained—in both academic business schools and commercial management courses—was premised on the assumption that business organizations are hierarchically structured. In the commercial courses, in particular, the common orientation focused on training managers to use their in-charge power more humanely. Because one of the distinguishing characteristics of networks, especially distributed networks, is that the exercise of power has more to do with being connected than being in charge, most of our traditional leadership training was of little use in informing us about what was needed to lead a network. If we were going to succeed in making this leadership shift, we needed to become trailblazers.

Our first order of business on our trailblazing leadership journey was to find a way to accomplish what had evaded us for two decades in two days: a workable consensus among the joint venture partners. Achieving this ambitious goal meant we needed to radically transform our meetings, which, up to this point, were often endless debates repeatedly covering the same basic agenda without reaching any mutually acceptable conclusions.

Our meetings often felt like highjack experiences where three or four people took control of the room by dominating the discussion, arguing past each other, and no one making any attempt to truly understand different points of view. Instead of finding common ground, these dominators became more entrenched in their vested interests. The dominators were not necessarily the most thoughtful people in the room but were usually more extroverted. This was often troublesome because when these extroverted dominators had effectively accomplished the meeting highjack, the thoughtful introverts would often shut down and become silent. When the voices of the most thoughtful are effectively squelched, there’s little hope of achieving a workable consensus. If we were to change the quality of our meetings, we had to stop the dominator debates. We needed to design a “no debate” format.

With this picture in mind, we began the task of designing a very different kind of meeting. Instead of setting up the room in the usual form of a U-shaped table, the forty participants would be seated at five round tables. Rather than serving as the chairman overseeing a committee-style meeting, the session leader would act as a facilitator leading the group through a series of interactive exercises. Instead of a schedule of meeting agenda topics, the focus of the facilitated session would be three to four concrete action objectives to motivate the group toward getting things done. Most importantly, there would be no debate in the large group forum. Debate would happen in the small group sessions where the influence of the dominators would be diffused, and the introverts would be more comfortable coming forward with their ideas.

A key discipline that turned out to be one of the most transformative attributes of our new meeting format was the practice of clarifying questions. When the small groups reported the results of their discussions to the large group forum, the participants were restricted to clarifying questions only. All they could do was ask questions to better understand the point of view of the presenting group. They could not agree, disagree, or present another point of view. This discipline of clarifying questions accomplished two things. First, it favored understanding over advocacy in the presentation of differing ideas. Second, it inhibited the fruitless debate that had been the albatross of our traditional meeting format.

Another key discipline was the practice of dot voting. When the small group reports were completed, we consolidated the items identified by each group into a mutually exclusive list. We then gave each participant strips of four stick-on dots that they could apply to indicate which items were most important to handling the problem we were attempting to solve. Typically, the results of the voting identified a clear number of items, usually four, that everyone agreed would work to solve the issue.

Our no-debate meetings exceeded our wildest expectations. We suddenly had a meeting format that could reliably and consistently accomplish a workable consensus among the many disparate partners in our business alliance. This newfound ability to rapidly create consensus was a prime contributor to turning the business around. Within two years, we had gained as much enrollment as we had realized over the previous two decades, and over the ensuing years, we gained back all the lost enrollment and more. This was possible because we had effectively learned how to lead a network.

To learn more about the skills and tools needed to lead a network, see my new book Nobody Is Smarter Than Everybody: Why Self-Managed Teams Make Better Decisions and Deliver Extraordinary Results.