A Word About Variability

Six Sigma, TQM, Kanban … every operational efficiency model out there has one thing in common – managing VARIABILITY.  Why do we like these models?  Because:

Higher Variability = Higher Cost = Lower Profit

If you are already looking for operational efficiency gains through these models, how can your organization generate more differentiated and break out results as a result of the process?

The Big Digital Squeeze

The intersection of Six Sigma and digital technologies provides new opportunities for a Big Digital Squeeze on your sources of variability to transcend mere operational efficiency fixes and create new, differentiated operating models.  Six Sigma can continue to identify areas of focus, but digital transformation will take you to the next level.

Accenture surveyed 141 C-level insurer executives who have been charged with driving their companies’ digital agendas.  The survey results clearly delineate the expected outcomes of those who aggressively pursue digital transformation (Digital Transformers) and those seeking efficiency improvements (Digital Followers).  What are the key differences?

While most insurers are investing in digital technologies to enhance discrete functions, processes and products, with the primary aim of improving efficiency, Digital Transformers’ strategies span the value chain and seek entirely new ways of generating value for customers – and growth for themselves.

As a result, Digital Transformers anticipate twice the premium growth relative to their Digital Follower peers.

Source:  The Digital Insurer – Accenture Digital Innovation Survey 2014 http://www.accenture.com/us-en/Pages/insight-insurers-seizing-opportunities-digital-transformation.aspx

Taking a more robust, Big Digital Squeeze approach by building on existing operational efficiency efforts to digital transform your value chain is worth exploring.

Where Do I Go for Ideas on How to Transform?

It’s not surprising that disruptive technologies have a funny way of coalescing around sources of variability.  Here, you will find the inspiration for your digital transformation.  To explore this further, let’s look at recent changes in Healthcare.

Healthcare

In the United States, the Affordable Care Act has provided a catalyst for change.   The current supply based model is focused on volume and profit.  Changes in the system are driving Healthcare consumers to pay more attention to the value they are getting for their dollar.

A new Value Based Healthcare model will provide for collaborative teams of the best doctors to holistically work your medical issue from multiple dimensions, resulting in a more effective outcome.  These outcomes would be measured; so solutions are tuned for maximum impact for the cost.  Healthcare has deep seated structural resistance to change.  How is Healthcare digitally transforming their sources of variability to make the Value Based Healthcare model a reality.  Again, let’s focus on one source of variability – medical information and data.

Sure enough, several digital technologies are coalescing around this source of variability:

Mobile Health Platforms (mHealth) : Lowers the variability of patient health data sources by integrating mobile devices, web, and sensor-based technology (wearables) to gather an unprecedented amount of information for health care organizations to gain deeper insight into patient behaviors and outcomes.  A good source of information on this market is Mobile Heatlh Market News (www.mobilehealthmarketnews.com).

Social Media:  Social media can be used to reduce the variability (and improve the quality) of available doctor or drug information by collecting and aggregating the collective voice of other healthcare consumers; so you are able to make more effective buying decisions.  An example is Treato (www.treato.com).  Treato has used social media to collect the side effects for thousands of drugs from millions of patients.  They then organize the information in a user friendly format for consumers.

Health information Exchanges (HIEs):  Reduce the variability in processing and sharing information between organizations.  HIEs enable the efficient flow of healthcare information electronically across organizations to facilitate better patient care across disparate service providers.  HIEs address the common breakpoints associated with the manual exchange of information common in many industries such as printing, scanning, faxing and mailing medical records.

Businesses share common sources of variability across industries.  Looking at the Healthcare example above, what other industries share similar sources of variability?  CPGs, Business Services, and large scale Administrative Outsourcing prviders come to mind.

What Does This Mean for Your Organization?

• Giving your organization a Big Digital Squeeze with a holistic digital transformation of  your value chain can yield more differentiated and breakout value than mere Six Sigma driven operational efficiency initiatives.
• Six Sigma and related models have been around for some time. Leverage these tools to identify the sources of variance in your value chain to begin your transformation process.
• Businesses share common sources of variability across industries.  Pay attention to where digital technologies are coalescing in other industries.   Identify analogous processes and sources of variance in their models to your own.
• Creatively adapt the digital applications found in these analogous models to create new breakout value in your organization.
• To capitalize on these opportunities, consider realigning your COO skill set or hiring a dedicated Chief Digital Officer to own these efforts.

Give your organization a Big Digital Squeeze and Transform For Growth!

Transform4Growth