lean innovation within unitedhealth group

Lean Innovation at UnitedHealth Group Presented by Chicago Lean Startup and Pathfinder Software

A little about

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Fortune 17Workforce: 150,00028,000 Physicians, Nurses, and Clinical Practitioners12,000 TechnologistsManages $150B+ in health care spend annually

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250,000+ Plan Sponsors85 Million Consumers780,000 Care Providers

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OUR HEALTH BENEFITS BUSINESS OUR HEALTH SERVICES BUSINESS

“Health in Numbers” “Good for the System”

Helping People Live Healthier Lives

UnitedHealthcare Community & State UnitedHealthcare Employer & Individual UnitedHealthcare Medicare & Retirement

UnitedHealthcare Military & Veterans UnitedHealthcare International

Making the Health Care System Work Better for Everyone

OptumInsight OptumHealth

OptumRx

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What if we used [insert technology] and added [insert core asset] and gave it to [insert market] so that they could [insert something cool]?

INNOVATION MAD LIBS

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What if we used smartphones and added our Rx data and gave it to consumers so that they could track their medications?

NEW IDEA

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OMG!!

$$ $$

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What if we used fancy charts and graphs and added claims data and gave it to consumers so that they could manage medical expenses easier?

NEW IDEA

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OMG!!

$$ $$

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from to

idea profit

BUSINESS PLAN

FINANCIAL MODEL

PRODUCT MANAGEMENT

WATERFALL ENGINEERING

THE TRADITIONAL PATH

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GO FOR LAUNCH!!

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BUT THEN

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Customer AdoptionProduct FeaturesDesignMarketingPartnersSalesCost StructureFunding SupportPrioritiesRevenue StreamsTime

UNCERTAINTY

GREMLINS = UNCERTAINTY

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No business plan survives first contact with customers

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Innovation at Big Companies:

TypesSustaining (easier)

Breakthrough/Disruptive (really hard)

Driven by core strengthsGrowth Strategy Precedent (M&A, Build)Established R&D, IP ModelsDisruptive innovation combative with CoreNo “one model”

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Innovation Antibodies:

Heavy governanceFunctional SilosNot Invented HereLiability, Brand RiskProtecting the Core

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Lean Startup to create startups

Portfolio ManagementEntrepreneur-Centric ApproachExperiments and LearningPhases and MilestonesChanging Culture

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Portfolio Management

SourcingFilteringMeasuring

throughput

potential

performance

Staged-Risk Funding

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INNOVATION PORTFOLIO

ideas

problem validation

problem solution fit

10 customers

100 customers

1,000 customers

scale

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Entrepreneur Centric

Founder TeamsEntrepreneurs In Residence (EIRs)Low-Cost Dev, Lean UX/DesignVC-Like BoardCoaching, MentorshipCo-Located Teams

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Experiments and Learning

Customer DevelopmentGetting Used to FailureDesigning ExperimentsMVPsInterpreting Results

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Phases and Milestones

Problem - Market FitProblem - Solution FitProduct - Market Fit

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HIGH LEVEL STAGES

Goals

Methods

Outcomes

Validate the CustomerValidate the Problem

InterviewsField ResearchSecondary Research

Establish PatternsMarket Size, Sales ModelEarly Adopter ArchetypeProblem Importance

Validate the Solution

Minimum Viable Product (MVP)Cohort AnalysisA/B TestingCustomer Acquisition Testing

Paying CustomersDistribution ModelsRevenue Models

Validate the Business

Sales/Marketing FunnelCustomer Acquisition OptimizationCustomer Acquisition CostsLifetime ValueChurnPricingCost Structures

Validated Business ModelPosition for Scale/Growth

Stages Problem-Market Fit Problem-Solution Fit Product-Market Fit

Funding Strategy Leverage Op-Ex Cap-Ex Cap-Ex Follow On

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Changing Culture

Getting Used to FailureRecognizing and Managing UncertaintyResourcingComfortable Being UncomfortableBe Bold and Pioneering

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GARAGE PROGRAM

tools

Facilities Resources Mentorship Process Tools Metrics

Idea

Entrepreneur

Idea

IdeaIdea

Idea

Internal Idea Sources:• Idea capture systems• Innovation Groups• Business Segments

EIR Sources:• Dedicated Entrepreneurs In

Residence (EIRs)• Segments can provide (but must

dedicate full-time or provide sabbatical)

Entrepreneur

Entrepreneur

UHG’s Garage is a service focused on identifying, nurturing and accelerating the commercial viability of innovative internal business ideas. The Garage manages a small, discreet portfolio of seed-stage business ideas through a disciplined, entrepreneur-centric process designed to rapidly de-risk ideas

in the market, and provide paths for commercialization, follow-on and exit.

Garage Mission:• Build and sustain a culture of experimentation that

enables the growth and scale of new health businesses, products and services

• Reduce the cost of innovation• Increase innovation portfolio throughput through

staged-risk funding, rapid iterative development• Diversify portfolio through option value

• Off-grid space• Collaborative

culture• Casual

environment

• EIRs• Developers,

Designers• Data/Analytics

Experts• Clinical• Regulatory,

Legal• Program

Management

• Advisors, Mentors, Coaches

• UHG Leaders and SMEs

• External SMEs

• Learning-Driven Process

• Lean Startup• Customer

Development• Staged-Risk

Funding• Business

Model Validation

• Highly Adaptive Agile Development

• Lean UX• Infrastructure• Continuous

Deployment

• Innovation Accounting

• Cohort Analysis• A/B Testing• Validation of

business model assumptions

• Financial analysis

EIRs are matched to Ideas based on domain knowledge, passion and entrepreneurial talent

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Some Results

60 pipeline candidates12 “projects” started373 Customer Interviews Conducted7 closed in Phase 1 < 3 months25% move to Phase 2

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MVPs

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Key Learnings

Create air coverAlign to top strategic risksBring Legal inRegular coaching!Ask for forgiveness, not permissionStart “lean”, experiment and iterateMeasure everythingFind the right people

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THANK YOU

Kunjorn Chambundabongse (KC)

kunjornchambundabongsekunjorn

Todd Wyder

Pathfinder Software

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