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Ep. 110: Mitch Perry - Business Transformation (in the Context of Accounting & Finance)
February 15, 2021 | 25 Minutes
Mitch Perry, CFO of BlueCross BlueShield of North Carolina, joins Count Me In to talk about business transformation in the context of accounting and finance. Mitch is an experienced executive with a demonstrated history of leading effectively across multiple industries, including health care, energy, and insurance. In this episode, he discusses the basic nature of a business transformation and what it takes to successfully implement, the challenges to expect and how to overcome them, and why internal controls are crucial to effective and sustainable business transformations. Download and listen now!
Contact Mitch Perry: https://www.linkedin.com/in/mitch-perry-6111b61/
FULL EPISODE TRANSCRIPT:
FULL EPISODE TRANSCRIPT:
Thanks for coming back and listening to another episode of Count Me In, I'm your host Mitch Roshong, and this is the 110th episode of IMA's podcast series. Today you will hear from Mitch Perry, CFO for Blue Cross Blue Shield of North Carolina. Mitch is an experienced executive with a demonstrated history of leading effectively across multiple industries, including healthcare, energy, and insurance. In this episode, he talks about business transformation in the context of accounting and finance. Keep listening to hear about some keys, best practices and strategies, for overcoming challenges associated with business transformation.
Mitch, what is the current nature of business transformations and what do businesses hope to accomplish by going through a business transformation?
Mitch P.: (00:56)
Yeah. Well, thanks, Adam, for that question, it's, it was really timely. For us, we're seeing, you know, a lot of change in healthcare and trying to lead transformation in healthcare, you know, it's at its most basic form, I look at it as a need to be responsive to really what's going on in the marketplace, how rapidly business conditions are changing. What you need to do to, as a company is not only to stay current, but hopefully stay in, stay in the lead. I think about healthcare, maybe even business in general, what we're living through right now with COVID-19, has really underscored, how, how important it is to be ready, to adapt and change and transform to the external market. And what we've seen, to some extent, even gives a little bit of an opportunity to accelerate some of that transformation. I view us as an industry that is transforming right before our eyes, and I see us as Blue Cross, North Carolina as playing a role on helping to transform leading the transformation of health healthcare for the better, in our state. And the way we look at it is largely from an affordability lens that, we got to drive transform ourselves and help transform the system in a way that, is, provides for more affordable healthcare for our customers, and a major way we're doing that is through how we transform our, our payment approach with our provider partners, and you're paying them for, quality and outcomes as opposed to a fee for service. And even though we're a leader, maybe especially because we're a leader, you know, we're doing it from a position of strength, we're making certain that we're focusing on, what we should be doing for the long-term,and it kind of allows us to play offense as opposed to maybe having to react and try to transform from a position of defense later r. You know, the final point I would make on, on this question, Adam is, we have, had really strong momentum with our provider partners and transforming, the payment system before the pandemic, and it really, because of that has allowed us to maintain momentum and even accelerated, some things that weren't initially on the roadmap is, have now allowed us to even go faster. So think in terms of how we're able to add telehealth, into what we're, in, into what we're really, completing as part of our transformation, structure, and then, you know, how we're working and bringing our primary care along as well. So it really, put us in a position to not only be strong coming into it, but to maybe even go faster through it.
So I think you've given us some great examples of how you've been able to have a successful transformation. What are some of the keys that you've been able to apply to make it a successful transformation?
Mitch P.: (04:23)
Yeah, and Adam, I will acknowledge, that, you know, we are, in the middle of this and maybe all businesses are at some stage in the middle of transformation, but, you know, the good news is I think I've got some really timely, feedback, but there's also the reality that we learn and learning every day. You know, one of the things I think about is, innovation is important. I think sometimes when you talk about transformation, people think about innovation and clearly there is an aspect of that, but I think about it as, as being more than about innovation, I think about it as execution the really the most critical part. I don't know if you've had exposure to John Doerr, a very successful investor with Kleiner Perkins. He was late investor, Google, Amazon recently, Door Dash, and, I've heard him say before, that ideas are easy execution is everything. And it really hits home for me that, yeah, it's, it's great to have all these great ideas, but there are a lot of great ideas, you know, really the key to success is can you execute on those ideas? And so with that, you know, I've done a little thinking around what are some successful events and, you know, almost think about it like a little bit of a recipe. This recipe happens to have six items. I will say I'm a pretty simplistic baker. Six items is quite, quite a bit, but transformation has some complexity to it, and I think six probably makes sense and they all happen to begin with the letter C. So hopefully they're easy to remember, but not the six c's. The first one is courage. I think it takes courage to make changes to the status quo. You have to have energy to continue to be curious. You have to find ways to take measured risks so that you move forward without putting too much of your existing model at risk. The second is, communication. You know, I'd say it starts at the executive level, but it has to go all the way through the organization. Being clear about what you're driving towards, you know, what we're trying to achieve, why it's better, you know, why, you know, not just trying to make a change for change sake, but why it makes sense for what we're doing. The third is collaboration, and I think what we're doing with our provider partners provides, or will a good example of that. transformation requires partnerships. I don't think there's really any way to do it effectively unless you deal with partnerships, whether they be internal partnerships or external. And I think it's important that you invest the time is early. She can, and your transformation process there to build those partnerships so that you can get some early wins and you can withstand the challenges later, and where in, you're able to pick up momentum as you, as you move. The fourth, is change management and, you know, I think about change management as being almost a process to itself. You have to be purposeful. We all understand that, as an organization and as individuals, we embrace change differently. We have different risk tolerances, but important, that you're able to, bring everyone along. And there's no way to do that, I think, but to be purposeful around kind of how you, how you work through the organization and when you're doing it outside the organization, how you work outside the organization to make certain, everyone has a common understanding. The fifth, and this one may become a little more obvious given the, for the fact that the four score probably has some complexity to them, but it is commitment. I'd like to say that you have to be patient, but you also have to be persistent. You can't change momentum overnight. There will be setbacks. There will be opportunities for people to say this doesn't work, but you have to make certain that you've got the commitment and fortitude to continue to move forward even during the challenges. And the final one, which I really think underpins them all is culture. And, you know, the culture of blue cross North Carolina is going to be different say than the culture of a technology company, or you know, or any other type of company. And any of those companies are, can go through transformation successfully, but you have to understand the culture you have and make certain that you're being purposeful around kind of how that culture supports the transformation. What are your norms? What are your tasks will change? you know, it's just going to have to be a structured that company. You can't be something that you're not, but it is important that the transformation as the transformation journey occurs, I think the culture continues to evolve so that the culture continues to become even more innovative and push the boundaries of our mission. So those are the six things, hopefully those are, uh, a little bit help them a little bit. None of them.
Yeah, I think they definitely are. And as I look at this next question, I just have to laugh to myself. you know, I was going to ask you, like, can you explain some best practices or setting up an initiating a business transformation? And I think a lot of people are being thrust into it because they were suddenly hit with a worldwide pandemic. So, you know, maybe you can share some of your best practices that you've had, you know, in the midst of COVID, you know, setting up and initiating a business transformation that was kind of, it was kind of thrust upon you.
Mitch P.: (10:23)
Yeah, yeah, no, I think that's a, it's a great, next question, Adam, and, and I think that the pandemic is a good example, that if you were, you know, if you were trying to start it and react to it, you'd be coming from a position of dependence, and it would be really challenging. It was because of where we were coming from and the strength and momentum we have built that we were able to withstand some of the challenges we were able to respond to it. and again, we were able to accelerate it. If I build off of the 6 C’s, I've got a few things that, maybe tease out a little bit more as part of that, and you know, the first, and I've used this word before, but it's such an important word, purposeful. Be purposeful about what you're trying to do. It doesn't have to be a detailed picture of the desired end state, but at least the objective, you know, what are you really trying to work from? What are you really trying to work your organization to? Earlier in my career, I remember I heard someone say something and it was stuck with me. That activity doesn't necessarily equal results, and so just because you're moving doesn't mean that you're actually getting the results. So, so being purposeful about the change you're trying to create and not just trying to change, because you think that, Hey, I gotta say, I gotta, I have to get out of the status quo, the, second one, and this one, I was in the 6 C’s as well, but worth calling out executive commitment is essential. It's going to be challenging. There are going to be times when, we, there are rough patches and it's important that the executives buy in, the support, the executives or the leaders, and actually have a visible presence in, in why what we're transforming to, is really going to be meaningful for the company and be meaningful for our customers. Third, I would say, not talking about having a structure and I'm not talking about trying to have something that's big and bureaucratic, but making certain that recognize the transformation as an investment you're making in the business similar to any other investment and that you've got a structure to incubate it and support it and manage through it. I think sometimes, and I've been guilty of it in my own program to work on, you try to do things off the side of the desk, as opposed to a dedicated or structured way, and it doesn't go as quickly and it's rarely as effective. Fourth, and I've said be purposeful, have a roadmap, but I think you can't have a roadmap, and be rigid. You gotta understand that, yeah, I know where I'm trying to drive towards, but you know, there may be some potholes, maybe some things in the middle that I've got to move around, so you need to be flexible, have to continue to make sure you've got the appetite to innovate, innovate, redefined boundaries, you know, adjust as you go. And the final, maybe best practice that I would, I would point to is the underpinning I talked about the corporate, the corporate corporate culture. Don't, don't try to be something you're not, you know, do to what you're trying to get to them, but make certain that it fits within who you are in the norms. you have, you know, the organization has a certain, tolerance, for how it will manage change and how it will overcome obstacles, and it's important to the table and manage within that co-construction.
So you touched on this a little bit, you know, on your fourth point that you just made about being flexible because not everything's going to go smoothly, as you all thought it would. So what are some challenges that people can expect or potential pitfalls to be aware of?
Mitch P.: (14:31)
Yeah, I, you know, I think one of them, it goes back to the executive, goes back to change it from a leadership standpoint of resistance to change is definitely something, any change you have, whether it's a big transformation or whether something smaller, you're going to have situations where there's resistance change. I've heard it described as the antibodies of an organization trying to fight off organization and trying to kill it. So that's where I think the executive commitment that's where, you know, you got to make certain that you've got the right, buy-in, secondly, really closely tied into that, there are going to be setbacks, no doubt about it. You know, as we've gone through our provider partnership structure setbacks with how we how we get the data of the pandemic itself, to some extent as a setback, because in the early days, the providers were, were basically had their focus was, was changed and even their cash flows. We had to figure out how are we going to deal with those, set setbacks. So it's important that you got that commitment and then you got that, willingness to adapt and push through. You know, I think third is there will likely be some, reduced productivity at the time. You know, sometimes we all know it's easier to continue to do things the same way, some your term that improve and it can cause reluctance and it can cause additional costs and additional burden, and I think that's why it's important that you have a structured approach. We call it bubble funding here at the company, but whatever you have, some type of structure that builds in for the inefficiency that you'd likely to have, in the process. You know, the fourth is maybe tightly tied to that one to the third in it. I think about this a lot is, is our company CFO, every dollar we spend as an investment, is an investment in something, whether it's an investment in yournear term priorities or, or long-term problems. And when you've got things that you've got to get done near term, sometimes it's challenging to think about how you make investments in those transformation activities over the ong-term. And so it's purposeful that you treat it like an investment and that you're able to communicate, what's the tie to the strategy, you know, how do I think about it from a priority standpoint? And then the last one really kind of, I think, relates to almost all of these and that's that, communication is, is key. There will, you know, there'll be gaps, and it makes certainly being purposeful about the change, noticeable about the communication. I like to say it's a little bit of spreading the truth, you know, making certain that everyone understands, where we are and where we're trying to go, as we're pushing through some of the challenging times with a transformation.
It's almost like these things that you've just mentioned, these pitfalls, they can almost serve as, learning, learning opportunities to improve the, even more, you know, have you seen that happen?
Mitch P.: (17:53)
Yeah, yeah, no doubt, and I think the organization, does learn, does learn as, learn as they go, in a box, I guess, back to that cultural art that I've, I've talked about, you gotta take it from where you are at the time, but continue to evolve, be flexible, you know, have a basic understanding where you need to go, but also know that, Hey, I can't work out every single item or, or every single potential outcome, because there'll be some things that will need to evolve, but be flexible, be purposeful, and then you'll be able to, to adapt as you go. And again, the pandemic is a great example of, for how we've done that. Tele-health wasn't even, I mean, telehealth was on the roadmap, but it wasn't really a focal point for us as part of our provider partnership efforts, but, we've been able to successfully shifted to where now it's a meaningful part. And so it's just being open and willing to be flexible to those learnings as they occur.
I mean, with all that being said, how important is it to make sure proper governance and internal controls is in place prior to a business transformation and why?
Speaker 2: (19:14)
Yeah, Adam, I think about governance two ways. The first way is I think about governance of the transformational effort itsel,. and you know, that one is, is definitely important, for all the reasons I think we've touched on here. You have a personal plan that you can execute again, execution is the key part. Making sur you have, visibility across the enterprise, really treating it like as a major investment activity, that is. that is important at it, that it is, has a separate governance structure and discipline and governance structure. The second way I look at governance is you've got a governance structure now over your existing processes, and you're moving to a governance structure over your new processes of mean structure. and that's also important to think about, I think it's important to be purposeful in your switching to that new, a new approach. You don't want the inner inner state to be too long because, you know, create confusion, but you don't want it to move too quickly because then the organization isn't ready to move into the, into the new structure. You know, I do think it's important, to, be purposeful about when you roll out the new governance because, it might not, in fact it probably won't fit within the legacy processes, one of the things we say here is we're, you know, as part of the transformation, not only are we trying to train to disrupt, you know, the external market, we're trying to disrupt ourselves and change our processes as well. So you just have to make certain that you ready to move to that new process that governance, then it's the process. Otherwise you're gonna end up with confusion, and probably some lost, productivity and this, and some loss of internal goodwill around kind of what's the best approach to move forward. So just timing is key.
That makes sense. So, as we kind of wrap up our conversation, do you have any last thoughts on business transformation that you want to share?
Mitch P.: (21:39)
Yeah, I don't know if I have any new thoughts, but I, you know, maybe if it's okay, if I summarize a couple of the, the things that I think are most critical here. You know, one thing I would encourage everyone to think about transformation, you know, be driven by the confidence that you can succeed, not the fear of failure. You know, transformation's going to occur. It's been occur in every industry. You know, we didn't want to be a leader in healthcare. It’s the healthcare industry is going to transform around us, but, you know, I think we're better. I think the healthcare should be better. We were leading it. So be driven by, the, you know, the competence of success. As part of that, thinking about it, transforming when you're strong, you know, not when you in a position of weakness or you feel like you have to transform. And you know, I think as, as part of that, you know, make certain that you're purposeful around kind of how you want to introduce the transformation, because again, transformation brings disruption in that you've got the right, focus on and you’ve got the right commitment. But I would also point out again to transform to, and for purpose, not just for activity, and, of course execution again, is the key here. Not that ideas and innovation aren't important, but execution is, is ultimately likely to be the driver of the success, and so maybe just as a reminder of the 6 C’s, courage, communication, collaboration, change management, commitment, and culture. But the final thing I will say, because we're living it, yes, it's hard. Yes, there are challenges, but I am completely confident that with the right focus, with the right leadership, with the flexibility to adapt that, that, that companies, that individuals can be successful in the transformative change and make really meaningful changes within their business and even in the industry moving forward.
Well, Mitch, I thank you so much for bringing your unique perspective, especially from the healthcare industry about business transformation, and thanks for sharing your insights with our audience today.
Mitch P.: (24:09)
Thank you, Adam. It was a really a pleasure to be with you.
This has been Count Me In IMA's podcast, providing you with the latest perspectives of thought leaders from the accounting and finance profession. If you like, what you heard, and you'd like to be counted in for more relevant accounting and finance education, visit IMA's website www.imanet.org.