Academic journal article Journal of Leadership Studies

Acordia, Inc. Leadership through the Transformation of "Growing Small"

Academic journal article Journal of Leadership Studies

Acordia, Inc. Leadership through the Transformation of "Growing Small"

Article excerpt

Executive Summary

Blue Cross/Blue Shield of Indiana embarked on an ambitious corporate transformation in 1986. This strategic journey and the leadership efforts that it took are highlighted in this case. How a huge bureaucratic organization employing 2,800 people and serving one state transformed into a diversified "family" of small companies (Acordia) that now serves 49 states, employs 7,000 people through 140 offices is depicted in this case study. It was an entrepreneurial vision transformed through powerful leadership into entrepreneurial action.

Prologue

"Overall, Acordia has redefined the notion of scale. Scale today is mostly associated with knowledge, not lumpy objects. The point of the individual Acordia company is to be a giant, not a dwarf. That is, within the collective heads of its 65 or so employees, an Acordia company will know more about its customers than bigger (total bodies, total assets) competitors. Moreover, through wise use of its overall network of inside and outside companies, it should be able to bring a wider set of resources to bear, more quickly, more efficiently, and more imaginatively than bigger competitors."

~Tom Peters Liberation Management

Introduction

In 1986 The Associated Group (formerly known as Blue Cross/Blue Shield of Indiana) embarked on a critical 1800 day strategic journey. During those days an ambitious transformation took place that changed one large bureaucratic operation in health insurance into an entrepreneurial network of 50 companies involved with health insurance, life insurance, property and casualty insurance, insurance brokerage, government program administration, investment banking, computer software, and market research. This transformation took a company employing 2,800 people and serving only one state (Indiana) to a diversified "family" of companies that employ 7,000 people through 140 offices and serving 49 states. This remarkable restructuring strategy of "growing small" was made possible through the creation of new "Acordia" companies that would concentrate into specific market niches and operate as stand-alone entrepreneurial companies. It was an entrepreneurial vision transformed into entrepreneurial action and the results have been an emotional, cultural, and financial success. In the fall of 1992 The Associated Group completed a successful Initial Public Offering of Acordia, Inc.

This strategic journey spanned five years but sought to accomplish so much more that early in its inception critics were quick to point out the "over ambitious" ideals of creating an entrepreneurial climate in a traditionally rigid bureaucratic organization. Some executives as well as some employees didn't believe in the plan either left the company or took early retirement. While the need to change was obvious to most of the employees it was the dramatic challenge of restructuring into a network of entrepreneurial companies that scared away the weak of heart. Tearing away layer upon layer of bureaucracy is not easy in a well entrenched traditional culture. Yet, the tearing away actually gave birth to a new breed of companies known as "Acordia." Through the creation of the Acordia concept an actual network of companies was established that allowed an entrepreneurial structure to exist within a corporate giant. However, it is not just the structure of Acordia that made such a difference as it is the vision and strategy behind it. The following section is intended to provide a short review of the Associated Group's past, to better understand the present strategy of Acordia companies which is currently setting the stage for the future challenges.

Background - The Recent Past

One reason The Associated Group has been able to change and prosper when others in the insurance industry are struggling is that it has been different from the very beginning. It operated for many years as Blue Cross and Blue Shield of Indiana. …

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