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September 10, 2004         

by Robert T. Yokl, President

If You Are Looking For Breakthrough Savings In Value Analysis You Need To Make 3 Big Leaps Forward

“Traditional Cross-Functional Value Teams Bring About Average Or Insignificant  Savings, Whereas, Non-Traditional Value Teams Generate  Breakthrough Savings”

A recent study by Lee Fleming, Associate Professor of Business Administration at Harvard Business School, confirms that breakthrough savings are more apt to be generated by value teams when their membership is more heterogonous than homogeneous in its make-up. 

In fact, Lee’s findings show further that as the “distance between the team members’ field or disciplines increase (within rational boundaries)”, so did the teams’ breakthrough performance.  As a comparison, the performance of traditional cross-functional teams was rated as average or insignificant in the studies Lee Fleming conducted.

The lesson to be learned here is that if you are looking for breakthrough savings in value analysis you need to make three big leaps forward in your program’s organizational structure, not just tweak it a little!

How To Make The Three Big Leaps Forward

First of all, if you still have a savings organizational structure that includes a Products Evaluation Committee or Value Analysis Committee at your hospital you need to rethink the efficacy of these savings architectures, because they won’t give you the breakthrough performance you have been looking for in your value analysis program.

In fact, the jury has rendered its verdict on these time worn organizational structures: They are tired and outdated vehicles for making savings happen in the 21^st century, and should be abandoned with great dispatch!

Now, that I have identified what you shouldn’t be doing for breakthrough performance, let’s look at what you need to do to make the big leaps forward with your value analysis program:

1.                Teaming Up For Success

Value analysis is a game of inches and is best played by  teams consisting of your best department heads and managers (with the right competencies) who have been trained and coached with guided practice, observation, problem solving and experimentation through the value analysis methodology so they can expertly perform value studies for your hospital.

2.                Diversity Encourages Change

Value teams consisting exclusively of your clinical staff won’t give you the diversity or multiplicity of opinions and experience to generate breakthrough performance of your value teams.  Only cross-pollination value teams can make this happen!

3.                Deep Rather Than Broad Experience

Lee tells us that your most successful value team members will be the ones who have deep rather than broad experience in their disciplines.  As an example, your endostomal therapist has deep experience in their discipline, whereas, your laboratory manager has broad experience in the laboratory sciences.

This deep vs. broad experience enables your endostomal therapist to relate to other disciplines symbiotically.  On the other hand, your laboratory manager is a generalist and can’t see all of the nuances of other disciplines as easily as your endostomal therapist.

These three success factors for breakthrough performance in value analysis should only be the starting point on your journey to reinvent your value analysis organizational structure, but they will bring you a long way to mastering this discipline if you are serious about perfecting your value analysis program.

Maximizing Your Chances Of Success

If you want to maximize your chances of success in value analysis you need to move away from Product Evaluation and Value Analysis Committee’s organizational structures and start teaming for success.  The best way to do so is to embrace diversity in your teams, while striving to align your team memberships with a wide range of disciplines that will bring about breakthrough savings and innovation as a performance norm as opposed to an exception.

About the Author

Robert T. Yokl, President, The HCP Group, Ltd., has over 35 years of experience as a consultant and manager in the field of Supply Value Chain Management and is one of the country's leading healthcare experts in value analysis, value engineering, Non Salary Expense Reduction and materials management. He is the developer and program leader of the award winning Certified Value Analysis Practitioner Training Program™. Mr. Yokl is also the developer of the healthcare industry's leading ValueNetCentral™ Value Analysis Software. Over the past two decades he has trained thousands of healthcare managers in his patented Strategic Value Analysis™ and Team-Based Project Management™ processes and has assisted scores of organizations in developing their own value management programs. He has published six books, videos and audios on supply/value chain management. His latest book being, “ Strategic Value Analysis™: The #1 Smart Strategy for Taking Cost Out of a Healthcare Organizations’ Healthcare Supply Value Chain”.

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