How Did Healthways Corporation Use Self-Design to Transform Organizational Structure and Improve Performance?

Healthways (American Healthways) faced a classic growth problem: a structure that worked at one scale didn’t fit a fast-growing health-plan business. Self-design is a structured way to redesign an organization with the people who run it—building ownership, surfacing constraints early, and creating the capability for continuous improvement. Healthways’ redesign is commonly described as moving toward a process-based structure, anchored on end-to-end value-creating processes rather than traditional functional silos. (SEC)

Background: what “self-design” means in organizational design

A self-design strategy is an inclusive organization structure design approach where leaders and employees jointly diagnose issues, design options, and implement a new operating model—building the organization’s capacity to keep adapting as conditions change. (casrilanka.com)

This is closely related to well-established OD thinking that change efforts work better when they focus on how work gets done, align around real business tasks, and engage the system instead of pushing “programs” from the top. (Harvard Business School)

Context: why Healthways needed a redesign

Healthways (American Healthways, Inc.) provided disease management/care enhancement services and was founded in 1981. (SEC) As the health-plan segment grew, the company recognized that its existing structure wasn’t strong enough to support future scale and coordination across functions (a typical symptom in fast-growing services organizations).

The design challenge wasn’t “reorg for reorg’s sake.” It was: how do we align people, roles, and decisions around the work that drives growth and delivery quality—without adding bureaucracy?

What changed: from functional focus to process-based organizational structure

A process-based structure organizes around end-to-end business processes that deliver value (rather than departments like marketing, operations, finance). (FourWeekMBA)

In Healthways’ case, the organization was described in terms of five core processes:

1. Understand the market and plan the business

2. Acquire and retain customers

3. Build value solutions

4. Deliver solutions and add value

5. Manage the business (yumpu.com)

This is the “shape” of an operating model: clear process ownership, cross-functional coordination, and decisions made closer to the work.

How the self-design intervention worked (and why it’s compelling)

Healthways’ approach is often summarized as a staged, task-force-driven redesign—where each stage has a distinct purpose:

1) Foundation: learn, diagnose, and clarify strategic direction

Goal: build a shared understanding of the business problem and what must change.Typical outputs:

• design principles (what the new org must optimize for)

• clearer strategic direction and measurable goals (what “better performance” means)

This matters because a structure can’t be “right” if the strategy and value drivers are unclear.

2) Design: generate multiple options, then choose based on fit

Goal: produce alternative structures and evaluate tradeoffs (speed, cost, coordination, accountability, customer outcomes).Typical outputs:

• 2–4 viable structure options

• recommended operating model (process-based in this case) with defined owners and interfaces

3) Implementation: build the long-term operating system

Goal: make the design real through roles, governance, metrics, and iteration.Typical outputs:

• role charters and decision rights

• process owner model + cross-functional forums

• KPI tree and review cadences

• continuous improvement templates (so redesign becomes capability, not a one-off)

This “capability to adapt” is exactly what self-design strategies aim to develop. (casrilanka.com)

A practical playbook you can reuse (step-by-step)

Use this if you want to replicate the approach in your organization—without copying a “cookie-cutter” org chart.

Step 1: Define the redesign trigger and success metrics

Inputs: growth constraints, customer pain, margin pressure, cycle time issuesOutputs: 3–6 measurable outcomes (e.g., faster onboarding, fewer handoff failures, improved renewal performance)

Checklist

• What customer outcomes must improve?

• Where is work getting stuck (handoffs, approvals, unclear ownership)?

• What decisions are too slow or too centralized?

Step 2: Establish design principles (non-negotiables)

Examples:

• optimize for end-to-end customer value

• reduce handoffs and duplicate work

• clarify accountability for core processes

• make decisions at the lowest responsible level

Step 3: Create cross-functional design teams with real authority

Structure: a small steering group + 2–3 task forces (diagnose, design, implement).This is consistent with how task forces are used to solve complex, cross-functional problems quickly. (themba.institute)

Step 4: Map the value chain into 4–7 core processes

Start with “how value is created and delivered,” then attach:

• process owners

• critical handoffs

• key measures

• enabling capabilities (data, tech, skills)

Step 5: Design 2–3 structural options

For each option, define:

• primary grouping logic (process, segment, product, region)

• roles and accountability

• governance forums (how conflicts get resolved)

• decision rights (what moves where)

Step 6: Select and operationalize the new model

Convert the chosen model into operational reality:

• role charters (what success looks like, key decisions owned)

• RACI for handoffs and cross-functional work

• KPI tree (process KPIs leading to business KPIs)

• meeting cadence (weekly ops, monthly performance, quarterly strategy)

Step 7: Implement a learning loop (continuous improvement)

If you don’t build a learning loop, you’ll be redesigning again in 12–18 months.

• define 60–90 day stabilization metrics

• run retrospectives on handoff failures

• update templates, playbooks, and onboarding

Templates (copy/paste)

1) Process Owner Charter (one page)

• Process name:

• Purpose / customer outcome:

• Process owner:

• In-scope teams:

• Key decisions owned:

• KPIs: (leading + lagging)

• Interfaces: upstream/downstream dependencies

• Governance forum: cadence + attendees

2) Structure Option Scorecard

Rate each option (1–5):

• customer experience impact

• speed of decision-making

• accountability clarity

• cost/overhead impact

• scalability for growth

• feasibility (skills, tech, change capacity)

3) “Handoff Contract” for two teams

• Input provided by Team A: format, SLA, quality rules

• Output expected by Team B: acceptance criteria

• Escalation path: who resolves disputes and how fast

• Metric: handoff failure rate / rework rate

Risks and failure modes (what typically goes wrong)

• Vision stays fuzzy: the team debates boxes instead of aligning on value drivers.

• Process owners without authority: accountability is named but not backed by decision rights.

• “Shadow org” persists: functions keep running old workflows, creating double work.

• Metrics don’t change: if incentives stay functional, behavior stays functional.

• Over-rotation into meetings: cross-functional governance becomes bureaucracy if it isn’t tied to decisions.

DIY vs. getting expert help

DIY works when

• the scope is one business unit or one value stream

• leadership agrees on strategy and pain points

• you can dedicate cross-functional time for design + implementation

Expert help is smart when

• you have multiple products/segments with conflicting priorities

• governance and decision rights are political or unclear

• you need a full operating model (processes, capabilities, KPIs, org roles) rather than a reorg

• you want design artifacts that scale (capability map, process architecture, measurement system)

Recommended internal reading (no case studies)

• Organizational design implementation guide: https://www.orgevo.in/post/how-can-you-implement-an-effective-organizational-design-in-your-company (OrgEvo)

• Self-designing & agile organizations (implementation-oriented): https://www.orgevo.in/post/how-can-self-designing-agile-organizations-transform-your-business-with-ai (OrgEvo)

• Capability architecture (to connect org structure to execution): https://www.orgevo.in/post/how-can-you-build-a-robust-capability-architecture-to-achieve-strategic-objectives (OrgEvo)

• Operations optimization and continuous improvement: https://www.orgevo.in/post/how-can-you-implement-effective-operations-optimization-and-continuous-process-improvement-cpi-wit (OrgEvo)

• Strategy & operating model alignment: https://www.orgevo.in/post/how-can-you-develop-a-robust-organizational-strategy-model-with-ai-for-long-term-success (OrgEvo)

• AI-assisted analytics for better decisions: https://www.orgevo.in/post/how-can-ai-assist-in-business-analytics-and-decision-making (OrgEvo)

Conclusion

Healthways’ self-design story is compelling because it’s a disciplined way to solve a real scaling problem: align structure to strategy by organizing around the work that creates customer value. The practical lesson isn’t “copy this org chart.” It’s the method: clarify outcomes, map the value chain, design multiple options, establish process ownership, and build a continuous improvement loop so the organization can keep adapting. (casrilanka.com)

CTA: If you want help designing a process-based operating model (structure + processes + decision rights + metrics), contact OrgEvo Consulting.

FAQ

1) What is a self-design strategy in organizational development?

A self-design strategy is an inclusive approach where members across levels jointly diagnose issues, design a new structure/operating model, and build capacity for continuous improvement. (casrilanka.com)

2) When does a process-based structure make sense?

It’s most useful when end-to-end coordination (across functions) is the main constraint—especially in growth, multi-product services, and complex delivery environments. (FourWeekMBA)

3) What are the five core processes often used to describe Healthways’ design?

Understand the market/plan the business; acquire/retain customers; build value solutions; deliver solutions/add value; manage the business. (yumpu.com)

4) How do you prevent process ownership from becoming “extra meetings”?

Tie governance forums to specific decisions, limit attendees to decision-makers, and measure outcomes (handoff failures, cycle time, rework).

5) What’s the biggest risk in a self-design effort?

Treating it as a structural exercise instead of an operating model redesign (workflows, decision rights, metrics, incentives).

6) What’s the fastest way to start without a full reorg?

Pick one value stream (e.g., acquire-to-renew), map processes and handoffs, assign a process owner, define KPIs, and run a 60–90 day improvement cycle.

References

• American Healthways (Healthways) SEC filings describing business and founding (1981). (SEC)

• Healthways-style process-based core process description (OD/change text excerpts). (yumpu.com)

• Self-design strategy definition and intent (OD chapter PDF). (casrilanka.com)

• Change effectiveness and task-alignment concepts (Beer/Eisenstat/Spector references). (Harvard Business School)

• Process-based structure overview definitions. (FourWeekMBA)