06 Mar

Bob and Jerry on Competing in Healthcare

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For the past several weeks, we have been busily reading the myriad articles and forecasts on Healthcare (HC) trends for 2017. There was even an article about all of the other articles.  With trends like a dramatically changing regulatory environment, continued momentum in HC consumerism, advances moving big data and analytics into cognitive computing and Artificial Intelligence, value management, medical device and pharma innovation, mobility, cloud, security, privacy and so on, 2017 promises to be an exciting and challenging year. Not only are things moving fast, but there are a lot of them and the very foundations of the industry are shifting at the same time. If you are feeling a bit overwhelmed and seeking enlightenment, we offer the timeless wisdom of Bob Dylan and Jerry Garcia to make some sense out of the state of HC.

“For the times, they are a changin’” pretty well sums up the status quo. Thank you, Bob. For organizations competing in the HC space, it is particularly important to examine the increasingly complex and multi-layered external environment and to ensure that strategic plans are up-to-date, refreshed and aligned with the go-to-market initiatives. Leaders may also find themselves in the circumstance of playing offense and defense simultaneously.  Some built-in flexibility goes a long way when there are well funded start-ups seeking to innovate by employing new, simplified business models and established organizations seeking to do some disrupting of their own. No matter where the threats come from or where the opportunities may lie, it has never been more important to listen to what is happening in the market, connect the dots and then convert this into insight that can be acted upon. There are a lot of factors to consider.  Jerry rightly observes, If the thunder don’t get ya then the lightning will.

While most organizations conduct annual planning and align their go-to-market activities to the current conditions, it may not be enough. When in particularly challenging times, we might feel the need to regroup a bit and as Bob points out, “Come in, she said, I’ll give you shelter from the storm.”  Leading organizations monitor their external environments continuously in order to anticipate market changes and make appropriate course changes. There are many methods to accomplish this that involve primary and secondary research, analysis and the pulling of various execution levers.

2017 presents potentially turbulent conditions. With a good and continuous view of the external environment, a sound and flexible strategic plan in place and solid execution, you will be able to navigate and compete successfully in the HC market. As Jerry sang, “May the four winds blow you safely home.”  Good luck in 2017!

27 Feb

Clarity at the Intersection of Product Management/Development and Analytics

Blog pic - Big Board - Dr Strangelove

Last Wednesday, Line of Sight Group attended the PDMA MN Chapter Meeting entitled, “The Intersection of Product Management/Development and Analytics.” There was networking, a tour of Optum including their version of the “Big Board” to monitor data and trends worldwide, and a panel moderated by Dave Mathias that included practitioners Kristen Womack, Jasmine Russell, Edward Chenard, David Quimby, and Scott Thomsen. They had great stories and examples drawn from real world experiences.

The final question had the panelists share some favorite resources and tips, which I scrambled feverishly to write down:

You can find these resources and tips at the intersection of deep and practical.

12 Jan

Telephone Switch Created to Bypass Love Connection

phoneoperator

Almon Strowger was one of two undertakers in a small town near Kansas City in the 1880’s. He had a good reputation and a nice business. Then, things started to change for the worse. He noticed that his business was dying off dramatically. His close reading of the local obituary notices revealed that he was not getting the usual amount of business. In those days, homes were equipped with telephones that were on shared party lines. People often listened in on their neighbor’s conversations, too. To facilitate connections between callers, there was an operator who worked a cord switchboard at the local telephone exchange. When there was a death to report, a call came into the operator who patched the call through to one of two local undertakers on an “every other one” basis. Or so Strowger thought…

What Strowger uncovered in his research was that his competitor was dating the telephone operator, hence giving him the inside track to most of the funeral business in town. Needless to say, this state of affairs greatly frustrated Strowger and he complained to the local telephone company authorities…to no avail. His business did not improve. The operator ultimately married Strowger’s competitor and continued to keep most of the funeral business in the family.

Finding no hope with the status quo, Strowger switched strategies. By burning the midnight oil and using hat pins and electromagnets, he cobbled together a device that by-passed the operator allowing subscribers to directly connect to one another. On March 12, 1889, he filed his patent application and it was issued to him on March 10, 1891 as patent No. 447,918. He had invented the Telephone Switch. Strowger went on to form the “Strowger Automatic Telephone Exchange” late in 1891. Strowger’s first customer was the telephone company in LaPorte, Indiana with 75 subscribers. Strowger continued making improvements on the telephone switch over the years. He added feature after feature to make the phones more reliable, easier to use and less time consuming to operate. Conversations over Strowger Switches were private and did not require any human intervention to operate.

Strowger bragged that his systems were “cuss-less, out-of-order-less and wait-less.” With all of this functionality, it is not surprising that the Strowger Switch became the standard technology platform upon which the US and British telephone systems were based on until the 1950’s and 1970’s respectively. Strowger eventually sold his company and patent to the Bell Company which later became AT&T, Verizon, GTE and Lucent.

There are many lessons to be learned in this story:

• Know your external environment. Strowger kept abreast by reading the obituaries – he knew that he was losing market share. He also learned that the operator was linked to his competitor
• Have a back-up plan when disruption occurs. When his complaints to the local telephone company went unaddressed, Strowger set out to develop technology that would neutralize his competitor’s primary advantage – the operator’s discretion
• Learn what the market wants and needs. Strowger was relentless in his quest to perfect person-to-person communications

Be flexible and open to the possibilities. Strowger did his research, uncovered a need, innovated, and sold a solution where there were no competitors…quite a switch!

27 Dec

How Stealth Technology Became a Silver Bullet

An F-117 Nighthawk taxis down the runway before its flight during the Holloman Air and Space Expo at Holloman Air Force Base, N.M., Oct. 27, 2007. (U.S. Air Force photo by Staff Sgt. Jason Colbert) (Released)

Stealth technology provides the U.S. military with a dramatic competitive advantage in battle and as a deterrent to potential aggressors. Yet, its development nearly didn’t happen. The mathematical theories upon which stealth technology is based were actually developed by a Soviet scientist whose superiors were absolutely uninterested in his “crazy” theories and confusing equations.  His frustration with his superiors led the scientist to publish a paper in a scientific journal.  Here’s an example of a stealth equation for the strength of the reflected radar signal:

stealth-equation

A Lockheed engineer in the course of keeping current discovered the Soviet Scientist’s article and believed that his Soviet counterpart was on to something.  He approached his management and received a small budget and team to explore the possibilities and was set up in the Skunk Works operation at Lockheed.  He led a team that developed the original stealth fighter.   After building the initial prototype, he and his team invited some senior Lockheed engineers to review their work and provide feedback.  The senior engineers were used to building speedy fighters with smooth, space age contours versus the strange looking, flat paneled surfaces called for in stealth theory.   Many of these senior engineers doubted that the plane would even get off the ground.

Undaunted, the Skunk Works team continued their work and completed the prototype.  By this time, they were nearly out of money and they had no orders yet for stealth fighters.  They realized that they needed a straightforward method to demonstrate their value proposition.   A radar scientist was brought in to perform some testing that involved gluing ball bearings to the nose of the prototype and zapping it with the radar gun. This revealed that the plane’s electronic radar profile was equal to that of a 1/8” ball bearing, about this size:ball-bearing-1-4

Over the next few months, the sales effort constituted rolling these small ball bearings across the desks of USAF generals. These brief and to-the-point sales presentations were accompanied by one simple question, “What if this was your fighter’s profile on enemy radar?” This technique led to billions of dollars and several generations of stealth aircraft sales to the U.S. Military.

There are many lessons to be learned from this story:

  • Research the external environment – the foundations of stealth technology were discovered in an obscure technical paper published by a “competitor”
  • Trust your instincts – “we’ve always done it this way” mentality nearly grounded stealth technology
  • Marketing messaging should be simple – while stealth technology is complex (theories and equations), its value proposition (radar profile of ball bearing) is not
  • Engage and sell the value proposition to those who can buy it – the USAF generals had all read and been influenced by Sun Tzu’s Art of War and sought “silver bullets” like strategic advantage and deterrence, not technical theories

In this case, the go-to-market team collaborated to research, develop, market and sell their new offer. The rest is history.

22 Nov

How do election results change my company’s strategic, business, and product plan assumptions?

Were your strategic, business, and product plan assumptions based on one candidate winning or did you have scenarios for either outcome?  Did you have a scenario in which one party would control the Presidency, House of Representatives and the Senate?  How dependent were your strategy decisions on U.S. trade policy, corporate and individual tax policy, the Affordable Care Act, immigration policy, the strength of the dollar, student debt forgiveness, a national minimum wage, environmental regulation, etc.?  Will policy and regulatory changes under single party control make your industry more attractive or less?  How will your competitors react to these changes?  Will political, regulatory, supplier, customer, investor, and competitor reactions be positive, disruptive or destructive to your industry and business?

If the questions above left you scratching your head it’s time to pull the strategic, business, and product level plans out and review the assumptions on which your forecasts and decisions were made.  Depending on your industry, you may need to simply update or completely redo your external analysis to determine the political, economic, consumer, environmental and regulatory implications for your industry and business.  Next, identifying what actions your competitors may take in this updated external analysis and monitoring for leading indicators that may signal competitor actions will position your company to be pro-active vs. reactive.

 

Doug Hedlund
President, The Hedlund Group, LLC
doughedlund@hedlundgroupllc.com

Doug provides Line of Sight Group clients corporate, business unit, and product level strategy development and execution facilitation and guidance. Doug’s disciplined approach to strategy development and execution helps our clients translate our industry research and competitive intelligence into focused, actionable strategies and execution plans. Doug has evolved the disciplines and tools he utilizes over a twenty-seven year career in corporate development and strategy leadership roles at Deluxe Corporation, CUNA Mutual Group, and Mayo Clinic. In addition, Doug has taught the Strategic Management Capstone course in the MBA programs at the University of St. Thomas and Augsburg College since 2008 and 2009, respectively and has helped numerous organizations formulate successful strategy and strategy execution plans.

10 Nov

OUR STRATEGY ISN’T WORKING

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Our strategy doesn’t seem to be working.  What’s wrong?  When company and business unit leaders or product and market managers share this question with me I answer with the following question:  Is it your strategy, strategy execution or both?  In most cases, they don’t know, so I take them down a path of a few more questions that include:

First, are your strategy decisions aligned and compatible with your company’s vision, mission and core values?  If not, execution can be very difficult because your company’s mission and core values are foundational elements of your company’s culture.  If not aligned and compatible, Peter Drucker’s statement “culture eats strategy for breakfast” can cause a strategy which looked great on paper to fail.

Second, are your strategy decisions based on a comprehensive identification and assessment of your companies opportunities, threats, strengths and weaknesses?  Successful strategies exploit company’s opportunities and strengths and mitigate company’s threats and weaknesses.  The absence of comprehensive industry, market and competitive research lead to strategies that can fail miserably.  Absent outside objective research and analysis companies tend to overstate their strengths and underestimate their weaknesses.  When viewed through internal lenses strengths may look like competitive advantages when in reality they are simply table stakes and offer no competitive advantage in the marketplace.

Third, are the required execution levers in place for your strategy to be successful?  The execution lever checklist begins with the right leadership, people, organization structure, systems and processes, and culture.  Keep in mind that current execution levers don’t necessarily work with strategy decisions that include new products, markets, channels, geographies, strategic partnerships and/or acquisitions.

Finally, superior strategy and strategy execution requires focus, discipline and alignment.

 

Doug Hedlund
President, The Hedlund Group, LLC

Doug provides Line of Sight Group clients corporate, business unit, and product level strategy development and execution facilitation and guidance. Doug’s disciplined approach to strategy development and execution helps our clients translate our industry research and competitive intelligence into focused, actionable strategies and execution plans. Doug has evolved the disciplines and tools he utilizes over a twenty-seven year career in corporate development and strategy leadership roles at Deluxe Corporation, CUNA Mutual Group, and Mayo Clinic. In addition, Doug has taught the Strategic Management Capstone course in the MBA programs at the University of St. Thomas and Augsburg College since 2008 and 2009, respectively and has helped numerous organizations formulate successful strategy and strategy execution plans.

27 Oct

Disruption and Innovation – Two Sides of the Same Coin

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Last week, Line of Sight Group attended the Product Development Management Association (PDMA) Annual Conference in Atlanta.  Line of Sight Group was also an event sponsor. This is one of the ways that we keep a pulse on the opportunities and threats faced by the industries, companies and roles that we serve.  We did a little “informal” research project with the attendees who visited our booth that you can see here: http://lineofsightgroup.com/pdma-attendees-well-represented-on-the-product-lifecycle-curve/

Amongst the three days of breakout sessions, workshops and networking, there were three keynote presentations that really explored disruption and innovation at the business model level. Calling it innovation or disruption is really a matter of where you sit.

The first was Terry Jones, founder of Travelocity, chairman founder of Kayak.com and now, Wayblazer. He spoke about the trials and tribulations of the travel industry, making million dollar mistakes, but finally getting it right by bundling air, hotel and cars into a single trip over a single end-user site. Here is his website where you can get his slides: http://www.tbjones.com/ 

The second was Alan Amling, VP Corp Strategy at UPS. Here is his actual TED talk on the future of distribution that will not only include boxes on trucks, but drones, high speed cross country tubes and sending part specs to 3-D printers for manufacturing closer to the requester. It is UPS vision called, the My Way Highway:     https://www.youtube.com/watch?v=pRaivgVBCB4

The third was Hania Jarrah Poole, VP Turner Sports, who talked about creating the March Madness, multi-platform, streaming offer, in a matter of weeks, to show alongside Turner’s subscription-based cable offer.  Here’s an abstract of her talk: http://www.pim.pdma.org/p/cm/ld/fid=2034 

All of these presentations revealed how business model innovation and disruption are different sides of the same coin. There were great examples regarding the pace of technology, the readiness of customers and the subsequent impact on new business models. It struck me that the most innovative/disruptive business models were the simplest, too.  These presentations provided a lot of fodder for discussion and were great for linking product management techniques to business model innovation, as well as go-to-market initiatives to strategy.

20 Oct

PDMA Attendees Well Represented on the Product Lifecycle Curve

PDMA Survey

It was great to see and meet everyone at the international PDMA conference this week in Atlanta.

Thanks to all who participated in our ‘research project’ to document and visualize where attendee’s products and/or companies reside on the product lifecycle curve.

Overall, there was a broad and fairly even distribution of where attendees placed their products and/or companies. Even one admitted that his product is in the decline stage. Some product managers explained that while their company overall was in a mature stage, they were involved in new product initiatives in the Development or Growth stages.

Understanding the external environment and developing product strategy is, of course, different depending on the lifecycle stage. In the development stage it is crucial to understand ‘can we win?’ in order to determine whether or not to invest. In the growth and shakeout stages, product success is more about the product and features and understanding how to emphasize strengths and exploit competition’s weaknesses and make investments in product features that sustain the unique value. In maturity and declining stages, strategies often involve maximizing efficiencies and strengthening go-to-market capabilities, while monitoring for disruption and finding new ways to innovate.

We enjoyed the excellent presenters and panels, the innovation tour, the friendly people, and the entire venue and event.

Steve and Brett

05 Oct

External vs. Internal: The Difference between Strategy and Planning

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As we enter the first days of October here in Minnesota, the leaves are turning, football is back and our clients are diving deep into their strategic planning for 2017.
When the concept of strategic planning arrived in the business world in the mid-1960’s, corporate leaders embraced it as “the one best way’ to devise and implement strategies, according to Henry Mintzberg, the internationally renowned academic and author of ‘The Rise and Fall of Strategic Planning’. By the mid 1990’s amidst the dot.com bust, however, strategic planning had fallen from its pedestal and planning departments were being dismantled.

“Strategic planning is not strategic thinking. One is analysis and the other is synthesis.”
– Henry Mintzberg

Mintzberg explained that strategic planning had become, “strategic programming, the articulation and elaboration of strategies, or visions, that already exist.” On the other hand, he wrote that strategic thinking is about capturing what managers learn from all sources (including both ‘soft’ insights from experiences and observations as well as ‘hard’ data from market research) and then synthesizing it into a vision of the direction that the business should pursue.

In his 2014 HBR article ‘The Big Lie of Strategic Planning’ University of Toronto Professor Roger Martin laments that “strategic plans all tend to look pretty much the same.” They have three major parts: a vision or mission statement, a list of initiatives, and a conversion of the initiatives into budgets. While they may produce better budgets, they are not about strategy.

Strategic Planning Strategy
Internally focused: planning, costs, capabilities Externally focused: customers and competition
Short-term Future-oriented
Controllable Uncontrollable in long-term
Comfortable Uncomfortable
Accurate, predictive Imperfect, directional
Risk elimination Risk management
Objectives, steps, timelines Placing bets

Strategy is about what we choose to do as an organization (and not to do) and why. It is about where to place ‘bets’. Strategy focuses on the revenue side, where customers make decisions about whether to give their money to us, to our competitors or to a substitute. This is the hard work of acquiring and keeping customers. It is uncomfortable because our customers are making the decisions, not our own organization.

How to escape the comfort zone: embrace the angst

Because the problem is rooted in our natural aversion to discomfort and fear, Martin writes, “the only remedy is to adopt a discipline about strategy making that reconciles you to experiencing some angst.”

How can we stay focused on strategy this planning season and not fall into the trap of planning and cost budgeting? Some tips:

    Focus on choices that influence revenue (i.e.: customer decision makers). This boils down to just two basic choices: 1) where-to-play (which buyers to target) and 2) how-to-win (how to create a compelling value proposition for those customers). Customers will decide whether or not our value proposition is valuable and superior to competitors’, and whether or not to reward us with revenue.
    Acknowledge that strategy is not perfect. Managers and boards need to shift their thinking to focus on the risks involved in the strategic choices (i.e.: placing bets) rather than insisting on proof that a strategy will succeed.
    Explicitly document the logic. The assumptions about customers, industry, competition, internal capabilities, and others that drove the decisions should be documented and then later compared to real events. This helps to quickly explain why a particular strategy is not producing the desired outcome.
    Invest in data-driven decision making. Placing bets inherently involves risks. Because strategy is not perfect and risk cannot be eliminated, the objective is to increase the odds of success by understanding and managing risks. This is where knowledge and insight into customer needs and competitive offerings and dynamics provides tangible value.

Alignment

Of course, successful strategic planning occurs when both strategy and planning are aligned. The strategic “sweet spot” is the value proposition that meets customers’ needs in a way that rivals can’t. It must include both the external view of customers and competitors and the internal view of our own capabilities.

When the core elements of strategy are aligned (customers – competition – capabilities – mission/vision), and when decisions are driven by solid external knowledge, organizations can confidently place its strategic bets in a way that both grows revenue and delivers it in a way that is profitable for the company.

27 Sep

Is it Time to Do Some Disrupting of Your Own?

Much has been written about the fear of being disrupted.  Maybe it is actually time to do a little disrupting of your own and strike fear into others. Here’s an example of a company thoroughly understanding their external environment, making a calculated move and capitalizing.

The client was a successful, mid-tier player in a maturing market that caught the attention of some very large players who sought to bolster their own market shares by buying up niche players and migrating these customers to the large player’s own platform. In one case, the large player had bought a niche player and had announced that the niche player’s platform was being phased out in a few months.

This served as a trigger for the client who sensed that there might be a fleeting opportunity to capture a few new customers by virtue of the change. The strategy we embarked on was to swiftly interview a number of decision makers, both wins and losses that the client had experienced against the niche player over the past year.  We discovered that while the niche player’s client base was satisfied with their current application, they were okay with a switch as long as the key functionality was covered, but what they feared the most was having to incur the pain of what they believed would be a lengthy, costly migration.

This was a relatively surprising finding as we were all thinking that it would be about closely matching the core functionality “to a tee,” which would have been costly for the client to implement. With this information, the client’s product managers were able to focus and create a comprehensive migration bundle that addressed and removed the pain identified in the interviews. It was also far less expensive than implementing changes in their offer to match the incumbent’s offer. With the ease of migration message clearly articulated in some pin point marketing, along with an educated and well-motivated sales force, this campaign resulted in millions of dollars of takeaway revenue for the client in a short period of time. It was far more than they had expected to obtain.

A few months later, one of the other large players bought a niche player and the client got very excited, thinking that we could notch another similar success.  In the course of our interviews, we uncovered a much different attitude in this niche player’s base.  Their concerns were being addressed and they were “drinking the Kool-Aid.”  The client did not go after this “false opportunity” and kept their powder dry to disrupt another day.

Keeping an eye on the external market enabled this company to spot trigger events, direct the research effort and act accordingly.  In one case, they scored a big win and in the other avoided unnecessary costs.