Leadership

Today's blog post is an assigned topic dealing with leadership. The topic in particular is below:

How do you interact with others? What is your leadership style? How does that affect the team around you?

How Do You Interact With Others?
In my professional life I have always striven to embody the traits I most admire in others. Politeness, helpfulness, openness, analysis/thoughtfulness, and confidence are the attributes that I strive to emanate in professional settings. These attributes are applicable to every level of enterprise and would be the foundation for my leadership style.

What is Your Leadership Style?
To answer this question, the optimal approach going to be one that breaks down the aforementioned attributes and applies them to potential future leadership positions.

Politeness:
While this should go without saying, in my somewhat brief career I have already witnessed firsthand rude/boorish behavior from people in positions of leadership. The best leaders do not make subordinates feel like subordinates. A glowing example of this is my current CFO. This guy is basically the 2nd most powerful person in a gigantic corporation and he always says "hello" and makes you feel like a valued employee/contributor/person instead of a peon. If he can be polite there is no reason why anyone up and down the ladder in this company or other companies can not manage it as well.

Helpfulness and Openness:
I combined these two because they kind of go hand in hand as one typically needs to be open in order to be helpful and vice versa. I can see helpfulness being less prominent as one ascends the proverbial corporate ladder as actually helping individual people becomes harder to do as more people end up under your leadership umbrella. Openness however never has to have its role diminished. Being transparent with decisions and thought processes, being approachable, and willing to engage with others are all forms of openness that can permeate all levels of leadership. Again, I must cite my current CFO as a beacon of openness. First he opened himself up to email questions about finance, then he not only answered my specific email question but also invited me into his office for a brief meeting to go over the answer in more detail and give me the proverbial bird's eye view of the financial machinations of my company.

Confidence:
Genuine confidence is the confluence of several factors which give a good leader that intangible "leader" quality, as opposed to simply being an excellent worker/team member. When the confidence is derived from having qualities, experience, knowledge, and skill that surpasses one's peers, then the confidence is justified and the leader belongs in his position of authority. When the confidence is derived from being in a position of authority, then it is a hollow and unfounded arrogance and one of the most poisonous traits a leader can possess. A confident leader will own what he says, confident that his prior work, experience, and knowledge  helps ensure that what he says is correct. An arrogant leader waffles on what he says or outright disowns it in an effort to save face. Confidence begets another "virtue" and that is accountability. If you are confident in your words or your work, you will hold yourself accountable for them, if you lack confidence you will attempt to shield yourself from accountability.

Analyses/Thoughtfulness:
The other attributes are probably universal and applicable to any good leader. Where my personal style originates, or in other words, how I differentiate myself as a potential leader is through my analytical approach to the world. I essentially operate under following assumptions; first, there always is an answer and second, the answer can be known through analysis. Data mining, statistics, big data, predictive modeling, Monte Carlo Simulation, and any other unmentioned analytical and mathematical tool all form the basis for my decision making processes. Analysis (breaking things down) allows for synthesis (building things up) which allows for innovation. My innovative contributions to my current employer have all come from combining disparate analytical tools to create new processes and methods.

How Do These Attributes Affect The Team Around Me?
While it would be tempting to align myself with like-minded individuals who placed emphasis on analysis, I think the best team members would be light on analytical affinity. The best team would bring other talents and disciplines to the table so that we all serve in a complementary role to each other. So my ideal team would have me and perhaps another one or two members handling the heavy lifting on analytical and technical endeavors while the deferring to our counterparts on less analytical tasks. While there is a cliche that analytical and intuitive mentalities tend to clash, I counter that apprehension with the other tenants of leadership. Clashes/conflicts can be very productive when the engaged parties work together to resolve issues and make forward progress. This is best brought about though openness, politeness, helpfulness, and confidence.

One Goal Console Value Story

Recently the class was tasked with creating a story for our products that demonstrated their value proposition. This is my rendition of two stories. The first is from the perspective of two medical providers. The doctor, who was unaware of the OGC and the nurse, who was intimately familiar with it. This little clip tries to demonstrate the value of the One Goal Console to medical providers as a way to consolidate and monitor medical device data in real time. The second video is from the perspective of a patient that was hooked up to the OGC but did not know what it was. This is to show how the quality of care is improved for patients as a result of hospitals adopting this technology.

I hope you enjoy the videos (they are a little silly, but I'm not a marketer...).

Market Cuts and One Goal Console

This blog assignment deals with market cuts and how they may pertain to my group project, The One Goal Console.

Demand
The impetus for this project/product was two fold. The first was to make nurses' and doctors' lives easier by aggregating real time medical data on patients. The second was to improve clinical outcomes for patients by reducing response time, errors, and anxiety. Conceivably, the demand for this product would be any medical care facility that needs to monitor vitals. This would include day surgery centers (outpatient/ambulatory surgery, extended care centers (hospice, nursing homes), and inpatient medical centers and emergency rooms (hospitals). The technology could help but would probably be less useful to clinics, urgent care facilities, Minute Clinics, pharmacies, case managers, and specialist offices (e.g. dermatologists).

Using a conservative estimate, this would probably give us one-third to about half of medical care providers in a perfect world. It could conceivably be more, but given the push by plan sponsors to early intervention through office visits and other lower cost health delivery settings like Minute Clinic and urgent care centers, I think my estimate is in tune with future developments in how care is provided in America.

Addressable Market:
The addressable market is going to be very close to the maximum demand, since there is no reason to believe that any one center or hospital is dramatically different than another. In other words, there is no reason to believe that once the product successfully gains a foothold in the ambulatory surgery center market that it can not spread out across the USA and reach all ambulatory surgery centers. The only subsets of the maximal demand that would probably be considered unaddressable are markets where Kaiser Permanente has a strong presence. The reason for this assessment is Kaiser's dedication to technology and innovation. They may wish to buy this product and become a customer, but the smart money is on them competing or already having their own similar product for their own facilities. This severely limits TOGC's ability to target the California, Georgia, Maryland, and D.C. markets, for example. Kaiser only has a significant presence in about 10 or so states, but it would have to be monitored as each state it "takes over" becomes a market that the TOGC may not be able to penetrate and win.

Realistically, as a start up, the most viable addressable market to get the product launched successfully would be outpatient surgery centers in the northeast region of the USA. This would allow our team to interact in person with prospects and customers while slowly growing our foothold in the healthcare industry.

Realistic Opportunities vs Competition:
To the best of my knowledge there is no serious player with this objective. That does not mean that we are immune to competition. The following would be the biggest threats as competitors:

1.  Kaiser Permanente - This medical system could conceivably grow into more states, which makes us getting a foothold an almost insurmountable challenge, in addition to growing oraganically, Kaiser's embracing of technology and clinical outcomes could lead to it building and marketing its own version of TOGC, which could also provide formidable competitive challenges as they would be a major name in the industry with a significant clout and bankroll.
2. Medical Device Manufacturers - Assuming TOGC begins to get adopted, what would prevent device makers, especially larger ones that cover a wide range of devices, from developing their own fully integrated device data solution? This seems more strongly tied to whether or not they would want to branch out of their core competency than anything we could do but this could be a downstream threat as device makers compete with each other rendering TOGC a casualty of war.

Given the two challenges above, I think the realistic outcome would be as follows:

1. Regarding Kasier - As I stated above it given the colossal challenge that would come with selling a solution like this to Kaiser coupled with their almost uncanny ability to create new technology themselves it just does not make sense to try to engage Kaiser directly in any of their markets. We may be able to co-exist peacefully in adjacent but non-overlapping markets, but until TOGC has the clout and the resources to try to compete any attempt to compete with Kaiser would be foolish. I would fully expect Kaiser to have their own proprietary analog to TOGC, however, as far as I know they do not typically sell their proprietary solutions to other medical systems so while they most likely would not attempt to muscle us out of any markets we enter I truly believe any market they have is theirs to keep. This is not all doom and gloom as resistance to HMO models exists in many states so it is not as if Kaiser could take all 50 states into their network.
2. Medical Device Manufacturers - While a big manufacturer could attempt sell complete solutions, I do not see them attempting to leave their core competency to compete on this axis with each other. This could perhaps lead to a small handful of competitors but not a huge market where each entrant has approximately no influence on the whole market. Where I see this type of competitor being a real headache is when TOGC tries to penetrate hospitals and hospital networks (e.g. Lifespan in RI). The big device manufacturers would have working relationships with hospitals and may be slightly faster at coming to market with a comprehensive device data solution as they would have all or almost all of the necessary devices in house for R&D purposes. Considering we would be growing up from the ambulatory and hospice segments of the healthcare market prior to attempting to enter hospitals we may end up becoming the "gold standard" for these facilities but also end up being the "proof of concept" that helps huge established device manufacturers beat us into getting entrenched in the hospital market. However, hospitals are a long long term goal and emergent competition hinges upon these companies taking a step out of their comfort zone, which can be very difficult for large companies.

Winnable Market Segments
As stated above, the most "winnable" market segment is probably the ambulatory or outpatient surgical centers. These facilities have many of the same concerns that inpatient facilities face but tend to deal with, on average, far less intensive cases with far fewer devices. This market allows us to reduce the number of devices we would have to consider for compatibility issues while also being able to penetrate a growing medical care delivery market. As inpatient care continues to become more expensive and as more and more surgeries become outpatient the number of outpatient surgical centers in the USA is only going to rise. By targeting these less complex but integral settings we establish a customer base that will grow as we grow.

The smaller size of these operations also dramatically shortens the sales cycle which would allow us to get established more quickly as the longer sales pitches to hospitals and hospital systems could only create more opportunities for deals to fall through.

In terms of geography, since the team is based in the northeast region of the USA, the ideal winnable target market would thus be outpatient surgery facilities in MA, CT, RI, VT, ME, NY, NJ, and NH, with a special emphasis on MA due to its population density and ease of access for our team.

In or Out? (Marketing)

Today's blog seeks to dig into two marketing paradigms; inbound and outbound marketing. Inbound marketing is marketing that is designed to cause potential customers to reach in to you. This can be done with search engine optimization, blogging, or other methods that entail giving potential customers information or samples that get them excited about your product or service. In a way, it is advertisement via providing value to prospects. Outbound advertising is more disruptive in that it reaches out to customers and attempts to get their attention and move them through the prospect to customer life cycle.

So Why Not Inbound Only?
Just as man can not live on bread alone, a company can not successfully market itself with a marketing strategy that is solely inbound. The reason that inbound marketing alone is flawed is that it lacks outreach. Compare a venus flytrap with a cheetah,the flytrap has to make itself attractive to insects and wait for one foolish enough to land on its maw. A flytrap's success is predicated on a chain of events in which it is only a passive participant, it must bait its trap and then it must successful capture flies that choose to land upon it. Contrast this with a cheetah. Cheetahs have to go out and capture their prey, cheetahs are active participants in the chain of events that determines their success. A company with the best site, the more interesting articles, the most fascinating videos, the most informative white papers, and so on can not draw in the prospects unless they somehow become aware of them. A company that that is solely dedicated to inbound is like the flytrap that makes itself irresistible to flies, the problem is, the plant is located in one room and the flies are in another. The flytrap is unable to move into position to capture the flies' attention, it has to wait passively and hope that some curious flies happen to fly by and notice the irresistible trap. A company that heavily leverages outbound marketing, like the cheetah, would bolt from room to room until it found its prey. In this animal example, the cheetah is much more likely to feed, even if it has to go through a ton of rooms to do so.

Taking a step out of the animal kingdom, the drawback to inbound marketing is its core appeal, and that is the passivity. Success does not come knocking, and if it does, it may take a long time to get there. While the upsides of inbound marketing are numerous, e.g. less cost per acquisition, it is the passive nature that makes those acquisitions take longer and renders them less predictable. If the average mail campaign converts 2% of recipients, then you know for certain that you can print 100,000 mailers and convert 2,000 customers on average. You can also observe that a blog converts approximately 5% of its viewers into customers, thus you would only need 40,000 viewers, but how do you get those viewers? Sure you could try to use search engine optimization, but so can your competitors. Mean while the outbound direct mail approach has concrete metrics, you just need addresses. With databases and "big data" the failure rate of outbound marketing is going to improve, again this is proactive research and refinement that is much harder to accomplish with inbound marketing since the customers are not necessarily identified until they are already at the mouth of your "customer funnel", since by definition any effort to lure people towards the funnel starts to become outbound marketing.

Why Outbound Marketing?
Outbound marketing is proactive. A huge outbound campaign can function on its own with a best estimate success rate or it can catalyze your inbound marketing's prospect awareness. Imagine our hypothetical company above that has the perfect inbound marketing campaign but does no outreach. Now imagine this company doing something aggressive like a billboard in Time Square. This outreach immediately forces an awareness, this awareness allows the inbound marketing elements to "go viral". Word of mouth is the most critical element of marketing, you need a way to get your brand, your "word" into some mouths, outbound marketing is a critical element of this.

Just as Inception dealt with injecting ideas into people's subconscious so too can your outbound marketing inject an awareness of your company into the masses' collective subconscious. Once your foothold is established, then the inbound elements can lure people in and convert them.

Alternatively, outbound marketing can be utilized as a closer. The metaphor of the customer "funnel" is particularly apt here. The inbound elements provide value to prospects, they come to learn from your site/blog/etc and these lessons cultivate a rapport, a trust, and a curiosity. These three elements help get your prospect to enter the funnel. Once in the funnel there are two outcomes, conversion or non-conversion, falling through the funnel or escaping the funnel. Why not grease the walls of the funnel with outbound marketing once a prospect has willfully entered? There is a difference between being passive and appearing apathetic. How many potential customers are really going to climb down the funnel intentionally? How many are that desperate to buy your product or service that you can sit there and wait for them to wave their check books in your face? Is your product or service that special? Is your value proposition that powerful? Chances are there is nothing that is so good that passivity as a primary strategy can work in perpetuity, so why continue to be passive? Once a prospect reaches in, e.g. signs up for an email list, they are signalling a willingness to consider your product. Chase them down! This is like a gazelle sauntering up to a cheetah, it wants to be eaten but it certainly is not going to put its neck in the cheetah's mouth.

It's The Combination!
In another class I had to view a lecture series by Dr. Ackoff who stressed the importance of managing interactions, not actions. This is a perfect way to encapsulate the role of both outbound and inbound marketing. A company that solely focuses on one and not the other is losing out on the synergy, on the interaction. Further applying this lesson, a company that does both but does not integrate the two is also wasting resources. The ideal marketing strategy combines both inbound and outbound, not as two disparate entities, but as a cohesive one-two punch at both ends of the prospect-customer spectrum. Lure them in and close the deal, inject yourself into their subconscious and get them to wander up to your funnel, and so on.

Less is More (Article Analysis)

Today's article is written by Matthew May and is from the HBR (article link) and it deals with the concept of less is more as a way to optimize innovation.

This article provided three ways to promote innovation, the first was elegance, the second was "loose reins", and the third was meditation. Of the three, elegance was the one that spoke to me most powerfully so I will focus on that, it is also the topic most strongly tied to entrepreneurship.


Elegance
Elegant has a few definitions but they all basically lead to a sort of refined excellence. This is close but not quite what the author means, as the author is using it more in line with how Mark Rosewater uses it in his seminal article on the topic (Article). The objective of elegance in design is in essence maximizing the impact while simplifying the delivery. This sounds simple and yet it can be extremely difficult to achieve, especially in an environment where inspiration leads to ideas leads to feature creep, bloat, and an eventual loss of clarity/purpose.

In an extremely competitive business landscape the temptation to add features and functionality seemingly ad nauseum in an effort to differentiate or maximize consumer perceived value is almost irresistible. Yet it is those who are able to resist this proverbial siren's call that actually get to market. Think of some of the biggest launches in recent history, how many of them are "elegant" versus "all-encompassing"? Instagram (mentioned in the article) does one thing and does it well, the iPad only performs certain computer functions but not others, the iPod originally only played mp3s, and so on. These services and devices did not attempt to be all things to all people, or to bombard the potential users with functionality. Sure you could conceivably add an email-like client to Instagram, perhaps add a real time instant messaging function, add video sharing support, and so on, but when you do so you dilute the product. The iPad does not come with productivity software, sure one could probably view documents and presentations but why would you want to do complex spreadsheet design or type out a 10 page paper on a tablet.

The Connection to Entrepreneurship
If entrepreneurship is about solving problems, then elegance is about making your solution focus on the problem you want to solve in a way that does not overwhelm customers. As the author states, elegance allows your value proposition to shine most clearly. If you continue to bury your value proposition under value adds that may or may not be germane to the problem you are solving, how will your customers find the value proposition? If your customers can not easily identify your value proposition, how do you convert them into patrons and users? Elegance is in the delivery, you want maximum punch with the optimal amount of leanness. Perceiving the problem is the first step, designing the solution is the second step, and delivering that solution in a succinct form that highlights your value proposition, that is elegance, and that is the crucial third step to entrepreneurial success.

Big Companies Can Totally Innovate!!!! (Article Analysis)

The last post dealt with an article that stated that big companies can not innovate. In my previous post I argued against this thesis along a few axes and this blog post adds some fuel to the argument. This article is also from the HBR and was written by Ron Ashkenas and can be found here (http://blogs.hbr.org/ashkenas/2012/10/kill-your-business-model-befor.html) the title of the article is "Kill Your Business Model Before it Kills You" or liberally translated as "innovate or die".

Innovate or Die?:
While the US Postal Service is a complex creature to analyze to support a thesis of "innovate or die", the article thankfully provides more examples of companies that missed the innovation boat and subsequently crashed and burned. Kodak is an excellent example of such an enterprise, rather than use their photography expertise to work with or take over digital camera and photo printing they stayed entrenched. Perhaps their shareholders did not want precious cash in hand being diverted to R&D and (ironically, like I said before) their short-sightedness may have cost them future share growth and dividends. This is contrasted with IBM, a colossal firm, that innovated in a big way (selling off its PC unit, switching to services) and ultimately succeeded in a big way, after what I am sure was a bit of a rocky period on the street. Had IBM stayed in its proverbial comfort zone it may have faltered or struggled like HP and Dell do today. The innovated and survived, Kodak did not innovate and have all but officially died.

Does Size Matter?:
IBM has been regarded as big almost as long as it has existed, yet it successfully innovated. CVS was big before it merged with Caremark (also big) and has successfully innovated and continues to do so. There are two simple examples of innovative big companies that have thrived as a result of their innovative endeavors. Apple was down to ~$50 per share when Steve Jobs returned and had several years of tremendous innovations (iPod, iTunes, iPhone, etc) and are now worth over $670 per share a mere 3-4 years later. That kind of growth is incredible, and has landed it a spot in the Fortune 20 for 2012. Staples innovated in its marketing strategies, using the internet and targeted catalogs to drive both top and bottom line growth, Staples is king of the hill while Office Max and Office Depot are but memories. All large companies, those that innovated grew and survived, those that were complacent died.

Tie in to Course Material:
An alternative way to read this article to see changing an established business plan/model as a pivot! Persevere, Pivot, and Perish do not have to be delegated to lean start ups, hypothesis driven management and strategy can be just as valuable to a blue chip multi-national as it is to a 2 man start up operating in someone's garage.

Bottom Line:
Innovate or die; if you do not innovate you do not move forward. A lack of progression is regression in an environment as competitive as business. This is the natural Darwinism of capitalism. Entrepreneurs' creations live and die by their innovation, the solutions to society's problems are born from innovation, after all if the solutions could be found without innovation they would exist already! Embrace innovation, embrace agile thinking and ideas can become solutions, solutions can become start ups, and start ups can becomes successful enterprises.

Why Big Companies Can't Innovate (Article Analysis)

Today's blog post grapples with Maxwell Wessel's HBR article "Why Big Companies Can't Innovate", available here (http://blogs.hbr.org/cs/2012/09/why_big_companies_cant_innovate.html).

The Irony:
When reading the article I had a few observations that could best be summed up as "ironic". A big company, due to its size should be in a superior position to innovate relative to a start up. What they lack in agility they most certainly can make up for with pure firepower. A large company would have more cash, more talent, more means of production, more distribution channels, more branding, more advertising, and all of the other things anyone could ever need to detect a problem, engineer a solution, and bring it to fruition. So they most certainly CAN innovate, they are just told not to, and this only compounds the irony. The shareholders and "the street" want large companies to stay safe, to grow revenue, protect/grow margins, and generate earnings per share. The reason this is ironic is that the population [uniquely] positioned to reap the biggest rewards from innovation are actually the shareholders who are discouraging it. This reinforces the argument made in a Whole Foods article that I analyzed earlier about customer focus. Whole Foods has gotten away from "shareholder focus" and embraced "stakeholder focus", with customers as a key stakeholders and the highest priority. If firms were less beholden to "the street" then they could conceivably usher in new growth opportunities once their investments start to yield returns. One of the tenants of American Capitalism is that it takes money to make money, and innovation usually takes money, so why not use the money to make more of it?

The Flawed Premise:
Part of the allure of the article's thesis is that it is extremely seductive to our intuition and dare I say to our naivete. There is a tremendous amount of appeal to the notion of a scrappy underdog overcoming the odds and growing into a powerhouse. Alternatively, one may view a start up as "untainted" by "the street" and able to perceive actual problems beyond the annual report to shareholders. Last but not least, also appealing is the intuitive notion that a young and small firm can be more adaptive and more experimental in its approach and as a result more innovative. All of these are valid reasons why a small firm or a start up may be innovative, but the most compelling reason is also the simplest; a start has to be innovative in order to survive and eventually thrive. Amazon, Apple, Google, Oracle, Microsoft, Facebook, and so many more companies that are inspirational to start ups and entrepreneurs were once small shops that perceived a problem and proposed a solution (the core of entrepreneurship). If you do not have the critical innovation necessary to entice venture capitalists and take your target market by storm how in the world does your business plan ever become a multi-national blue chip on the Fortune 500? Barring anomalous circumstances, a start up can not hope to compete (and win) based upon price so it must offer something that competitors can not, especially new entrants into established industries. That something that the competition does not have is the fruit of innovation.

So if small companies innovate because they must not because they can where does that leave big companies that want to innovate? Mr. Wessel used a single example (Gerber) to forge his axiom so I will use a single example to not only counter it but also demonstrate how a company can succeed if it surmounts the resistance generated by the irony explained above. My employer, CVS Caremark, is by most definitions a big company, and yet it is an innovative one. Back in 2007/2008 CVS Retail merged with Caremark a PBM to create the world's first retail pharmacy-pharmacy benefits management hybrid company. This was a grand experiment and until recently "the street" was no fond of the conglomerate and encouraged it to revert back into two distinct enterprises. The street was only concerned with financials and metrics, it was not interested in new pharmacy benefits and synergies like "Pharmacy Advisor", "90 Day At Retail", "Maintenance Choice", and so on. The street was transfixed on comparing CVS Caremark to Express Scripts or Walgreens, not realizing that neither comparison was valid, since CVS Caremark could do things that neither of those companies could hope to accomplish, as we like to say, "CVS Caremark is an industry of one". In short the street was more concerned with next quarter's cash flow instead of the long term prospects and ROI for this risky (innovative) venture. Now the shareholders are excited and now the street wants to see what we do next as we continue to innovate pharmacy and healthcare, as we continue to "help people on their path to better health". Tom Ryan (former CEO) once said in a speech that he eventually wanted people to look at CVS Caremark and say that "CVS 'gets' pharmacy, that CVS 'gets' healthcare", it's taken about 4 years but I think people are starting to finally say that.

CVS is currently in high gear for innovation. The entire company has been challenged by our current CEO, Larry Merlo to innovate. So here is CVS, 18th on the Fortune 500 with innovation not being considered a nice pet project, but an integral component of its multi-year strategy. That is just a single example, but there are more all the way up and down the Fortune 500 and beyond.

Gerber and the Entrepreneurial Lesson:
Gerber's innovation did not fail because Gerber is a huge company, Gerber's innovation failed because it did not innovate hard enough. You can not pour baby food into a larger jar and call it adult food, that is not even innovation that is laziness. Had Gerber attacked the adult food market with actual adult food it could have leveraged its massive resources to go toe to toe with Swanson in the pre-made dinners market. Gerber would have been known for wholesome and nutritious, after all who would feed their baby nutritionally void garbage right? If Gerber was good enough for your child it would certainly be good enough for you. Instead of making real adult food Gerber made bigger jars of baby food, completely missing the point of both products. Babies do not have refined palettes or teeth so they need liquified food, adults have teeth and refined palettes so they do not want mush, this is so obvious it is painful to type. I have no idea why the author decided to use this as the for why large companies can not innovate, this is a much better piece of evidence for do not innovate lazily.

While the author's point about bureaucracy, infrastructure, and "the street" can certainly add inertia and friction to innovation one example of one failure at one company does not an axiom make. I am going to take this thesis in a completely different direction and apply to entrepreneurism; go big or go home. Gerber is a warning about failed innovation not because Gerber was big but because Gerber was simply not innovative enough. Aspiring entrepreneurs try solve problems, successful entrepreneurs solve them with viable and desirable solutions. Gerber perceived the problem but delivered a terrible solution, so the axiom that I would extract from the Gerber story is to innovate thoroughly and deliver a desirable solution. Do not give the market more baby food and call it adult food; get out of your comfort zone, get outside of the box, shift those paradigms and solve problems the market has with solutions it actually wants! That is the axiom here; that is the lesson for entrepreneurs, the lesson is not that big companies can not innovate. Not only are they perfectly capable of doing so, but they are extremely well equipped to do so.

Pain is Weakness Leaving Your Value Proposition (Persona Pain/Gain)

Today's blog post is Persona Pain/Gain Analysis from the perspective of a health insurance company (e.g. Aetna, United Health, etc) and how my business plan group's product "The One Goal Console" may affect them. Since the insurance company would be paying medical bills related to services performed at hospitals that may or may not use the console they are affected indirectly, however, as I will show below they can persuade hospitals to purchase or reject our product so they are an important market for us to engage.

What Does a Bad Day Look Like?
For a health insurance company a bad day can vary but the most common kind of bad day is one where a lot of cash is paid out (this is intuitive). However, the worst kind of bad day is most likely one where a lot of cash is paid out for services that could have been mitigated or avoided had an alternative provider or alternative clinical intervention been utilized.

What is Their Fear?
A health insurance company, like most insurance companies, has one complex and multi-faceted threat which is insolvency. When an insurance company is insolvent it means that its liabilities exceed its ability to pay. While a properly underwritten and risk pooled insurance company should be able to avoid this, it is possible to have operational loss ratios (i.e. losses/premiums) decay over time, especially if underwriting and pricing methodology is not up to date. A prior employer of mine used to follow a business model that allowed for operational loss ratios over 100% (i.e. they paid more in claims than premiums) and could sustain this due to a very bullish stock market and very high return on investments. When the market tanked in late 2008 so did the comprehensive loss ratio (i.e. losses/total income) and the company suffered. Most successful insurance companies run at a 85% or better operational loss ratio since the stock crash in the 1980s to help reduce the dependency on investments to remain solvent. Insolvency for an insurance company is essentially a death blow to the organization so that is a very serious and very real fear for any insurance company. Tying this back to health insurance, an anomalous number of "shock losses" (single cases over $100K is the typical threshold) can cause an insurance company to fold. Examples of shock losses are premature babies, organ transplants, renal failure, and readmission (i.e. someone having 2 or more hospital stays within 30-90 days).

What is Their Responsibility?
A health insurance company's responsibility to their members is to pay for services as outlined in the contract that the plan lays out. A health insurance company's responsibility to its network providers is to pay for services rendered at the rates agreed upon by both parties. In some cases, the insurance company is also responsible to its share holders to return a profit (i.e. a good loss ratio). There has been some growing tension in the public regarding the responsibility to shareholders as adversarial to the responsibility to members and providers. This is intuitive since covering more procedures at more generous costs cuts into profits. Part of this tension is addressed by PPACA (aka "Obamacare"), and is a tangent unto itself. This blog post simply lays out the 3 responsibilities.

What are the Obstacles?
Aside from the tension that arises due to responsibility to shareholders being at odds at times with responsibilities to members and providers the biggest obstacle to an health insurance company is cost containment. Leaving out the legislative impact of PPACA on health insurance companies and focusing on how things have been there are many drivers of healthcare cost that insurance companies have to confront. A population that has a large aging component (baby boomers), a population that is growing progressively unhealthier due to poor diet and lack of exercise, continued inappropriate use of emergency rooms, delayed pregnancies (i.e. older mothers), and medical R&D all contribute to escalating medical costs. This is further exacerbated by the risk of fraud, whether bill for unperformed services or performing useless services, and societal pressure to cover more and more procedures and expenses at little to no cost to the members. In addition the sluggish economy places extra strain on insurance company revenue since investment income (a very large and important component of revenue stream) is hamstrung relative to growth several years ago. All of these factors assault the company's operational and comprehensive loss ratios and make satisfying their 3 responsibilities more difficult.

What are Their Wants and Aspirations?
While it might seem naive to say that they want a healthy and productive population, that is not logically far off from the truth. A healthy population consumes fewer services which improves operational loss ratios and returns to shareholders. A health insurance company should want the best clinical outcomes for their members (i.e. the highest level of health possible) for the best price, or in other words, they want the maximum value for their healthcare expenditures. Value is defined as healthiness of membership.

How is Success Measured?
Loss ratios measure underwriting performance. Charlson Co-Morbidity Index and Verisk Health Risk Score measure the healthiness of a population. Earnings per share measures return to shareholders. Membership and provider satisfaction can be extrapolated from participation. If a lot of providers stop participating in network than the responsibility to providers has not been satisfied, if a lot of members leave for other providers than the responsibility to members has not been satisfied.

What Do We Offer?
The One Goal Console is a product that is sold to hospitals, not insurance companies, so how do we help insurance companies. First a quick aside on lesser known relationship between hospitals and insurance companies. Most large insurance companies designate specific hospitals as centers of excellence (or some synonym) for specific conditions. When a hospital is designated a center of excellence several important consequences emerge. First, the hospital gets a slightly better compensation rate (for example they may get $11,000 for a broken leg instead of $10,000) but in addition they also get a lot more traffic from the membership of that insurance company. Most surgical intervention has a pre-authorization requirement to ensure that it is medically necessary, during pre-authorization, a case manager or other insurance company employee has an opportunity to recommend an alternative doctor or alternative hospital. For example, in Rhode Island, a prospective knee surgery patient may be referred to Miriam Hospital instead of Memorial Hospital. This leads to Miriam Hospital getting more traffic, more surgeries, and more revenue per surgery. For the health insurance company they want to steer members to centers of excellence because the designation is earned through clinical excellence. If Miriam hospital costs $11,000 for a knee surgery that almost never requires further intervention but Memorial hospital costs $10,000 for a knee surgery that has a 5% complication rate (and complications can be extremely costly) then it would behoove the insurance company to send its knee surgery candidates to Miriam since in the long run it is more profitable (good for shareholders) but it also means better health outcomes for the members (good for members). In essence, when a health insurance company steers members to centers of excellence it is ameliorating the tension between its two "dueling" responsibilities.

What the One Goal Console offers is a way for hospitals to improve clinical outcomes for admitted patients. Faster updates allow nurses to intervene during a crisis sooner, fewer beeps and wires mean less patient stress (affects outcomes/recovery), better recording/tracking reduces medical error, and so on. Conceivably this product could be a key differentiator for hospitals that want to either attain or maintain their center of excellence rating with insurance companies. Insurance companies, always sensitive to cost and clinical outcomes, may pressure network hospitals to adopt this technology once it is shown to signigficantly improve clinical outcomes. Ultimately while our customers are medical providers and hospitals, the value of our product permeates the entire medical and healthcare industry. Center of excellence designation increases hospital revenue and profitability, it leads to better clinical outcomes which leads to better loss ratios for insurance companies and better health outcomes for members, healthier members further improve medical insurance loss ratios and eventually shareholder value. This is the value of the One Goal Console, and this is what we offer to insurance companies, a way to improve health outcomes of their membership and financial outcomes of their operations.

The Power of Defining The Problem (Article Analysis)

My latest article analysis comes today from the Harvard Business Review. The article is called "The Power of Defining the Problem" and it was written by Dwayne Spradlin, here's the link (http://blogs.hbr.org/cs/2012/09/the_power_of_defining_the_prob.html).

So What's the Problem Man?
In a previous post I defined entrepreneurship as problem solving at its most fundamental level. With this as my thesis it seems obvious why today's article was relevant. As a clinical researcher and statistician this topic also hits very close to home for me outside of the classroom. Defining the problem before you start to work at a solution is so straight forward it is almost taken for granted, and yet I see poorly defined problems being tackled by poorly designed methodologies on a somewhat regular basis. This could be a major reason why start ups falter, to borrow from fellow ETR500 blogger John Levin, you can not start with a solution and back into a problem. There are plenty of examples of this behavior; developing a product then trying to "create" its market, presupposing that a clinical intervention works before you start doing an actual ROI analysis, or inventing an entire new footwear paradigm that nobody was looking for (Timberland case). These are examples of solutions that either failed to address a real problem, or facilitated poor problem solving with questionable methodologies. How can someone arrive at a destination without first ensuring that the destination is a real place and then determining the logistics for getting there?

Your Problem is Finding Your Problem!
Now that we appreciate the value of a well-defined problem, how do you define it. The article highlights 3 examples of simply asking the right question. Rather than say "we need a way to handle this frozen oil" Exxon said "we need a way to move work with extremely viscous liquids". I do this at work quite a bit, whether it is converting a business question into a data question, or finding additional insights within the data for management (the mythical unasked question). For example, I recently conducted research on racial disparity in healthcare; the question from management was a very open, very vague "do we have any disparities" however, that is a poorly defined problem. To make the problem more tangible I isolated several key metrics that would be reflective of racial disparities and then investigated those and reported results. So not only does management get a simple "yes, there are disparities", which should have been expected given the research by Johns Hopkins University, but now they know what specific disparities exist, how to mitigate them, and where to focus their efforts. That is like the Exxon problem; we knew something needed to change, however, through refinement we were able to pinpoint not only what needs to change but also how to change it.

So Do I Still Have a Problem After I Define My Problem?
One of the biggest pitfalls in research is bad experiment design. While this topic is probably worthy of its own blog post, I will touch on it briefly. Experiment design is so important my master's program at Northeastern dedicated an entire course to it, to put it in perspective. A good experiment, a good investigation, has to be freed from bias. For example, when you conduct an ROI analysis motivated by the question "so how big was our ROI" instead of "did we produce an ROI at all" the mentality of the analyst is going to be different. This is a very easy trap to fall into and there are several logical fallacies that address and attempt to combat this. For brevity I will distill experiment design to a single nugget; a good control group is the absolute most important thing for a good experiment. It does not matter how sophisticated your statistical tools, or how many best practices you want to leverage, if the control group is bad or even worse, non-existent, then your problem-solving methodology has a very serious problem.

Bottom Line For Entrepreneurs:
Without a clearly defined problem, you can not solve it. If you are not solving problems as an entrepreneur then what are you doing? The nature of entrepreneurship is to solve problems, sloppily defined problems get sloppily designed solutions, but how many people are in the market for sloppy? If you want to succeed your mission, your motivation, your raison d'etre has to be clearly defined. You can not win at step 10 if you botched step 0, step 0 is clearly defining your problem. Once the problem is defined, the methodology can emerge, and the solution can reach fruition. Problem-solving does not have to be problematic.

A3 Report for Healthcare Strategy

For this week's formal assignment I decided to do an A3 Report as if my elevator pitch were rolled out to a single company. My elevator pitch was for a company idea called "Invigorate Health Strategy" and below is the essential framework that would be applied to a client company faced with progressively increasing healthcare costs. The perceived problem/challenge is the healthcare costs and deteriorating wellness associated with the current healthcare system. The proposed solution is to switch paradigms away from "repairing the sick" to "keeping the healthy people healthy". Given that the vast majority of people are healthy from birth, that most chronic (and costly) conditions are preventable, and that it costs far less to prevent a condition than to treat it, this radically different approach should have tremendous ROI and much better outcomes in terms of quality of life and productivity. I do not have the nifty graphics from the MIT Sloan article, but the objective is similar.

Essentially the objective of this proposed framework is to restructure health and wellness strategies around keeping healthy people healthy instead of treating the sick as cheaply as possible. My strategy was heavily inspired by Dr. Dee Eddington of the University of Michigan and his research on public health, health strategy, and healthcare cost management. This strategy was adapted from his book "Zero Percent Trend" and most the credit behind framing the problem and seeing the path towards the solution belongs to him. To say his work has been inspirational for me in my capacity as a healthcare and clinical program analyst would be a serious understatement. The aforementioned book "Zero Percent Trend" has shown me the possibilities and opportunities within the healthcare industry and gave me a huge boost to motivation and enthusiasm to try to make a difference, in all honesty it may have helped me find my true calling/vocation.

Who Doesn't Love Data? (Article Analysis)

I stumbled upon this gem today on Harvard Business Review's site (http://blogs.hbr.org/cs/2012/09/will_big_data_kill_all_but_the.html?cm_mmc=SocialHub-_-3271-_--_-6807223796479021584). The article focuses on my area of expertise, business intelligence and data mining. To be very blunt it's a great time to be a math person. To be honest, I think the author is making a lot of fuss about something that is not particularly fuss worthy, the commenter Simon Karpen actually had the best observation, in my opinion, which was basically that if a retailer does nothing but sell stuff, it will lose to Amazon. My employer and a previous employer both use extensive data mining to match customers to products and help drive bigger basket sizes/orders/etc. Ultimately however, if a retailer does not provide something besides the widget in my basket, I am probably just going to order it off of Amazon, unless I need it now.

All of those key tags and club cards that every single retailer wants you to sign up for is basically a way to suck data into a database for mining. This mining goes beyond circulars and emails and starts to get into individualized coupons and other specials. For example, if a customer is consistently hovering around a $20 basket, most retailers will start hitting them with $5 off of $25 in an effort to try to force the basket size to drift up and stabilize at a new higher equilibrium point. These approaches to marketing eliminate the proverbial cherry picker and also help minimize cannibalization. Why give $5 off of $25 to the shopper that consistently hits a $25 basket when you could give them $10 off of $40?

The author seems to believe that "big data" will give big retailers even bigger advantages over small retailers and ultimately squash them. While small retailers can not directly compete with big retailers, since by the nature of the size difference the data would be more robust for large retailers, they can be fast followers in many cases. Since retail margins are very narrow, if the smaller (and usually more agile) little guys can successfully play the role of the fast follower they can emulate or recreate the insights provided by the big retailers data bases without having to foot the bill for the data gathering or analyzing. Furthermore, as stated above, if the only differentiation is price, then the lowest price merchant will usually win the business in the end anyway. Smaller retailers already have trouble competing on price anyway so it's not like the insights from data will widen the gulf between the huge retailers and the small retailers or add new axes upon which to compete.

What data can not do however is provide a different customer experience, and this is where smaller retailers can still attack the big guys, especially for goods that are less price driven. While Walmart, Krogers, Target, et al may be able to give me a $5 off of $25 coupon to entice me to buy more their staff can not provide the same level of service that smaller niche retailers can. Your local tailor can take the time to help you pick out a matching tie for your new shirt, the staff at Whole Foods will drop whatever they are doing to help you find exactly what you are looking for, the local bicycle shop will take the time to fit you for a bike and help you navigate the options, and so on. These are the kinds of user experience differentiators that larger and by consequence, more austere and impersonal retailers can not provide.

Take Away For Entrepreneurs:
This is a little bit of a stretch to tie into start ups, since a new company most likely will not have access to "big data" however, it does provide some perspective. The first is that the article touches upon the power of data and data-mining. Considering we just discussed Lean Start Up and the need to contemplate "pivot, perish, or persevere" being able to understand and utilize data effectively is invaluable. This article reinforces that notion, but from a different angle, as these firms are not necessarily facing "P-P-P". However the lesson to use data to add insights and solve problems is still here. The second lesson from the article is more so an awareness of the threat/advantage that large firms possess in their ability to acquire and mine enormous data sets. A start up, by its very nature, can not compete along that axis as the resources and infrastructure will just not be in place. This places an even greater need for sufficient differentiation from established firms, and while this article focuses on retail it is not a stretch to take this lesson into other markets and industries. It is this lesson that is most important to take away from the article. Since the course focuses on innovation, and difficult to copy strategies, value propositions, etc are all part and parcel to innovation and by extension differentiation, this article just reinforced how important these qualities are for start ups trying to get off the ground.

More On Innovation (Article Analysis)

I came upon this article in my twitter today: Marissa Mayer's 9 Priciniples of Innovation

Since my last posting was about innovation I decided to follow up with another innovator's take on innovation. What I liked about this article was a heavy emphasis on how to innovate, innovation best practices, as opposed to Drucker's "Sources of Innovation". My rationale here is a little bit selfish, my employer has tasked each person with the objective of "innovating" on any scale as often as possible. In a vacuum that is certainly well and good but that is like telling people to "win" or "succeed". Sure, these are worthy goals, but they can be esoteric at the same time. Telling someone to "win" does not help them find the way to do so, it merely states the obviously good outcome that they are probably already striving for. Similarly, telling someone to innovate leaves them hanging a bit. Now innovation is obviously different from winning but the vague "do good stuff" without any further concrete guidance can be its own obstacle to that very objective.

The challenge in guiding innovation however is that any effort to steer it may inadvertently limit it, throttle it, or stifle it. So I can appreciate a hands off approach to bringing innovation to fruition, but just like you can not harvest a crop without first tilling the earth, you can not just demand the end product without making the environment conducive to its creation.

Mayer's nine principles lays out, for all intents and purposes the blue print to foster innovation without excessive steerage, that said #3 "A License to Pursue Your Dreams" is probably the best and most conducive to innovation. The 20% time allotted to any productive pursuit allows employees to separate from their day to day and explore. Exploration leads to discovery, experimentation, and innovation. Sometimes the innovation is even fruitful and marketable. I also liked #1 "Innovation, not Perfection" where she warns against building castles. By innovating incrementally things can be accomplished, tested, and finished in non-linear patterns with lots of opportunities to "pivot" as we are discussing this week in our course.

Taking the lessons from these 9 principles helps me personally get into a bit of an innovative mood. Thinking about my organic benchmarking algorithm I can see how I used some of these ideas from my perception of the problem, weak benchmarking, and my envisioned solution, strong benchmarking, and all of the interim steps that got me from perception to delivery. The solution to the problem I had came to me at a Healthcare Business Intelligence Conference in May. I was unplugged, literally since the internet did not work, and the complete separation plus the energy of the conference unlocked the solution that was hiding in my subconscious the entire time.

Bottom Line For Entrepreneurs:
Reading this article should help open up the mind a little and most importantly break us out of linear thought processes. While my previous post argued that entrepreneurism is fundamentally about solving problems, and that innovation is how we figure out how to solve them, this article helps us find the path between perception of the problem, conception of the solution, and delivery of the solution via innovation. Pivoting, collaboration, aggressively probing the box so you can think outside of it, and so are all things that foster innovation, whether it comes in small or large increments, you are still moving forward, even if you have to zig zag.

Seven Sources of Innovation

For this post I am going to take a look at the 7 sources of innovation as defined by Peter Drucker. A quick link for the unfamiliar: 7 Sources of Innovation

What is Entrepreneurism?
For me, the purest essence of entrepreneurism is problem solving. A firm that is not solving a problem is probably not one that will blow the doors off the market and thrive. The greatest innovations of recent memory and some of the most successful new companies solved problems, some of which customers did not even know existed. Take the automobile, invented by Ford. While he famously quipped that had he asked customers what they wanted they would have asked for faster horses, his invention solved the problem that was unstated but pervasive and tangible. The problem he tackled was faster travel. Later when the Wright Brothers invented airplanes and gave the world flight, they too tackled the problem of faster travel. Even more recently something as novel and creative as Facebook seems to not solve any problems, right? This is wrong, as Facebook solves the problem of communication between humans. It was a novel way to communicate in the sense that flight was a novel way to get from point A to point B, however, at its more fundamental level, it is communication, and it solved a problem.

Successful entrepreneurism is the application of innovation to problems. This is why Facebook thrived while MySpace died, or why Google dominates Internet search while Yahoo struggles to remain relevant. They innovated successfully, solving the same problem but in a different way. While the actual implementation is the final deciding factor that determines success or failure, the innovations and the implementations all originate with perceiving a problem and attacking it. There is a reason why corporate lingo likes to call challenges and problems "opportunities"; it is because they are the problems that your organization has an opportunity to solve, and it is problem solving that leads to commercial success.

The reason for this tangent is to tie the 7 sources of innovation to entrepreneurism and in distilling entrepreneurism to such a simple definition the connections become obvious immediately, it also facilitates prioritization of the 7 sources for new businesses.

Seven is Five Too Many
If we distill entrepreneurism down to problem-solving, then we should be able to distill "7 Sources of Innovation" as well.

The Unexpected - This is accidentally discovering something useful, for example, the coating placed on automobile glass that makes it pulverize was discovered by a chemist who dropped a beaker. The linked article accidentally discovered that the compound he was working on was sweet. There is an urban legend that one of the greatest medical breakthroughs of all time, penicillin, was also discovered by accident in a garbage can with a moldy sandwich in it. There are myriad scientific breakthroughs that if you dig a little were probably stumbled upon unintentionally or accidentally. While this is not intentionally solving problems, the other major part of innovation, the implementation, is critical here as any of the aforementioned breakthroughs could have been discarded had their discoverers not had the perception and awareness of what they had found. Due to its uniqueness I would leave "The Unexpected" as its own special category where the proverbial cosmos or "fate" decide a discovery's time has come.

Incongruities, Process Needs, Industry and Market Structure, Demographics, Perception, and New Knowledge - These are all ways to rediscover existing fundamental problems or new ways to attack them but at the bottom we come full circle to problem solving. Incongruities, Process Needs, and Demographics pose the challenges and problems to entrepreneurs and innovators, here is something that the market or part of the market wants or needs and how can you satisfy that want or fulfill that need? Tata's CEO noticed that his people were traveling on mopeds built for 1 or 2 as families of 3-4+, he saw an incongruity between what was available (mopeds) and what people truly needed (safe transportation), as a result he launched the Tata Nano. Industry Structure, Perception, and New Knowledge give innovators and entrepreneurs new ways to approach standard problems to lead to new solutions. The new knowledge of the internal combustion engine allowed Ford to tackle the old problem of transportation with a new tool which led to a new solution  that he profited from.

Bottom Line For Entrepreneurs:
According to Drucker there are 7 sources of innovation, however, I would argue that there are really two; serendipity and human ingenuity in the face of problems. The reason we have persevered as a species is because of our ability to solve problems, society rewards problem solvers with praise and financial rewards. The lesson here is that as entrepreneurs we do not have to be transfixed on "innovating" as innovation for the sake of innovation is pointless, however, if we go looking for problems are focus on devising solutions to them, then we are on the path to success. Dividing and labeling problems or sources of solutions is distracting and  takes away time from the most important endeavor, solving the actual problems.

Strategy and The Singular Focus

A follow up to yesterday's blog post regarding singular focus, I took the following excerpt from an interview with highly regarded Harvard Professor Cynthia Montgomery by Dan Schawbel at Forbes.com. The full interview can be found here: http://www.forbes.com/sites/danschawbel/2012/09/03/how-to-become-the-strategist-your-company-needs/

The selected excerpt:
"If a firm’s strategy is not clear, people throughout the organizations have a right and a duty to press for clarity. If the answers aren’t forthcoming or satisfying, there’s reason to doubt the business’ prospects and whether one is likely to thrive in that environment."

Reinforcing the Value of A Singular Focus:
Consider for a moment how this relates to yesterday's post about Singularity of Focus. By having a single focus that is deployed throughout the firm and woven into its very essence you provide the clarity that helps stakeholders (employees, shareholders, business partners) determine the business' prospects and ability to thrive. The singular focus guides the strategy and by transparently presenting both eliminates wasteful and distracting conflicts of interests or priorities.

Additional Insight for Entrepreneurs:
The interview also mentions the human component to strategy, and makes the observation that becoming a strategist allows one to develop effective strategies. Professor Montgomery's students tend to be entrepreneurs and business owners, not so dissimilar to the students in ETR500. A secondary lesson here is for aspiring entrepreneurs and leaders to start thinking strategically at their current level, to start to see how the cogs and gears interconnect and iteratively build upon this strategic thinking until becoming strategists. Once one becomes a strategist then one can finally make worthwhile strategies.

Singularity of Focus - Article Analysis

As I plan to do for most of the semester, I would like to analyze an article that I feel provides insight into the Entrepreneurial Process. Today's article was written by Steve Denning and published by Forbes.com. The link to the original article http://www.forbes.com/sites/stevedenning/2012/09/03/whole-foods-and-the-triumph-of-customer-capitalism/

As a frequent patron of Whole Foods (WF) I found the article very easy to relate to, and I prefer WF over Stop and Shop or Shaws for the same reasons as the Mr. Denning, better selection and better customer service. This article was intended to guide management however it provides some insight to entrepreneurship as well, and since that is the focus on the blog that will be focus of the analysis.

Lesson 1: Customer Focus
The author makes a very interesting comparison between Safeway (SW) and WF, showing how the cost-focus of SW leads to a reduced customer experience while WF's customer-centric goal enriches the customer experience. The correlation between their respective strategies and stock prices speaks for itself. When one considers that goods that are not unique to WF can be acquired for less at Walmart, SW, or Stop and Shop there must be more to the value added to the customers than the food in their basket. The singular focus on the customer and its subsequent improvement of the shopping experience helps create long term repeat business, which leads to long term and consistent profitability. These are the kinds of results that keep shareholders happy, even if they are not the sole focus of the organization's endeavors. The fact that this customer-first culture is woven throughout the very fabric of WF ensures that all stakeholders at all levels are fully aware of this goal and working towards it, which adds more stability and consistency to both the customer experience (shopping), partner experience (suppliers and employees), and shareholder experience (consistent stock price growth).

When starting a new company, as entrepreneurs do, committing to customer focus from day one is a great way to ensure that it becomes a cornerstone of the culture. Customers are the ones that provide you with revenue; repeat customers give you repeat revenue. The best way to ensure repeat customers is to offer a rich and rewarding customer experience, regardless of market segment or product. Whole Foods provides an excellent example of this and aspiring entrepreneurs should consider it strongly.

Lesson 2: Singular Focus
The author also points out the benefit to all levels of Whole Foods when a singular goal or focus is accepted and worked towards by the organization. By establishing the singular focus of customer value from the beginning Whole Foods eliminates distractions, debates, inconsistencies, and confusion. When faced with a challenge, each employee at every level of the organization can think critically and find the answer to dilemma by simply finding the course of action that maximizes customer value. This adds consistency since the same solution should be reached regardless of who is deciding or where the dilemma occurs, so the outcome at the Providence, RI WF should mirror that of the Boston, MA market.

The lesson for entrepreneurs seeking to establish their company's culture is to find a singular focus and let it shape the culture and by extension govern operations. It does not necessarily have to be customer value, as noted by the author, but it does have to be the one overriding goal that provides frame work for decisions at the most microscopic of levels. By removing the obstacle of balancing interests, whether they conflict or not, logically effectiveness and efficiency go up. If time per decision goes down then more decisions get made per day, and if each decision is intended to maximize the company goal, then you have more decisions snowballing into more aggregate progress towards the one goal.

Google SWOT Analysis

Here is my first SWOT strategy analysis (technically a TOWS, I guess) this was done in open office and MS Paint. Please feel free to comment and debate in the comics.

Fixed Links

Links on the right side now work, I had an extra "http" in each URL.

How Much Disruption is...Disruptive?

This is cross-post from the class message board.

Looking at the two products in the Timberland case one thing that struck me was the juxtaposition of Travel Gear with Precise Fit. The former was a completely revolutionary idea that could have changed the very notion of footwear consumption and the latter was a simple insert to make shoes fit better. As prospective entrepreneurs I think we all have at least a slight inclination towards the big disruption, the revolution. In our first lecture we were already informed that "me too" business plans are a tough sell so innovation is imperative and disruptive innovation seems even more desirable, which begs the question, how much disruption is disruptive?

Focusing on the disruptive aspects of the two products it is clear that they were both disruptive to varying degrees with distinctly different "disruptees". Travel Gear was monumentally disruptive to pretty much everyone involved, customers would be disrupted because an entirely new way to consume footwear was being introduced, competition was disrupted because they would have to adapt to a radically different landscape, and internal stakeholders were disrupted because they had to make, pack, and market this footwear revolution. This product was a nuclear warhead of disruption, and much to its detriment, it was engineered in isolation, which only exacerbated its disruptive qualities. Compare this with Precise Fit, which really only "disrupts" the competition who must now adapt and combat Timberland's improved customer experience. The overall process for the consumer was enhanced, not altered fundamentally. The overall process for the internal stakeholders was far less disruptive thanks to input and a more democratic R&D process on this invention. Precise Fit was the kind of disruption that harkened back to the original silicone impregnated leather boots from Timberland's origin. The only disrupted players in the game were competition who had to catch up, the customers got a better experience and the internal stakeholders were involved early and as a result the company flourished.

This provides a valuable lesson to start up plans. Applied disruption (or "creative destruction", as mentioned in class, e.g. Precise Fit) leads to differentiation, market acceptance, and ultimate success while catastrophic disruption (e.g. Travel Gear) leads to confusion, market rejection, and ultimate failure. Extrapolating from the case study it appears that a key way to ensure that disruption is productive instead of destructive is to remain customer centric. Travel Gear tried to solve a customer problem (traveling footwear) that suffered from two flaws, one it was a problem that most people probably did not even know they had, and two it added at least one problem (confusion). Trying to answer an unasked question in a potentially vexing way is not customer-centric, and a lack of customer-centrism probably condemned Travel Gear to the scrap heap. Precise Fit sought to solve a very pervasive problem, that I am sure many people have. By focusing on a real and pervasive external customer problem (people who buy shoes) and internal customer problem (internal stakeholders who have to implement) the iF team was able to disrupt its antagonists (competition) without disrupting those who drive the success the most (customers and colleagues). So if we, as future disrupting agents, also apply precise disruption when we seek to get our ideas off the ground, we too should have similar success.

So let's all strive to disrupt in an orderly fashion.

Hello World

First time blogging, so here is a test.