Tag Archives: P&L

Gallup

A Wake-Up Call for B2B Brands

Gallup has just released the Guide to Customer Centricity: Analytics and Advice for B2B Leaders. The study reports that 71% of B2B clients are ready and willing to take their business elsewhere – not even one-third are fully engaged in their relationships with suppliers.

If you are operating in the B2B world – and you likely are, as either a supplier or client – do you find this statistic surprising?

This finding should be a wake-up call for B2B brands to figure out what is going on with their clients.

Do you know anyone in the business world who will say they are opposed to client-centricity? Putting clients at the center of a business remains an aspiration for many companies. Why is a strategy of such potential value so difficult to execute? What must happen to create mutually beneficial relationships between businesses and clients?

Companies have to get out of their own way and provide the value that clients expect. B2B or B2C, people handing over their money to you because they believe you are meeting their needs demand personalized engagement. They will choose the right moment to go elsewhere if you fail to deliver. Here are some areas that can make a difference:

  • Sales force compensation systems rewarding new client deals, with little incentive past contract signing and getting the client set up, can be updated to reward surfacing and delivering on continuing needs.
  • A linear approach to winning, welcoming and engaging clients can be reinvented to treat clients like people and break old habits of putting them through a gauntlet of internal systems and silos.
  • An outside/in understanding of client needs and wants can replace product pushing. Even traditional client needs assessments may not capture evolving needs – these methods tend to play back answers biased by the products driving today’s P&L.

There is no magic to this. Client-centricity requires change and a new mindset. It’s hard work. Where can you begin? Follow these four action steps to identify the priorities for your business:

  • Go out and talk to clients. The value of conversations where clients do most of the talking and you do most of the listening can be far higher than quantitative research.
  • Segment your client base. This is not just about bucketing clients by size, sector, potential value to you or historical purchase relationship. It’s about the clients’ journeys, including their attitudes and behavior, how they go about achieving their vision of success, and where you fit in.
  • Reimagine your clients’ experience of doing business with you. How does your brand enhance the clients’ journey — it’s not about making them fit in to your mechanisms for running your business. It’s about reflecting their preferences back to them in every interaction they have with you.
  • Figure out what this means for your employee experience and expectations. Everything from sales incentives, to marketing communications, to servicing policies to channel capabilities – should contribute to the experience your brand will create so your clients see you as enabling their vision for their business. Hire people who are not only business-focused but people-focused.

The very term “B2B” fails to acknowledge the reality that every brand, irrespective of whether its audience includes individuals or enterprises, must prove itself to the people who will be its users, buyers or payers. Behind every B2B relationship are P2Ps – People-to-People.

This post also appears in Amy’s regular column on Huffington Post.

New Way to Lower Healthcare Costs

Managers are more likely to limit rental cars to $30 a day than limit an open heart surgery to $100,000 — for ethical and regulatory reasons, many executives steer clear of involving themselves in healthcare decisions, other than selecting the broadest possible network access. But few expenses that executives know so little about matter more than those involved in healthcare do.

This article speaks to a cultural shift that could provide tremendous impact for employers. They can now lower costs while also improving outcomes.

Until now, employers have used two main strategies:

–They offloaded costs to employees, hoping that giving them more skin in the game would reduce their spending on healthcare. But the continuing lack of transparency about healthcare costs, combined with costs that rose faster than employers shifted them, resulted in insurance picking up more cost and consumerism being driven down.

–Employers also invested in wellness programs. But wellness programs are most attractive to the already healthy. And they attempt to reduce how often enrollees encounter the system. But we know that everyone will encounter care at some point. It is each encounter’s volume and cost that is at the heart of this out-of-control system.

The new, better approach was demonstrated in a whirlwind, 48-hour trip I took with some incredible healthcare leaders.

First, we met with the executives of Rosen Hotels in Orlando, who have saved hundreds of millions of dollars compared with average employer healthcare costs. Rosen’s single-digit employee turnover would delight most employers, but it is spectacular in the hospitality industry. Rosen achieves this turnover with a benefit-rich plan most employees would drool over: e.g., no-cost prescriptions, $750 max hospital out-of-pocket.

How does Rosen accomplish this? First, its healthcare thinking is based on what it wants to achieve rather than what it has to provide. Beginning with the CEO, Rosen’s top executives really care about every one of their employees, as evidenced by the more than a few employees who have been there for 40-plus years. (Remember, this is a hotel chain, not a hedge fund with six-digit salaries). The strategies deployed vary, but they mainly support making the highest value care as accessible as possible.

Value—a fair return or equivalent in goods, services or money in exchange for something—is seriously lacking in American healthcare. Rosen took it upon itself to provide healthcare whenever and wherever possible, using its clout to lower costs. The company arranged special prescription drug discounts with Walmart. Rosen has on-site medical directors who personally engage with each employee’s health. The directors visit employees in the hospital and help arrange home delivery of costly specialty medications from lower-cost pharmacies. The company monitors and supports sick employees’ recovery and progress. It also built a health-and-wellness center for all employees and dependents with primary care, prescriptions, fitness instruction and more. I know all this sounds expensive, but the impact far outweighs the cost.

The second part of our adventure involved a flight to the Caribbean island of Grand Cayman, just south of Cuba, a beautiful tropical setting an hour-long flight from Miami (and with direct flights from a dozen other U.S. cities). The morning after our late arrival, we enjoyed the beautiful sunrise for exactly 20 seconds before we were bused to a facility called Health City Cayman Islands (HCCI). The single building on 200 acres (with significant future expansion plans) is clean, new and functional, though it is not nearly as grand as many U.S. mega-hospitals. Now two years old, HCCI is a joint venture between Ascension Health (a non-profit U.S. health system) and Narayana Health, a top Indian health system based in Bangalore. HCCI’s Indian roots are very important, because that country has no national healthcare or insurance system. The Indians have a novel approach to healthcare: You pay for it.

Narayana Health, which has achieved Joint Commission International (JCI) accreditation, performs a volume of procedures unprecedented in most hospitals. This volume is produced by a highly experienced team with quality outcomes that equal or exceed the best U.S. hospitals, but the team does it at far lower cost. Dr. Devi Shetty, Narayana’s founder and a cardiologist who has performed more than 25,000 heart surgeries, is focused on reducing the price of an open heart surgery to $800. (It currently sits around $1,400). Compare that with a 2008 Millman report that pegs U.S. open heart surgery costs around $324,000.

Some employers—Carnival Cruise Lines, for example—are so convinced of HCCI’s value (better health outcomes at far lower cost) that they will pay for all travel, including a family member’s accommodations for the length of a stay, and often waive an employee’s out-of-pocket costs associated with the procedure.

While HCCI’s pricing is higher than its Indian sister facility, many people could afford to pay for HCCI’s care with their credit card, if that were necessary.

HCCI charges a single, bundled fee that covers all associated costs, plus the cost of most complications — the director says, “Why should the patient pay for something if it was our mistake?” Compare that attitude with that at U.S. facilities, which have financial incentives to deliver as much care for as long as possible, and which get paid more if they make mistakes. HCCI’s upfront pricing model creates a serious incentive for efficiency and quality, because the facility is financially responsible for complications, infections and extra tests.

Patients and purchasers (i.e. employers and unions) should realize that nearly all U.S. healthcare—hospitals, doctors, drug companies and even insurance carriers—are structured to benefit from more care, rather than good, efficient or innovative care.

This means that purchasers and patients must use any available levers to get the best healthcare value they can. As Rosen and HCCI have proven, those levers are increasingly available.

CMO

Wanted by the CEO: A Superhero CMO

The IDC “2016 Global Chief Marketing Officer FutureScape” predicts CMO turnover continuing at 25% per year or higher through 2018.

This is not surprising, as marketing continues to be disrupted and reinvented.

The CMO must anticipate the expectations of the connected consumer, master an accelerating digital learning curve and negotiate a new role and relationship to the CEO – who himself must come to terms with marketing playing a new position in the organization.

While this is true across companies in all sectors, it is a special consideration in insurance, where marketing is emerging from a historical “back seat” role in sales support and becoming the leader of customer-centricity and digital transformation efforts.

The CMO is now often expected to be a superhero – one who speedily turns customer-centricity into P&L results … uses technology and data analytics to drive performance … delivers marketing ROI … drives leads to sales channels … and advances capabilities to keep up with marketplace opportunities. She is a leader who gets beyond intellectualizing the need for change and quickly makes change happen. She gets Millennial consumers to flock to the brand.

Being data-driven is core to the wiring of the CMO who can accomplish all of this. Being a member of the Millennial generation may be useful, too. But I’m hearing a hunger for even more, from start-ups to Fortune 500 leaders.

These leaders are looking for a CMO who demonstrates:

  • Strategic, visionary and transformational wiring, with the ability to execute
  • Skill at seeding and scaling innovation
  • Analytical, technical and creative abilities
  • A collaborative style – someone who is a motivator and a networker
  • Digital native instincts and intuition
  • Links to P&L performance
  • A sense of urgency

This profile is a tall order. To find your marketing superhero:

Define what marketing means in your business. Marketing can be the high-impact discipline that connects your company’s brand with customers to create growth. If you have defined marketing as the advertising, promotions and research function, my definition proposes a much-expanded view with implications for the broader team, goals and metrics and alignment. Being clear on the function’s role is the basis for picking the must-have CMO qualities.

Maximize the CMO’s potential by envisioning a function that can:

  • Be immersed in customers’ lives and be the internal advocate for their needs
  • Surface, synthesize and apply market insight and data – pushing beyond demographics to a segment-based understanding of attitudinal, behavioral and cross-cultural attributes
  • Create experiences that attract customers and strengthen relationships
  • Test and learn – acquiring and applying data to get better
  • Have a P&L focus – connecting customer behavior to financial outcomes
  • Be a collaborator with colleagues, especially technologists and data scientists

Look to the CMO to adapt the mature methodologies that matter, and meld these with what technology and data now make possible. Segmentation, A/B testing and positioning methodologies work and are essential in an environment of channel proliferation and media fragmentation. Apply these alongside customer journey mapping, machine learning capabilities and the best social, mobile, community and other connection tactics to motivate customer engagement.

Hold the CMO accountable for metrics that make sense. The best metrics focus on the drivers of prospect and customer behavior that marketing can affect. While awareness, intent to buy and volume of qualified leads are on the list, more rigorous metrics linked to P&L outcomes also belong on the marketing scorecard – accounts opened, sales closed, evidence of loyalty such as repeat purchase and recommendation to others. Be aware of the dependencies beyond marketing, across a multi-functional business, to move these levers.

Provide sponsorship. Marketing will continue to transform irrespective of the size or stage of maturity of the business. The function’s success increases in a culture of customer commitment and insight, where leaders keep the customer at the center of decisions.

Chances are your CMO will be mortal. So, how will she succeed? Whether digital migrant, native or newbie, data-driven or intuitive, CMOs will rise to superhero status when they: 

  • Operate with a relentless customer focus.
  • Achieve differentiation that matters to your target.
  • Build and motivate a diverse team – creating, in effect, the composite superhero marketer.
  • Lead with openness, trust and collaboration, self-awareness and humility, clarity of vision and connection to execution.

This post also appears in Amy’s regular column on Huffington Post, Medium.com and LinkedIn.

Why Insurance WILL Be Disrupted

As it’s Pantomime season, can I start this with “Oh, Yes It Will”? (For those not familiar with Pantomime, check out some of the history here.)

I write in response to a great post from Nick Lamparelli on why insurance will not be disrupted (here). He takes a really interesting position. But I sit on the other side of the fence and believe insurance will, is and can be disrupted.

In answer to Nick’s six points as to why insurance will NOT be disrupted, here’s my perspective:

1. He writes: “At the core, insurance customers are leasing the potential to access capital…. How do you make a big pile of money irrelevant?” But this will vary from line of business to line of business. Where there are person-to-person (P2P) and other self-insurance approaches, why do I need capital? I will self-insure.

2. He writes: “Peer-to-peer providers just won’t be able to get sufficient scale to efficiently use capital to cover risk.” But isn’t this more about how they enable distribution and connections and pools of risk?

3. He writes: “IoT [Internet of Things] devices [and other new technologies] will slowly be adopted by most insurers as they look to get competitive edges, but the follow-the-leader paradigm of the industry will mean that any edge will disappear quickly, and we will all be running hard just to stay in place. These technologies are impressive. I would classify them as a solid innovations to the industry, but not disruptive.” I agree on this – it’s more evolution, not revolution. The revolution comes if the carriers actually do something with the technologies and create better products that are truly personalized. Note that we are still thinking in a product mindset, and I suspect this will change.

4. He writes: “I think State Farm and large auto insurers like them will be just fine, and technologies such as autonomous vehicles will be more of an annoyance than an existential threat.” Like Nick, I think there will be evolution. But I think the change with autonomous vehicles is not only to move from personal insurance to product liability (or a mix with a flex of product and personal liability, e.g. the manufacturer will provide the base layer of cover, but after that you have the flex options to add extras). To me, the issue is more about distribution of the product. I envisage that next you will buy insurance to cover a journey, instead of buying insurance once a year through a price comparison/aggregator site. Equally, the big auto insurance carriers Nick mentions will need to look for new sources of income and value-added services, be it breakdown or otherwise to drive revenue and profit. I suspect these will be more often from outside our standard world. The car will be the most connected thing we engage with, and that alone brings a whole host of exciting opportunity. If we do go for autonomous cars in scale and get them right, then the disruption could be that product liability (PL) dramatically reduces to being a capacity provider only to a new distribution channel (auto providers?). Or the CL carriers and reinsurance providers actually take prominence (higher likelihood in my view).

5. He writes that regulators could stomp on innovation. This is a tough one, but I think the consumer will always win. Regulators’ views will be driven by what’s best for the customer. Equally, smaller, nimbler insurers that can turn on a dime will be better-equipped to manage through regulation changes, as opposed to large, legacy-laden carriers that will be too slow to react and catch any positive outcome.

6. He writes that there is very little that technology can do to disrupt insurance for natural catastrophes, which is his area of expertise. I reply: OK, you win. Not many seem to be tackling this, if any at all. However, how we manage in advance, or the ensuing events, how we handle the supply chain and how we treat return to pre-loss will improve, again as natural evolution rather than as disruption. You could argue that crop insurance has changed dramatically over the years with better weather data. Some pay out proactively based on weather data, without ever the need for a claim. This to me is revolutionary and goes back to the point that customers come first.

I’m 100% with you and Paul VanderMarck, chief strategy officer at Risk Management Solutions – customers and better outcomes will ultimately win. However, on the race to this end, there will be many who change and challenge our thinking. To me, this is why there are so many new entrants and existing carriers investing heavily to understand what, why and how we can disrupt. Have a look at some of the work from CB Insights, which gives a fascinating view on the state of the market. See here for some of the great work Matthew Wong and team are doing.

Separately, I think we have jumped on the “disruptor,” label, as, like any industry, we need to be able to offer up the opportunity for the next unicorn (Zenefits, Oscar etc.) and to attract the right attention, from both inside and outside the industry, along with the appropriate talent and thinking!.

Either way, for me it’s an exciting time out there in insurance, and we must continue to evolve, revolve, pivot, disrupt – whatever we call it. Sitting still is not an option!

What Is Your 2016 Playbook for Growth?

CEOs entering 2016 convinced they can succeed by doubling down on what worked in the past may be reading from the wrong playbook.

According to a recently released Forrester/Odgers Berndtson study, “The State of Digital Business 2015,” most companies remain unprepared for digital transformation” — an absolute must for growth. Yet executives representing the diverse sectors examined in the study expect the majority of their sales to be digital by 2020. How will they get there?

If your transformation plan to capture at least a fair share of an expanding digital sales pie is not well underway, and you feel behind the eight ball, that may be for good reason – digital transformation leading to adopting a meaningful new business model or new technology can take years. And it demands operating along a different set of practices that used to work.

Growth is within reach of any CEO…

  • Moving at least as fast as the pace of technological change,
  • Delivering on clients’ growing expectations for real outcomes, and
  • Adapting to the shifts of economic and workplace controls to the millennial generation.

The CEO must be the Chief Growth Officer. Hiring a chief digital officer or chief innovation officer or someone else carrying a fashionable CXO title assigns daily responsibility for actions to close the digital gap. This can be a good move. The CEO cannot be everyplace at all times, and, besides, micromanagement from the top of the C-suite is deadly. When it works, this added role introduces skills, fosters enterprise-wide external partnerships, signals commitment inside and outside the organization and creates the digital blueprint for buy-in by colleagues. But the CEO alone has and must use his or her authority to coordinate growth levers and make the tough calls.

The CEO is also the Chief Culture Officer. Culture is not the job of HR or any other designee. Culture is the sum of the hundreds of choices everyone makes every day. People respond to the behaviors of their leaders. What do growth behaviors look like? Think about orchids in a greenhouse. Like orchids, new and different ideas are fragile and require special care. They may need protection from the outdoors – the conditions through which a mature business can operate, but that will kill a still-emerging concept. The CEO must advance a culture of a greenhouse, using governance to support both the work wherever growth businesses are being incubated, and a smooth transfer to the mainstream at the right time.

A lot has changed, but strategy is still the starting point for execution that gets results. Good strategy means having a clear view of where you are, an intended destination and a map of the terrain with a logical path to get there. Good strategy allows for good prioritization of short- and long-term moves, including the digital agenda. Strategy is still what gives all members of an organization a common view of goals. Strategy must evolve from what it has become in too many companies — a financial extrapolation supported by a sales-y PowerPoint presentation and ungrounded assumptions.

You must govern to engage and create accountability. Bring the whole C-suite into the act – no bystanders or anonymous choristers allowed. It’s a great idea to ask your CMO or CIO (or both) to lead the digital acceleration effort, but what about the rest of the C-suite? Put a governance process in place that fosters a constructive dialog with all of the CEO’s direct reports, including the P&L leaders and functional heads. Governance must reinforce that every member of this team has “skin in the game” to achieve growth results. No one is exempt from being part of the solution.

You have to update the risk/reward equation. Face it – the traditional American corporation was built to be predictable – to control risk. But nowadays, avoiding deviation from the status quo may be the riskiest path of all. I’ll paraphrase how Joi Ito, director of the MIT Media Lab, described the issue at a recent talk: To the corporate leader, downside risk is determined by aggregating variables that are stress-tested through complex analyses in an attempt to account for unknowns. And the potential of digital is full of unknowns, so it can easily be discounted down to where it is assumed to just have incremental impact.

But here’s a whole different view: To a venture capitalist, the maximum downside is the loss of 100% of his or her investment. That investment is meted out in small chunks as milestones are passed, so exposure is clear, measurable and contained. And the upside is viewed as exponential (though low-odds).

Food for thought: Reframing the risk/reward inputs and calculation can be a liberating and responsible course of action.

Digital transformation is a non-starter without the right talent. Seek evidence beyond the skills that seem urgent now but come with an expiration date — what matters is hybrid thinking, continuous learning and a record of delivering meaningful results. Is “fit” simply a euphemism for “people like me”? Go after your complements, and even some people who don’t fit your mold, but for whom you are committed to make room. The continued homogeneity of the faces on the “Team” section of most corporate and start-up websites in this day and age reinforces the untapped opportunity to invite others in and reap the rewards.

You must measure client outcomes. What gets measured gets done. And the wrong metrics stifle innovation. Applying yesterday’s metrics with blunt force is a death sentence for new ideas. The CEO must take a stand on how to gauge digital progress. Implement metrics that: 1. Align to the strategy. 2. Reveal how well you are delivering outcomes to the client (i.e., fulfilling the benefits that brought them to you in the first place). 3. Focus on how well the team is delivering results to clients. 4. Relate to drivers of the P&L and overall franchise health now and in three to five years.

You need to generate speed and momentum through constant progress in small chunks. It beats all-at-once precision that misses the market. Iterate, iterate, iterate, as fast as you can. Make live prototypes and show them to clients. Test and learn. Be flexible to new data and insight. The word “failure” does not appear in this playbook. “Failure” is something you bring upon your team when you don’t take the learning from a study, a test, a prototype, a client conversation and have it fuel the next improvement, however large or small, to allow you to move closer to success. “Failure” is what happens when the water cooler talk echoes with, “That doesn’t work, so we killed it.” A culture of “failure” has gum in its gears.

You must pursue three stages to finding your digital leverage: Step one: Identify the sources of revenue from new clients or relationship expansion (see above point on speed) and the drivers to win this business. Step two: Define the profit model. Step three: Go for scale. I worked under a CEO who set up this one-sentence approach during our early days of digital transformation: “Find the unit profit model and then see if you can scale it.”

You need to collaborate. Some people are wired to collaborate. Others are expert at advancing their own goals through silos. Evidence of growth effectiveness: an environment where colleagues build on each other’s ideas with the goal of shared success. Make collaboration a hiring competency that is taken seriously. Make it an expectation and demonstrate through your own behavior what that means.

Finally, you must get out there and get your hands dirty. We all learn by doing. Fast and valuable knowledge exchange takes place when corporates and start-ups interact. Corporates will find the speed, iteration and absence of failure as a concept inspiring. Start-ups are always looking for mentors and advisers with financial, marketing and operating experience. This quid pro quo can be the basis for a mutually beneficial and mind-expanding relationship. Make the meeting ground any space that is not a corporate conference room.

This post is also published in Amy’s regular column on Huffington Post.