I was reading an interview with Donald Berwick in HealthLeaders Media earlier this week and something about the interview sounded vaguely familiar. The quote that caught my attention, in Donald Berwick On Better Care As A Route To Financial Success:
If you look at what…happens in hospitals, we have tremendous areas of overuse of procedures, technology, and tests that cannot help people. They are being done for historic reasons…We have a tremendous amount of paperwork and non-value added activity that staff are forced to engage in and that the patient pays the price for. We have continuing problems with coordination and continuing problems with safety….If we were able to address each of those [and] getting authentically focused on the needs of patients, costs would fall and not rise….I’ve often said we need to act not like we are hosts in our organizations, but like we are guests in people’s lives. That’s a shift of power. We are asking the people we serve more and more about how we are really doing, what they really need, what they want and what they don’t want and tuning in more to their real needs and desires instead of our habits
I started to think, where have I heard that before? Then it occurred to me that this notion of consumer sovereignty – the market philosophy that the desires and needs of consumers control the output of “producers.” The term is not new – it is attributed to William Harold Hutt in his 1936 book, Economists and the Public. But, in the current era, this concept is embodied by perpetual market disrupter, Amazon (see Strategy Lessons From Walmart Vs. Amazon):
Amazon practices consumer sovereignty, a policy which figures that the best profit will come from providing customers with the best products and best customer service at the lowest possible price. In short, Amazon aims to treat its customers like kings and queens. In fact, this was outlined in 2012 by Amazon CEO Jeff Bezos. Now known as the Amazon Doctrine, the company’s policy is admirable: Above all else, align with customers. Win when they win. Win only when they win (see The Ultimate Retail War: Who is Winning the Walmart vs. Amazon Battle?).
But recent criticism about the Amazon culture and management practices (see Inside Amazon: Wrestling Big Ideas in a Bruising Workplace) illustrates one of the practical realities of consumer sovereignty: the needs and wants of the consumer trumps all other stakeholders – suppliers, managers, and employees. And even if not embraced to the same extreme as Amazon embraces it, this is a big culture change in health and human services.
So how do health and human service organizations use “consumer sovereignty” to remake their services, “à la” the recommendation of Dr. Berwick? The first step is to understand who the consumers are. Then, how they use services and why. And, finally, to understand what they value and what they don’t (see How Consumerism Is Reshaping The Field & Sustainability With It and Seven Steps To Delivering ‘Breakthrough’ Consumer Experiences). Dr. Berwick pointed out the big shift in focus:
My plea is to take the spotlight off finance and profit as the primary responsibility or activity of senior leaders because I believe we will never solve the problem of cost and finance by focusing on cost and finance. We’re going to have to solve that problem by focusing on the design and redesign of healthcare and the improvement of its quality.
But I like to point out that this isn’t a “soft” process about making consumers feel good. This is a metrics-intense operationally-driven continuous improvement process that substitutes consumer data for financial data as the driver of change. The consumer market research is meaningless without action – continually improving service and cutting costs based on consumer data. Managers need to use that data to change processes for a better consumer experience and to cut spending on anything the consumer doesn’t value. It is the ultimate change in focus for organizational leadership (see Going With The (Knowledge) Flow: The Future Of Decision Making In Improving Outcomes (Executive Web Briefing Recording and Customer Service Is A Leadership Issue).
For more on making consumer sovereignty part of your organization’s management strategy, check out these resources from the OPEN MINDS Industry Library:
- The Amazon Leadership Principles & The Amazon Flywheel – What They Could Mean For Your Organization
- No Customers Without Customer Service
- CRM As Customer Service Strategy
- A Long (Long) Way to go in Customer Service
- Leadership + Culture + Service = Profits
As you think about how decisions are made and change happens in your organization, remember the admonition of former Dell chief information officer, Jerry Gregoire – “The customer experience is the next competitive battleground.”