While the adage “The best defense is a good offense” is typically associated with military combat and sports (and is often attributed to Michael Jordan), it was first said by George Washington in 1799, “…offensive operations, often times, is the surest, if not the only means of defense.” In the midst of the current crisis, it may appear that defense is the best choice—hunkering down and waiting it out seems safe. But defense is not the only option. Crises often present opportunities but executive teams need to plan their offense. They need a plan for how to “grow” in the midst of turbulence.
A structured approach to growth in a time of crisis was the focus of The 2020 OPEN MINDS Strategy & Innovation Institute session, Proven Methodology For Identifying Strategic Opportunities: Cultivating, Negotiating & Decisionmaking. The presenter, Matthew M. Dorman, chief executive officer of Credible Behavioral Health, Inc. discussed his structured approach to evaluating growth choices by considering both the current and future customer base and service offerings. His three-step process—understand the market position of your current service line portfolio, set your growth targets and strategy, and use growth tools to make that strategy a reality.
Understanding market position
Traditionally, serving long-time customers with long-time products has been the “safe” thing to do for health and human service organizations. But maintaining status quo could sound the death knell in this highly disrupted market (see The Sound Of Closing Doors). At best, “you may be left behind” given the aggressive and growing competition in the market, Mr. Dorman warns.
It’s time to evaluate your TAM (the total demand for your product), SAM (the market based on your current business model in the context of geographic location, employee base, and internal infrastructure), and SOM (what you can do based on the practical limits of your current strategy and model).
And it’s time to take a hard look at your numbers—reimbursement rates, current market share and demand for your services, your organization’s capacity and cost to market and provide the services, and the return-on-investment (see Why Unit Costs Matter & What To Do About It).
Turning those numbers into key metrics that are tangible, understandable, and relevant is critical (see Maintaining Financial Strength Requires Knowing The Numbers). As Mr. Dorman emphasized, “Make sure you are graphing numbers that are relevant to your end goal—otherwise you will get lost in the data and you’ll burn a lot of time.”
Setting growth targets and strategy
With knowledge of the market and the position of the organization’s portfolio, executive teams can set growth targets and strategy.
A low risk option is to leverage current relationships to sell new products to old customers. That’s not without challenges, especially if the new products don’t fit into the long-standing brand your old audiences are familiar with. Selling new products to new customers is the most exciting strategy—but comes with the highest risk and lowest return. The optimal growth strategy is to leverage what you already do well with current products and expand it to new consumers.
Interestingly, we’re seeing these growth strategies in play right now. The pandemic crisis has pushed us over the tipping point in terms of telehealth and we know it’s here to stay. And that has two implications—telehealth could pave the way toward better outcomes from increased consumer and family engagement and convenience. On the flip side, it could help us define our niche for service delivery that demands an in-person or blended model for efficacy (see Telehealth—Not For Everyone and Fire Up Your Hybrid For The Recovery Race). The pandemic also underscores the urgent need for integrated care so we can deliver holistic care for vulnerable populations with co-occurring, complex, and chronic conditions (see The Pandemic Provides A New Urgency For The Integrated Care Issue).
And what about new markets? Will we see increased demand for services and increased spending (see Mental Health Spending Now & After The Pandemic)? Are there opportunities for more home-based services (see Moving Your Services To Where Your Consumers Live)? What does the rising rate of nursing home closures mean for home and community-based services (see As Nursing Home Closures Rise, Operators May Pivot To Home- and Community-Based Care)? Growth strategies that involve entering these new markets will require a keen eye on the landscape and moving in quickly where competitors fail or where gaps in care start to surface.
Making strategy a reality
But strategy alone isn’t enough. Making the growth strategy a reality is what matters—and leveraging tools to make that happen is key.
Being transparent about your growth strategy is critical to obtaining organizational and board buy-in and ensuring long-term success. To sell the broader team on any new strategic initiatives and prepare for smooth execution, executives must clearly explain the choice of the growth strategy, communicate the roles and expectations of each team member in the process, and be clear about deadlines and timelines.
Making strategy happen also requires negotiating—whether it’s negotiating the cost of services, the ability to add employees, expand internal capacity, or expand geographically through new locations and facilities. Executive teams must know what they are bringing to the table and figure out their breakeven point in terms of costs (see What To Say When You Want More and Negotiate Those Contracts). Mr. Dorman explained, “When you know your goals and your numbers, you also know your threshold for failure,” ultimately giving you more leverage in the negotiation process.
It’s important to realize there is more than one path to growth—and sometimes that path means being prepared to walk away for a new opportunity (see Are You Negotiating (Or Gambling) With Health Plans?). Mr. Dorman discussed, “We can get so focused on a particular outcome that we don’t realize when we try to go from A to B to C, there’s another path that gets us to that same outcome. The best alternative is always a solution that gets you to your end goal with as little sacrifice as possible—you have more power than you realize.”
A sustainable strategy doesn’t have to be all-or-nothing, there are many paths to growth—the key is to make sure it’s the right path for you.
For more on positioning your organization for success, check out these resources in The OPEN MINDS Industry Library:
- How To Develop A New Service Line: An OPEN MINDS Seminar On Building A Diversification Strategy & Conducting A Feasibility Analysis
- When Chased By A Bear In The Woods…
- Lessons For ‘Being Big’
- Managing The Cost Of Services—Matters Now More Than Ever
- What Gets Measured Is What Gets Done: Keys To Selecting Measures For Performance Management
- Diversification As A Financial Sustainability Strategy
And for more on planning your offensive growth strategy, join us on July 2 for the web briefing, Service Line Portfolio Management In Crisis Recovery Planning – Making The Tough Decisions, led by OPEN MINDS Senior Associate George Braunstein.