Yesterday we wrapped this year’s OPEN MINDS Strategy & Innovation Institute. We opened the institute with a look at where the specialty provider organizations are with adopting innovative practices (see The Most Common Program Innovations Among Specialty Provider Organizations), and we closed with my keynote (see What Does It Take To Outlast The Disruptors? Building a New Strategy For A New Market) with a focus on the competitive forces that are (rapidly) bringing those innovations to the complex consumer space—What Should Keep You Up At Night?.
The question for most executive teams in the field is how best to adjust their strategy to the many disruptive innovations that are reshaping the relationship with (and expectations of) customers. To answer that question, I looked at the retail sector where Amazon and Walmart reign (FYI, both are entering the health care space).
What did the “survivors” do to reposition in the face of extreme competition shaped by low cost and customer convenience? The retail organizations that have thrived in the face of these disruptive forces did so by reframing their market positioning around “value” to customers—and using data to monitor customer experience and adjust service offerings accordingly. It’s all about developing a strategy that builds on a defendable and sustainable market niche.
To develop that strategy, it is important to give some thought to how innovations are changing the health and human service landscape. I think the market effects will have the greatest influence on primary care (see The Primary Care Reinvention); on the delivery of professional “therapy” (see Digital Health Still ‘The Exception’ But Get Your Plan Ready); and on service packaging and reimbursement models. One or all these market effects are relevant to most organizations’ strategies—whether provider organization, care management organization, or health plan.
So how to approach the challenge? It all comes down to a more robust approach to strategic planning and plan execution. I think there are four key elements in “best practice” strategic response to these market disruptions:
Create a new strategic identity – and sell it! The key question—in five years, what service will your organization provide that will have market legs and generate a margin? That is the single most important question guiding strategy and investments. Once your organization identifies that new strategic vision, it’s important to sell it to staff and customers alike.
Treat your legacy as an asset and sell it! Portfolio management is a must. As markets change, the profitability and strategic importance of service lines changes with it. Decide what matters to your sustainable future market positioning (and mission) and divest of the rest. Use the proceeds (in terms of time, talent, and capital) to invest in the future.
Remember what “value” means! The future, and your future identity, will need built around “value.” That sounds simple, but clarity is needed. “Value” needs to be defined from the perspective of what customers want—payers and consumers in the case of most organizations. Also, one constant is that every customer wants a lower price if possible. The pursuit of scale and efficiency should be a constant.
Master the pivot from pilot to scale – promptly! There is competitive advantage in bringing next generation services to market without undue delay. Organizations need a structured and prompt process for evaluating possible innovations, testing new service offerings using structured proof of concept and beta testing, and moving from pilot to scale. This requires new approaches to service line evolution and an executive team capable of managing complexity.
The adoption of a wide range of innovations is on the upswing and the key for executive teams is to have a plan for how to respond as the market shifts. For more on identifying and responding to the disruptors in your market, check out these resources from the OPEN MINDS Circle Library:
- Can You Teach A Fish To Climb A Tree?
- David Versus Goliath?
- Innovation Isn’t Enough
- Don’t Let The Big Disruptors Out Of Your Sight
- What Does It Take To Outlast The Disruptors?
- The 5-4-6 Formula
- Who Do You Need To Lead An Agile Organization?
- Will Health Plan Backward Integration ‘Remake’ Specialty Care?
- From Pain Point To Revenue
- How Private Equity Investors Are Reshaping Non-Profit Strategy
For more on the incorporation of innovation into your organization’s strategy and operations, check out our discussions on innovation in the context of specialty provider organization management on Twitter @openmindscircle – #OMstrategy. And stay tuned in the coming weeks as we take a deep dive into all this year’s institute sessions.