Voices: the CMB Blog

Healthcare in the US has been a hot media topic, and the Affordable Care Act’s next key provision that goes into effect on October 1 will bring about profound change in the health insurance industry. Consumers looking to buy individual health insurance will be able to enroll in subsidized plans offered through state-based exchanges with coverage beginning in January 2014.Regardless of the politics and adoption hurdles surrounding the subject, it’s crystal clear that health insurers will need to change the way they approach the market in the coming years. Challenging as it may be, this change represents opportunity as well. Not only will this regulation open up channels to sell direct to new customer segments that have previously been underserved or never served, but the shift to a more retail-oriented business model will push customer-centricity to the forefront of health insurers’ strategy.

So, what does customer centricity actually mean for insurers? It’s not something I have hard and fast answers to yet, but we’re collaborating with our clients to help define a path forward. Here are my top-level thoughts on some of the myths that need to be put to rest in order to build a successful customer strategy in the space:

MYTH: The consumer matters more than the ecosystem.
FACT: Up to now, consumers have generally been “extended stakeholders” in the health insurance ecosystem, and they are definitely an audience that insurers should be learning about and listening to more given the change on the horizon. However, serving the consumer well means also understanding how other players—employers, brokers and providers—are preparing for change. Be careful not to develop blind spots toward traditional stakeholders.

MYTH: If you build technology, the customers will come.
FACT: No doubt today’s consumers are open to social tools, apps and other tech solutions that will help them learn about and interact with companies. But in order for a new technology to really matter to consumers, it has to solve a pain point.  Without a deep understanding of what customers need, and a willingness to address root-level issues (such as consumer trust), a new technology is just a shiny object.

MYTH: You’ve got the right data…and it’s Big.
FACT: Insurers have a lot of data. But it’s primarily based on claims and transactional data, with very little gleaned directly from healthcare consumers themselves about wants, needs, and interaction pain points. The industry’s legacy of being claim-oriented continues to drive consumer dissatisfaction and distrust, so it’s not the ideal source for data that will build customer intimacy.

What other myths need to be busted in order for insurers to be truly customer centric? We’d love to hear from you and promise to share our thinking as it evolves.

Jennifer is a Director at  South Street Strategy Group. She recently received the 2013 “Member of the Year” award by the Association for Strategic Planning (ASP), the preeminent professional association for those engaged in strategic thinking, planning and action.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies. 

At any point in the innovation process, businesses can come across new information, trends or practical issues that challenge thinking about what the end result of an innovation should look like. Maybe a new technology can’t scale or the application doesn’t have a big enough market. Or perhaps competitive analysis reveals that a new service or business model isn’t as unique as once thought. There are examples that many of us could on draw from our own experiences. Challenges like these can be frustrating and force businesses to think differently—creatively—about how to move forward. They actually provide the constraints within which an innovation project must operate.

At the FEI conference in Boston, there was a lot of talk about the role of constraints in creativity. Pasquale Cetera, VP of Portfolio Management and Strategy at Merck, brought this into focus during his presentation on R&D decision-making. Pharma is clearly a very developed industry, and this is a key challenge in innovation. The low-hanging fruit has already been developed and is on the market, so to bring new products to market requires more time and investment than ever before. This, along with the fact that regulations are ever-more stringent, means that the average length of drug development is rising, and pharma companies find themselves under pressure to focus and improve success rates at each stage of the development process.

It’s a big challenge with a significant bottom line attached to it. The necessity to maintain the business in spite of this has given rise to innovations that simply were not needed to make a profit until recently. Some of the innovations that Pasquale highlighted include:

• New lead optimization approaches in the Discovery stage, so that suboptimal leads are let go early-on

• Use of biomarkers to improve the probability of success in Phase 2 (Efficacy & Proof of Concept)

• Business model innovation: from fully integrated pharma companies (FIPCOS) to fully integrated pharma networks (FIPNETS)

• Collaboration with health payers to solve problems vs. traditional antagonistic relationships

Innovating within these kinds of big-picture constraints isn’t just a big-industry phenomenon. There are impressive innovations coming out of emerging markets, be it in the form of new agricultural models that support small farmers, mobile computing in Africa, or new type of distribution system for a CPG in India—as a few examples.

So, the next time you come across a challenge that alters the reality of your business, I encourage you to approach it not as a threat, but as an opportunity to differentiate and push innovation farther than it would have gone otherwise.

Jennifer is a Director at  South Street Strategy Group. She recently received the 2013 “Member of the Year” award by the Association for Strategic Planning (ASP), the preeminent professional association for those engaged in strategic thinking, planning and action.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies. 

See how CMB and the South Street Strategy Group helped SunTrust use a customer-centric approach to inform brand strategy, improve marketing tactics, and drive organizational  transformation. Read the case study.

With ever more crowded industries, and customers’ ever-growing access to information that guides decision-making, if ever there was an era where the customer came first, this is it. Landing on a strategy that will delight current and prospective customers requires getting to know them both qualitatively and quantitatively. And herein lies the challenge. This kind of insight takes time and money and often gets pushed off or short-changed.

It’s true that data should not be the only driver of your strategy. Indeed, as Steve Lohr of the New York Times recently wrote: Listening to the data is important…but so is experience and intuition. After all, what is intuition at its best but large amounts of data of all kinds filtered through a human brain rather than a math model?

Taking these words to heart, strategy is both an art and a science. At some point, asking for the umpteenth model of sensitivity analysis simply isn’t productive to decision-making. On the flip side, building a strategy based on anecdotal evidence from the sales team (for example) will usually result in more pain than gain, financially and operationally.

Data will ground your thinking in facts. Intuition and experience will guide your thinking on why the facts are what they are and how to take action.

I often find that data is at its most valuable when used to:

• Prioritize. Having data around which questions or problems are most important to address and which opportunities are most attractive is imperative to prioritizing which paths or solutions a company chooses. Even one data point can have big impact: when one of our clients learned that 50% of its online directory was inaccurate in some way, the decision around which customer-facing channel to focus on first was easy to make.

• Challenge assumptions. Without an outside-in approach, companies are making big bets on assumptions about the market and their customers. An insurance company I once worked with wanted to extend their brand into what seemed to be an adjacent product space from their point of view. However, customer research revealed that customers actually didn’t trust that company—or any insurance company—to manage this new line of business well.

• Shore up confidence. Whether launching a new product or service, redesigning a brand or moving into an adjacent market, a new strategy needs to be sold up the executive chain. Data, from the mouth of the customer, not only reduces risk in decision-making but helps sell the decision internally. Bringing the outside in changes people’s minds.

How well do you apply the science of data to the art of strategy?

Jennifer von Briesen is a Director at  South Street Strategy Group.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies.

See how CMB and the South Street Strategy Group helped SunTrust use a customer-centric approach to inform brand strategy, improve marketing tactics, and drive organizational  transformation. Read the case study.