Smarter Patient - Lower Cost

A smarter consumer makes better choices, which leads to lower cost. My mom being a nurse knew when to asks questions and when to probe for other solutions. She didn't have all the knowledge but she knew enough and knew what to expect.

In health care the power has been with the physician. The patient didn't question the recommendations. In comparison, we do not unquestioningly accept a mechanics recommendation. By questioning the mechanic a solution that matches your value of quality and cost is found.

The improvement for health care is to give the patient information on a procedure before they enter the doctor's office. The information is the expected process and the three questions the patient needs to have answered before leaving. This bit of knowledge gives the patient leverage to ask questions. For instance, if the patient sees that some steps are not being performed the patient will ask. The step may have been overlooked or due to other factors was removed. The value is a check and balance. As well, the questioning can lead to a different solution that leads to better health and lower costs.

Restaurant Idea

This idea is based on my experience at Golf Club of Tennessee. At the club, the employees know my name and greet me by it. It makes me feel welcome and want to be at the club. The secret is that they post pictures and bio information of the members who will be there that day in the employee areas.

The application is for restaurants such as Brick Tops that have regular visitors to capture information on their guests. For example, Jim Beckner walks in with two investors from NY. Everyone greets Mr Beckner by name and takes the three to his favorite seat and his favorite waitress. Jim feels good and his guests are impressed.

Capturing the information can be a designed process for the host and waiters. Key is a picture of the guest. From the picture, the waiters and waitresses can then quickly recognize the guest.

Building Reader Base

This is an excerpt from an email I sent a friend about building his blog's reader base.

"My thinking revolves around creating connections. You write because you have thoughts and ideas to express. Readers read because they connect and feel a part of something. For instance, I read it because I am your friend.

Two thoughts on how to build the connection are to reply to the feedback that is posted on the blog entries and to build blog entries based on the feedback. I think the second can be more powerful because you will start out with, 'John put some thoughts in my head when he left a reply on one of my entries.' John feels good because you are using his entry. As well, the other readers note that you read the feedback and mull them over."

External Resources in place of PMO's

I like Navi Radjou's blog on using internal and external IT solutions.
http://discussionleader.hbsp.com/radjou/2008/10/5-reasons-indias-largest-bank-is-thriving.html

He points out the value of the P&G program that builds innovative communities. The communities are leveraged to put products together. The benefit is not having to support a large R&D group that may or may not produce. As well, it can replace the PMO, whose job it is to dole out resources to internal projects. Key to success, as Navi points out, is not protecting the ideas, but rather is fast implementation. It is the producing the solution that has value to the company and customer versus protecting the solution through internal knowledge and patents.

Redefine Music Delivery

A well established friend in the music industry made the point that iTunes has killed the album. While I think that the real problem with music industry is its inability to change to meet the consumer, the point did make me think of a better solution.

The believed product is the music. I say it is the connection to the artist. A solution to the change in the music industry is to release the twelve songs for free. Each month give away one of the songs. This will give free publicity each month, since we only pay attention to an artist when the album is released. When coordinated with a concert tour, the songs advertise the tour. The revenue stream will be the concerts and all of the ancillary items that are sold. The fans buy these items to connect with artist, which is the ultimate product.

PMO's Incentive

Susan Cramm on her blog wrote the ways to reduce IT costs. Her points revolve around better control of internal developers.
IT Blog Entry on Reducing IT Costs

Her entry's solutions do not hit the core problem that an internal developer's incentives are not in line with the requestor's goal. The goal of the developer is to hit the deadline 100% of the time without doing overtime. There is no upside for him/her to work extra hard. Another way to look at it, the developers only hear from the reqeustor when the application is broken or off schedule. This leaves the developer in the position of fudging on the plans, i.e. stating the work at 800 hours rather than 400.

A better solution is to remove the internal developers and have the requestor employ an outsource service. The requestor knows the value of the project in terms of either costs saved or increased revenue. Based on this value, he/she can negotiate in a competitive market of outsourced IT services for a price that gives a desired return. In this way, both parties have an upside and a downside. As well, their incentives are more closely aligned.

Cash Leading to Lack of Operational Efficiencies

Cash can hide the failings of poorly run companies. Since the goal is to make money, everyone is happy as long as the cash is rolling in. It acts as an aphrodisiac. Leaders and investors do not ask if performance could be better.

A prime example is Emdeon, i.e. WebMD. Finance leaders sold Wall Street on the ideals of synergies. Unfortunately, cash blinded everyone and operational efficiencies were never achieved.

In the capitalistic system, competitors improve their positions and ultimately overtake the poorly run company. The downside is the displaced employees of the poorly run company.

The solution is well defined performance measures and cutting underperforming products and services.

Costs beyond Indian Labor

There is a cost that is unvalued in utilizing Indian labor. The direct labor cost is easily determined and compared to other values. On top of this labor cost is time spent in completely defining a project, additional time due to miscommunications, and effort in managing the project from such distant separation.

While it is easy to demonstrate the difference between Chinese labor and American labor cost, other factors need to be valued. For instance, Callaway Golf has kept its manufacturing in the US, so that it is closer to its customer. By doing so, the company can respond more quickly to demand.

Train for the Performance Desired

BMW's and Mercedes are bought more often in the US than Maserati's. It is because Germans create great engineers. We look to Italy for style and not a well engineered engine. In Italy, students are trained to appreciate design and the culture rewards it. In Germany, order and engineering ideals are cultural standards, which are part of the schooling.

If America is to maintain its position, then it needs to design its schooling around the factors that will take it there. For instance, if America intends to be in manufacturing then it needs to train its people to think in terms of the Toyota Production System ideals.

Why Toyota's System Will Never Work in the US

One of the tenets of the Toyota Production System, the system that is beating Ford and GM, is simplification. Unfortunately, this ideal is not trained in the United States. Our schools teach how to handle ever increasing complexity. Therefore, employees believe that dealing with complexity adds value to their position. For example, a boss comes to an employee with a new daily task. The employee gladly accepts the challenge. The employee is meeting his training he has received his whole life. He believes that he is matching expectations and adding value to the company. As well, this complexity means job security. Whether intended or not, the employee is making it harder to be replaced.

Oddly, franchises design the operations so that they can hire anyone and train them quickly. This entails simplicity. Simplicity is built into the system.

Ultimately, employees will need to be praised and rewarded for taking out unnecessary steps and for removing actions that do not lead to positive financial results.

Short-Term Results

Why do companies bow to the Wall Street analyst? The knee-jerk reaction to a quarter that falls short of expectations is a hiring freeze. Obviously, this helps the short-term net income and appeases the analyst who determines the stock price. Unfortunately, it hinders the five year or ten year initiatives. The example is a hiring manager who needs two employees to implement the initiatives his boss is pushing. Those initiatives will be effectively a year later if they are performed at all.

The real problem is new hires are not the cause of the bad quarter. The CEO should focus on the root of problem. For example, Starbucks stated that Frappuccinos' preparation time were the reason same-store sales did not meet expectations. Nonetheless, a hiring freeze is in place.

Performance

There is a general ideal that employees should not be judged based on performance. The ideal is people are generally going to do well and therefore should not be judged. Unfortunately, you would not buy a bad album of your favorite artist just because he/she is your favorite artist. You expect that the artist will perform. You like the individual but not what he/she has produced, i.e. a bad album.

The same is true of performance-based judgments. The employee is there to do a function that creates a return for the company. He/she is not there to simply fill a hole.

We should remember that our American ancestors immigrated so that their actions would be the basis and not their lineage and entitlement. Why should entitlement be a part of business? Leave entitlement to the French and their new graduates.