How To Measure Success

By Simon Sinek

This journey I’m on is a deeply personal one. When I put words to this thing called the Why, it completely changed the direction of my life. Not a single thing I’m doing these days -- not the speaking, not the book, not even this column -- was a part of any plan. How could they be on a plan? I couldn’t even imagine them. With all that has happened in the past few years, someone asked me a question recently that really made me think: “How will you know when you’re successful?”

I know there’s a difference between being successful and feeling successful. And if you ask me if I feel successful, the honest answer is “not yet.” By most standard measurements, I am enjoying more success now than at any other time in my life, but I still don’t feel successful. This is what makes the question so fantastic. If the goal is to feel successful, what is the measurement we should use to achieve that feeling?

The most common standard measurement is money -- our bank accounts. That’s how so many people measure their success today, so perhaps it works?

I went to an event for high-performing entrepreneurs and the question was asked of the room, How many of you have achieved your financial goals?  Amazingly, 80% of the room raised their hand. Then the question was asked, “how many of you feel successful?” and 80% of the hands went down. This example alone shows that there is little to no connection between the standard measurement of success and the feeling of success.

I for one have never been motivated by the money.  Most years, if you were to ask me how much I make, the genuine answer is that I have no clue. I usually find out the answer to that question once a year, at tax time, when my accountant tells me. And if money were the only measurement, we’d all have a number in our minds that, if we reached it, we’d stop working. And most of us don’t. No matter how much I make, I don’t want to stop working. Money doesn’t help me answer that question.

Some would argue that you’re as successful as the company you keep. Certainly there is a connection between our friends and who we are. James Fowler talked about it a couple of years ago in a piece called “Do Your Friends Make You Fat?” But can we really measure our success based simply on the company we keep? For example, are Vincent Chase’s buddies in the HBO series Entourage successful because they hang out with someone rich and famous? Most of us would say no. Sometimes the opposite happens. Sometimes spending time with someone who is perceived as “successful” can make us feel less successful. The irony is that regardless of how successful we think someone is, we don’t actually know if they feel successful.

Over the past year, I’ve had the opportunity to spend time with people I never imagined even meeting. At two events this week, for example, I shared the stage with The Tipping Point author, Malcolm Gladwell, and David Bach, author of The Automatic Millionaire, respectively. It was so exciting to spend time with them and it was fantastic to get to soak up some of their genius. I cannot dispute that having the opportunity to work with them certainly is an indicator that things are moving in the right direction, but it didn’t make me feel successful. For me, the best thing about spending time with people I admire is the opportunity to ask them questions and learn from them. Though spending time with them doesn’t make me feel successful, their ideas and their thinking absolutely contribute to making my own work better, which, of course, helps me advance. But it doesn’t yet answer the question.

My friend Georgia Hurd is not famous. She’s not rich. And she’s not yet attained the success she desires. She moved to Los Angeles to become an actress and has been working really hard to achieve her dream. She has been through some hard times. Money has been tight. Her work schedule often hurts her social life. But she perseveres. Her work ethic and her drive are amazing. She is so focused on where she wants to go. It is inspiring. After a couple of years of pushing and lots of wondering if it would ever happen, she’s starting to get some momentum. This week alone, she was called in to do a modeling job for American Apparel, she had some fantastic auditions and people are starting to take notice of her. What Georgia has found is momentum. It is that momentum that makes her feel good. It is the momentum that makes her feel successful.

This is my measurement: momentum. That’s what I want to track and measure. Money and the people I meet are stepping stones, indicators that momentum is building -- but it is the momentum that makes me feel good.

Studies show that over 90% of Americans don’t feel fulfilled by their work. Think about that. The vast majority of Americans go home at the end of the day without the feeling of success. I imagine a world in which that statistic is reversed. That most people go to work every day to a job they love and go home at the end of the day feeling fulfilled. That’s the world I’m working to build. My contribution is to share a message that can help make that dream a reality. But only when others join me in this cause; to help spread the message; to build the companies that people love to work for; and to choose jobs based on how the job makes them feel, not simply how much it pays, will this dream become a reality.

I know momentum is building. That, more than any other measurement, makes me feel successful. So what of the original question, “How will you know when you’re successful?” The answer:  When I reach a level of momentum when the movement can advance without me -- then I will feel successful.

Where Do Ideas Come From?

I thought today's Seth Godin blog was worth re-posting.  If you're not currently subscribing to his feed or following him on Twitter, you're missing out.  Catch him at @thisissethsblog and/or at http://sethgodin.typepad.com.

Just a reminder, to follow and learn from blogs, my recommendation is set up your Google Reader and subscribe to as many as you can handle.  Then set up iGoogle as your desktop where you can plug in the Reader, your blog, and other things like ESPN.com.  You choose.  What I like about the reader is I can research hundreds of articles at a glance, yet read only what applies to my interests - all without cluttering my inbox.

Where do ideas come from?

1. Ideas don't come from watching television

2. Ideas sometimes come from listening to a lecture

3. Ideas often come while reading a book

4. Good ideas come from bad ideas, but only if there are enough of them

5. Ideas hate conference rooms, particularly conference rooms where there is a history of criticism, personal attacks or boredom

6. Ideas occur when dissimilar universes collide

7. Ideas often strive to meet expectations. If people expect them to appear, they do

8. Ideas fear experts, but they adore beginner's mind. A little awareness is a good thing

9. Ideas come in spurts, until you get frightened. Willie Nelson wrote three of his biggest hits in one week

10. Ideas come from trouble

11. Ideas come from our ego, and they do their best when they're generous and selfless

12. Ideas come from nature

13. Sometimes ideas come from fear (usually in movies) but often they come from confidence

14. Useful ideas come from being awake, alert enough to actually notice


15. Though sometimes ideas sneak in when we're asleep and too numb to be afraid

16. Ideas come out of the corner of the eye, or in the shower, when we're not trying

17. Mediocre ideas enjoy copying what happens to be working right this minute

18. Bigger ideas leapfrog the mediocre ones

19. Ideas don't need a passport, and often cross borders (of all kinds) with impunity

20. An idea must come from somewhere, because if it merely stays where it is and doesn't join us here, it's hidden. And hidden ideas don't ship, have no influence, no intersection with the market. They die, alone.

A Thought

Life is not a journey to the grave with intentions of arriving safely in a pretty well-preserved body, but rather to skid in broadside, thoroughly used up, totally worn out and loudly proclaiming ... WOW! What a ride!

Serving the Customer in Every Patient

By Gregory VandenBosch, President & Co-founder, MedDirect

There is a fundamental change occurring within the healthcare industry that is rapidly shifting more of the financial responsibility for medical services to patients. In fact, patients’ payment responsibility has grown by 300 percent in the last five years and most providers are only just beginning to experience the impact that this shift has on their finances and operations. As consumer-driven products (HSAs, HRAs and other plans with high deductibles and high levels of co-insurance) and other retail health initiatives continue to gain traction, some experts project patient payments as a percent of a provider’s total revenue will increase to approximately 40 percent by 2012.

This change presents a major challenge to providers because compared with health plan payments that generally arrive quickly and reliably, payments from patients require more work and often necessitate specialized software and staff.  Unfortunately, most healthcare organizations to date haven’t developed the adequate business-to-consumer tools and processes required to manage a large number of highly diverse patient payers and have failed to address the fundamental reasons why patients don’t pay – poor communication and education, confusing invoices/data and limited payment options.

It may sound a bit odd to talk about managing your patient’s “experience” when you're attempting to collect a debt, but in fact, that’s just what one must do. A lot of companies have said that it can cost five times more to acquire new customers than the cost of retaining current customers. In fact, many healthcare organizations now consider the lifetime value of their patient base as a primary financial lever in capital transactions and debt ratings. So, even when collecting a debt, it’s important to make every effort to avoid losing a good patient.

This makes loyalty a key focus, particularly in a mature industry such as healthcare. In healthcare, a zero sum game is in effect. It’s not just that you lose a patient – it’s that your competitor gains one of your former patients. In this case, patient loyalty becomes an even more critical component of your long-term profitability picture.

The right solution must bridge the gap between the need for patient payments and delivering a good patient experience. This raises the question: What communication and contact strategies can you employ to consistently deliver a positive experience without compromising your collections performance? In fact, these two elements are not mutually exclusive.

COMMUNICATION STRATEGIES TO IMPROVE THE PATIENT EXPERIENCE

Traditional methods of communication, such as contact center agents and direct mail, play an important role in customer communication, but they are not capable of shouldering all your communications. With more than 90 percent of the U.S. population communicating via mobile phones and text messaging, healthcare providers need to adopt a communications strategy that makes use of all technology channels.

For example, automated communication through voice, email and text not only compliments your existing resources, making them more efficient and profitable, but also provides you with a more cost effective way to engage your patients and solve several business problems, many of which you may not realize exist. Such solutions also enable you to tailor each message to a particular demographic segment, even down to the level of an individual patients’ preferences.

                 

WHY USE AUTOMATED PATIENT COMMUNICATIONS?

When we discuss using automated outbound calling solutions, one of the most frequently asked questions we hear sounds something like this: “C’mon, people don’t really listen to those automated calls, they just hang up, right? Why would my patients want to listen to a robot voice– it’s tough enough getting them to listen to our agents?” Of course, if the answer to that question were “Yep. They hang up,” then we wouldn’t have the success we’ve been having.

Using this approach, companies can routinely achieve results far above the numbers achievable when using agents to manually call patients. Why? In our deployments, we have uncovered three main factors:

• First, when dealing with a live agent, patients will sometimes make promises to pay just to be done with an awkward conversation.

• Second, an agent could be aggressive in getting a promise over ending the call without a commitment from the patient. Automated communications does not ‘push’ promises to pay, but offers patients the option professionally and courteously at exactly the right time, as defined by best practices and business rules.

• Third, patients are less likely to lie to an automated call.

        

We have even heard that patients might prefer automated communications, for many of the reasons above. According to a study commissioned by Varolii, Inc. last year, 77 percent of consumers would welcome a personalized call in the form of an automated phone call or message. 

Interactive communications are always consistent, professional, easy to listen to and never have a “bad day”.  They perform exactly as designed, each and every time. The benefit is clear. Each time the system communicates with your patient, it is as though they were speaking with one of your best patient representatives.

THE BOTTOM LINE

Working effectively with patients who owe you money is a tricky proposition. But, it’s more important than ever to enhance your communications efforts to retain your patients.  It’s critical to success that healthcare providers deliver the right message, in the right tone of voice, saying the right things, at the right time, to the right patient. Using automated communications in your contact center will allow you to reach more customers and, in an affordable way.

What Design Can't Do

by Christopher Simmons

September 01, 2010

Years ago, inspired by something I heard Terry Irwin describe, I created a diagram to explain to clients just where design fits into their business plan. It was as much about managing expectations as it was about selling the value of design. This is how it works:

At the center of any organization is its leadership—an individual or small group of partners on whose vision the organization is founded. The leader is the heart. The core.

Next are the people—the managers, directors, employees, members, volunteers, etc., who believe in the leader’s vision. They contribute their own qualifications, expertise and perspectives to the organization, but most importantly they participate in a shared purpose.

After that is the product. The product is the thing that the people make. They make it well when they share a common purpose. They share a common purpose when the leadership unites them around a compelling vision.

The product (which can also be a service) must be supported by a strategy. The strategy is the plan that will help deliver the product to the right people in the right way.

Finally, there is design. Design is the language that supports the strategy that promotes the product, which is imagined by people that believe in the vision.

If you want to be a brand, I tell clients, you must work from the inside out. A great logo isn’t going to make a shitty product any less shitty, any more than a hard worker is going to make a bad boss a compelling leader. In this model, the inner layers affect the outer ones, not the other way around (with the possible exception that a well-articulated brand can help employees feel pride in their organization which can, for a time, boost morale).

Critics will say that this is an outmoded view of design—one that relegates the designer to the role of a stylist who merely dresses up an idea after all the hard decisions have been made. They will argue that design—particularly “design thinking”—should permeate all levels of an organization, that designers should have a seat at the table. That’s true. And it’s false.

It’s true because a design methodology can be useful in identifying need, discovering opportunity, developing insight and driving innovation. It’s false because the elements that drive the success of an organization are two layers deeper than most designers are equipped to go. Generally speaking, we don’t have the skills to train bosses to be leaders. Generally speaking, we don’t have the skills to truly, fundamentally inspire a workforce or volunteer base. That’s the leader’s job. To make it ours is both presumptuous and undermining. The designer who wants a seat at the table must first acknowledge who put the table there in the first place. And who built the room it’s in.

This doesn’t mean that designers are simply form-givers, and it doesn’t preclude us from developing deeper engagements with our clients. Companies and organizations routinely and necessarily rely on design to capture and attract people to the truth of who they are. Graphic designers do this visually. Interaction designers do this by creating experiences. Architects do it with spaces. And so on. The accomplished designer, then, is expert at utilizing their skills to enroll others in a vision that radiates from the inside out. That inside out part is key. It’s a conclusion I came to based on observation and intuition, but which, it turns out, is supported by science. Simon Sinek’s recent TED talk is probably the clearest and most compelling explanation of the biology of why this is true, and Debbie Millman’s well-researched presentation “Why We Buy, Why We Brand,” also dovetails tightly with this concept. I recommend seeing them both.

What design can do:

The designer occupies a powerful space, mediating the interface between brands and the context in which they live.

Where this model is deceiving is that it suggests that design comes in at the end of the process. In fact, there is another ring beyond design where the consumer lives. There is a ring beyond that that represents the affiliations of that consumer, then a ring for society, then a ring for culture and so on. Design, then, is at the center of another process—that of mediator between consumer and product, between message and audience. It is a position of such profound influence and such limitless potential that I’ve never understood why so many designers seem so reluctant to fill it.

This article was originally published on Christopher Simmons’ blog for his class at the California College of the Arts.

Culture, Risk-Taking Key to Innovation

by Pamela Babcock


Many organizations are hardwired to reduce risks and quarantine failures, but culture, timing and the ability to stretch boundaries and take risks are key to innovation, experts said recently.

In an organization where the number-one priority is not to make a mistake, you’ll never have innovation, Ogilvy & Mather Worldwide Board Chair Shelly Lazarus told attendees June 23, 2010, at The New York Forum, a summit of business leaders and industry experts, held here.  “You have to create that environment where it’s safe to fail and where it’s okay to fail,” Lazarus said, adding that behind all great ideas, there’s an unreasonable person—someone to whom everyone says “sit down, we don’t need that.”  Innovation can bring everything from new services to new technology to new foodstuffs and new forms of social organization. During the session, panel members with a range of innovation experience shared insights into key characteristics of innovative organizations.  

Culture, Timing Are Key

When it comes to innovation, culture matters at all organizations, from startups to large companies. But changing culture is difficult and “really does require leadership,” noted Jonathan Miller, chairman and CEO of the digital media group and chief digital officer for News Corp. in New York.  Timing surrounding innovation is key, Miller said. “When you think about innovation, even if you have a sense of where to go, the timing and nuance is really important. You really have to be able to boil it down to specific products.”  Panel moderator Quentin Hardy, national editor for Forbes, noted that at a recent conference, Apple CEO Steve Jobs mentioned how it carefully timed the iPad launch. “They tested the learning with the iPhone, and the iPhone became an environment in which to test the iPad,” Hardy said.
Taking the “or” Path Social entrepreneur Daniel Lubetzky, CEO of Kind Snacks in New York, said the essence of innovation “is people who are introspective and question themselves and question their environment for assumptions that maybe should be challenged.”  Lubetzky likes to challenge the idea that you have to either pursue this path or that path, rather than both.  He said historically, companies assumed that you either pursued profit or good, but noted how his company’s PeaceWorks program “brings flavors together in conflict regions and uses this as a force for social change.” It offers a line of spreads produced in Israel with cooperation between Israelis, Arabs and other neighbors with hopes that personal contact between the groups will help shatter cultural stereotypes and help people live together peacefully.

Dispelling False Stereotypes
 
Tech entrepreneur and academic Vivek Wadhwa, a senior research associate with the Labor and Work/Life Program at Harvard Law School, said a common misperception is that “innovation is a young college dropout developing the next Google or a scientist sitting in a lab.”  Wadhwa, also an executive in residence and adjunct professor at Duke University, said attendees were “more typical of the entrepreneur than is Bill Gates or Steve Jobs or some college dropout” since most entrepreneurs come from the workforce. The average tech entrepreneur isn’t 19, but 30 years old; the average entrepreneurs in health foods and other high-growth industries are 40, Wadhwa added.  “Almost everybody in this room can innovate,” Wadhwa said. “There are plenty more innovators here in this room than you’ll find in any block of Silicon Valley.”
 

Power of Unreasonable People

 
Innovation requires not only unreasonable people, but also a culture of experimentation, Lazarus said.
“You’ve got to be brave enough to go out there with an idea and try it because you’re not going to know until you go out there into the marketplace,” Lazarus added.  When her company launched The Dove Campaign for Real Beauty that features size 12 women in their underwear, Lazarus said the Unilever marketing head in charge of the campaign received an e-mail from the head of Unilever in Japan that said, “I don’t think you understand. In Japan, we don’t like fat women.”  The marketing head stood up to the criticism, noting that the campaign was exciting, interesting and “the right thing to do,” Lazarus said.

Pairs, Wild Ideas and More
 
At ad agencies, people tend to work in pairs since the product typically involves art and words. And that’s a good thing, Lazarus said, since two people can stand up for each other’s ideas.  When you have two people working together, “one makes the other great … and I’ve found out a way to always keep them in pairs and to celebrate people who have wild ideas, even if they don’t go anywhere,” Lazarus said.  Lubetzky said when it comes to ideas, he likes to separate the brainstorming phase from the analysis phase since it’s really important “to not be saying why this will not work. Unless you’re getting these really crazy ideas, you’re actually not tapping the potential.”

Safety Net and Pulling the Plug
 
If you institutionalize innovation at your company, do you also have to institutionalize the hedge or your safety net when innovating?  Miller said it’s important to know that at any point in time, there are a couple of big mistakes “that if you make them you’re done, you’re out, and you have to know what those are.” But, he added, “You also have to know where your degrees of freedom are.”  Lazarus said it’s critical to be willing and quick to admit when you’re wrong and pull out. “The ability to pull the plug creates a much more innovative organization because it gives you courage. But most people are very reluctant to pull the plug on an idea they’ve fallen in love with,” she said.
 
Pamela Babcock is a freelance writer based in the New York City area.

Why Innovation Thrives at the Mayo Clinic

by Uri Neren

Start listening for guidance on innovation and you tend to hear a lot about Apple, Google, and other high-tech pioneers in Silicon Valley, Boston, or Seattle. You rarely hear about hospitals, especially those that operate closer to farm fields than oceans.

Yet in the extensive research my team has done to uncover the mystery of successful innovation, we've found few track records to rival that of The Mayo Clinic, in decidedly non-urban Rochester, Minnesota. The World Database of Innovation we are compiling, as a collaborative effort between my firm, Generate Companies, and several universities, represents over 20,000 hours of work to date. As well as over 200 in-depth case studies, it compiles the ideas of 4,500 or so innovation experts and consultancies.
Innovation is a multi-dimensional challenge; we have identified more than 105 areas in which it would be valuable to arrive at a definition of best practice. But one of the most fruitful areas has been "Conditions Needed for Innovation to Occur." As is the practice in each area of the database, we first pored over accounts of innovative environments (corporate, nonprofit, and public sector), many of them provided by our partners at some of the top innovation consultancies. Scanning for every mention of a workplace condition, we found 128 conditions we could put a distinct name to — and when we boiled the list down to common conditions, there were no less than 17. Our conclusion is not that all 17 are "must-haves", but that all should be considered by any large organization hoping to create a setting where innovation will flourish.

In the case of The Mayo Clinic, the right conditions were in place at the very beginning. While the word "innovation" has not always been attached to its work, the habit of developing better ways of treating patients and running its operations has been a signature trait since its founding in 1889 by brothers William and Charles Mayo. Three conditions in particular formed the climate that endures today:

Limited Resources. The hospital was born of tragedy, a result of a devastating tornado in 1883 that left much of Rochester in ruins. The town was only an outpost when Mayo began and today, as a world-renowned provider, it is still situated in the midst of cornfields in this town of 30,000. Interestingly, scarcity of resources shows up in our database as the single strongest driver of innovation in organizations in general.


Connectedness. The brothers established a place where teamwork was paramount yet where "cooperative individualism" would thrive. Early on they created an atmosphere open to new ideas and engaged in world travel to observe other physicians and spread the Mayo name. Mayo created the Surgeons Club in 1906 to allow doctors to watch surgical procedures in Rochester, anticipating by a hundred years the "open innovation" approach that has captured imaginations in the past decade. Today, Mayo's graduate school maintains the open door tradition.

Internally, Mayo has achieved a high level of connectedness among employees with systems and processes that enable — and oblige — everyone across the organization to find and connect with the expertise they need at any moment. Such systems are often associated with excellence in service and outcomes. Our research underscores that they also enhance innovation, by focusing attention, from multiple perspectives, on new problems and ideas.

Diversity. The brothers established and promoted the country's first real "group practice" concept where physicians in different disciplines would collaborate on the care of patients. The combined wisdom of practitioners, they believed, would result in better, more integrated care and better results. Their approach is sometimes called cross-functional teaming, and is now common in health care and corporate innovation practices. 

Just as important as these initial conditions was the Mayo brother's resolve to constantly re-invent their enterprise. They were dedicated to being the best in their field and, more importantly, to moving the entire field of medicine forward. Perhaps the best example was their decision to place doctors on salary, which would allow them to focus on health outcomes rather than volumes of health-related transactions, and give them the space for creativity, education, and research. This was a decision so controversial it nearly shattered the Mayo family, but one that helped to create one of the world's greatest medical centers.

More than a century old now, the Mayo Clinic enjoys brand recognition at nearly the level of The Coca-Cola Company. Its culture is known for collaboration, knowledge sharing, communication, and teamwork, and it takes pride in a legacy of important innovation. Many, many people have shared responsibility for building its practices and processes, but all had the advantage of the fertile conditions the Mayo brothers worked with at the start.

Higher Education Is Overrated; Skills Aren't

by Michael Schrage

With innovation, entrepreneurship and significantly smarter fiscal policies, America should eventually escape its "hireless recovery." But what won't hasten new hiring — and might even dampen job prospects — is the mythical belief that higher education invariably leads to higher employment and better jobs. It doesn't. Foolish New York Times stories notwithstanding, education is a misleading-to-malignant proxy for economic productivity or performance. Knowledge may be power, but "knowledge from college" is neither predictor nor guarantor of success. Growing numbers of informed observers increasingly describe a higher education "bubble" that makes a college and/or university education a subprime investment for too many attendees.

Are they right? I don't know. But painfully clear to many employers are serious gaps between elite educational credentials and actual individual competence. College transcripts spackled with As and Bs — particularly from liberal arts and humanities programs — reveal less about a candidate's capabilities than most serious employers need to know. Even top-tier MBA degrees often say more about the desire to have an important credential than about any greater capacity to be a good leader or manager. The curricular formalities of higher education — as opposed to its informal networks of friends and connections — may be less valuable now than they were a decade ago. In other words, alumni networks may be more economically valuable than whatever one studied in class. "Where you went" may prove professionally more helpful than "what you know." That certainly undermines "value of education" arguments. While higher education itself isn't marginal or unimportant, its actual market impact on employment prospects may be wildly misunderstood. In "Econ 101" terms for job-hunters: time spent cultivating your Facebook/Linked-In network(s) may be a better investment than taking that Finance elective.

Eduzealots have done a truly awful thing to serious human capital conversations and analyses around employment. By vociferously championing higher education as key to economic success, they've distorted important public policy debates about how and why people get hired and paid well. They've undermined useful arguments about "street smarts" versus "book smarts." Treating education as the best proxy for human capital is like using patents as your proxy for measuring innovation — its underlying logic shouldn't obscure the fact that you'll underweigh market leaders like WalMart, Google, Tata and Toyota. Dare I point out that Microsoft's Bill Gates, Dell's Michael Dell, Apple's Steve Jobs, Oracle's Larry Ellison and Facebook's Mark Zuckerberg are all college drop-outs? The point isn't to declare a college degree antithetical to launching a high-tech juggernaut but to observe that, perhaps, higher education isn't essential to effective entrepreneurship.

We have a huge branding issue. Pundits and policy-makers jabber about the need to educate people to compete in knowledge-intensive industries. But knowledge doesn't represent even half the intensity of this industrial challenge. What really matters are skills. The grievously undervalued human capital issue here isn't quality education in school but quality of skills in markets. Establishing correlations, let alone causality, between them is hard. (Michael Polanyi's classic "Personal Knowledge" brilliantly articulates this.) A computer science PhD doesn't make one a good programmer. There is a world of difference between getting an "A" in robotics class and winning a "bot" competition. MIT's motto isn't Mens et Manus (Latin for Mind and Hand) by accident. Great knowledge is not the same as great skill. Worse yet, decent knowledge doesn't guarantee even decent skills. Unfortunately, educrats and eduzealots behave as if college English degrees mean their recipients can write and that philosophy degrees mean their holders can rigorously think. That's not true. Feel free to comment below if you disagree....

As Atkinson's anecdotes affirm, there's no shortage of "well- educated" college graduates who can't write intelligible synopses or manage simple spreadsheets. I know doctoral candidates in statistics and operations research who find adapting their superb technical expertise to messy, real-world problem solving extraordinarily difficult. Their great knowledge doesn't confer great skill. Nevertheless, you would find their research and their resumes impressive. You should. But focusing on their formal educational accomplishments misrepresents their skill set outside the academy. Academic and classroom markets are profoundly different than business and workplace markets. Why should anyone be surprised that serious knowledge/skill gaps dominate those differences?

Higher education institutions do decently with knowledge transmission. Unfortunately, they do dismally transmitting skills. Pun intended, that's — apparently — not their job. That's also why "human capital" debates and investment policies going forward should weight skills over knowledge. When I look at who is getting hired, purported knowledge almost always matters less than demonstrable skills. The distinctions aren't subtle; they're immense. How do they manifest themselves? These hires don't have resumes highlighting educational pedigrees and accomplishments; their resumes emphasize their skill sets. Instead of listing aspirations and achievements, these resumes present portfolios around performance. They link to blogs, published articles, PowerPoint presentations, podcasts and webinars the candidates produced. The traditional two-page resume has been turned into a "personal productivity portal" that empowers prospective employers to quite literally interact with their candidate's work.

Unsurprisingly, this simultaneously complements and reinforces the employer-side due diligence that's emerged during this recession: firms have both the luxury and necessity to find the best possible candidates for open positions. Yes, they're looking for appropriate levels of educational accomplishment but, really, what they most want are people who have the skills they need. More importantly, they want to actually see those skills — be they written, computed, designed and/or presented. Professional services firms I know now don't hesitate to ask a serious candidate to demonstrate their sincerity and skills by asking them to show how they might "adapt" a presentation for one of the company's own clients. Verbal fluency and presence impresses headhunters and interviewers. But the ability to virtually demonstrate one's professional skills increasingly matters more.

This is part of the vast structural shift in the human capital marketplace worldwide. Firms have the ability and incentive to be far more selective in their hires. But project managers and professionals also have the bandwidth and desire to showcase their skills. The resume is rapidly mutating away from a documentary string of alphanumeric text into a multimedia platform that projects precisely the brand image and substance a job candidate seeks to convey. Did they teach you that in college or grad school? Of course not. Will you learn that by hanging around LinkedIn or Facebook? Probably not.

Is this how human capital markets will become more efficient and effective tomorrow? Absolutely. You've got to have skill to show off your knowledge.

Misfit Entrepreneurs

 by Dan Pallotta

Imagine Walt Disney at the age of nineteen. His uncle asks him what he plans to do with his life, and he pulls out a drawing of a mouse and says, "I think this has a lot of potential."

Or Springsteen. In a concert he once told the story of how he and his dad used to go at it — how his father hated his guitar. Late one night, Springsteen came home to find his father waiting up for him in the kitchen. His father asked him what he thought he was doing with himself. "And the worst part about it," Springsteen says, "was I never knew how to explain it to him." How does he tell his father, "I'm going to be Bruce Springsteen?"

Someone interviewed me a few months back for an entrepreneurship project, and he mentioned that in his conversations the thing that stood out most was the willingness of great entrepreneurs to be vulnerable. It's not the first association you'd make with an entrepreneur. Words like "driven," "ambitious," and "persistent" usually come to mind. But the moment he said it I knew he'd hit the nail on the head.
Vulnerability. It is the most poignant quality in every entrepreneur I know.

There's a misfit in each of us, and it's the most delicate, precious thing that we have. Sadly, most people make it their life's mission to hide it, to cover it over in the same clothes, the same work, the same "regurgitations," as Thomas Merton wrote, as everyone else. This virus of homogenization has infected the landscape. Our backdrop in real life now mimics the scenery repetition you'd see in a Fred Flintstone cartoon as he drove down the street. But now it's Home Depot-Walmart-McDonalds-Starbucks; Home Depot-Walmart-McDonalds-Starbucks; Home Depot-Walmart-McDonalds-Starbucks.

Ironic that all those enterprises were begun by entrepreneurs trying to do something different. And poignant that in the absence of Walt Disney himself, the Walt Disney Company just keeps building more Disneylands.

I used to visit the merry-go-round in Griffith Park in Los Angeles where Disney once took his daughters, asking himself, "Is this all there is? There has to be a better place to take my children." And the rest is history. The great entrepreneur — the entrepreneur who really changes things — is the one who, in 2010, goes to Disneyland and asks the same question: "Is this all there is?" And the new world she or he will create as a result of that audacious inquiry is one that cannot possibly be conceived by people busy trying to fit into the world as it is.

To question the hegemony of merry-go-rounds — to actually care that there should be something more magnificent than a merry-go-round — is to be a misfit. I mean, who worries about these things? It reminds me of that scene in Annie Hall where the mother of a young Woody Allen takes him to a shrink and he says to the therapist, "How can I relax when the universe is expanding?" And his mother says, "You live in Brooklyn! Brooklyn isn't expanding!" Talk about a misfit, right?

To embrace the misfit in oneself is to be vulnerable. It is to forsake the easy acceptance that comes with fitting in and to instead be fortified by a kind of love, really. A love of life, a love of wonder, and, ultimately, a sustaining love for oneself. Far from egoism, that love for oneself is a measure of one's love for others, for humanity. And it is only from love that great ideas can be born.

This kind of love cannot be taught in business school. It has to be felt. It has to be given sanctuary away from the noise and relentless assault of information. And then it has to be nurtured. It must be embraced, in the light of day, for all to see, for people to ridicule, to criticize, to laugh at. And the entrepreneur has to be willing to feel the pain of that ridicule and suffer the risk of the dream being stolen, or crushed by the meanness of this world. But the misfit doesn't worry about that. The misfit has a higher calling: to bring the unmanifest into being, no matter who is saying what.

Vulnerability is the absence of cynicism. And the absence of cynicism is love.
As that interviewer uttered the word "vulnerability," I thought of some of my entrepreneur friends: Peter Diamandis who founded X Prize, Wayne Elsey who founded Souls4Soles, Billy Shore who created Share Our Strength, Brian Menzies who founded 1-800-CharityCars, Dennis Whittle who created Global Giving, Torie Osborn, who brought the L.A. Gay & Lesbian Center into the twenty-first century.

And I realized that what separates them from others is their abject lack of cynicism.
Their willingness to be vulnerable. Their love.

What's Included?

Below is yesterday's blog entry from Seth Godin.  Think about your last visit to the doctor's office as you read it.  Were you treated like a valued patient or rushed through your appointment so the patient behind you could be seen?  The rise of the healthcare consumer will force most health providers to stop viewing patient encounters as a transactions and start seeing them as opportunities to create happy referrals.  Power to the people.       


What's Included?

This is the pricing question of our time.

First, from the buyer's point of view: when I buy this car/boiler/phone, how much are the services that come with it going to cost me every month, forever?
We stand at the Verizon store agonizing about the extra $34 in posted price for one phone over the other, then sign a contract for $2400 in fees.

We are attracted to a car with a rebate, not caring about the $2000 extra in lifetime gas costs.

More and more, the thing we buy isn't a thing, it's a subscription. The thing might as well be free.  And from the seller's point of view?

When you sell me that low-cost email service, did you also just get yourself on the hook for a lifetime of free support? What's that going to cost you?

When you take her reservation at your hotel, are you prepared to do all the work and attention you need to get a decent review on TripAdvisor? Ready for your CEO to take a call in the middle of the night, ready to comp meals, scramble teams of reps or engage in months of correspondence with that customer? Because that's all included in your marketing costs now, isn't it?

I recently hired someone to do some research and brainstorming. The first stage of what might become quite a bit of work. I was sort of amazed at the end of the short project... he asked me if I was happy with what I got, and I said, 'no.' He said, 'sorry' and walked away.

On one hand, this is dumb marketing, because he'd already done the hard work of establishing a customer, and wasn't particularly interested in turning that customer into a happy referral.

On the other hand, the old school decision to view a transaction as a transaction, time to move on to the next, is getting more and more rare. Perhaps it's an intentional act on his part, a way of doing business in the moment, without investing in or worrying about what comes as a result.

From Earthworms to Amazon: How Tony Hseih and Zappos Create a Culture of Happiness

By Gregory VandenBosch


In his new book Delivering Happiness, Tony Hseih outlines his journey to achieve professional happiness on an individual level as well as his model for "delivering" happiness to his employees, customers and vendor partners.  It's a funny, wry, honest autobiography of a striving Asian American who's got the drive and ambition of his family deeply ingrained, and at the same time the irreverence of a slacker who's looking to create a "vibe" that makes the people around him feel like they're part of something special. From a failed earthworm farming venture to a successful teenage button making business, the book is chocked full of stories that provide an entertaining glimpse into the mind of an entrepreneur in the making. 

After telling the story of LinkExchange, an internet advertising cooperative he co-founded in 1996 with two of his Harvard classmates, the book shifts gears.  It's the reality of a $265 million dollar LinkExhange sale to Microsoft that leaves Tony, now wealthy and free, looking for his next adventure and his earnest search for personal happiness.  His time with friends partying, buying up real estate, investing in start-ups all provided highs, but the adrenaline rushes were short lived.  Tony wasn't building something.  He wasn't living with a higher purpose.  Overtime he ended up finding himself more and more involved with Zappos, a tiny little startup that kept losing money and was in desperate need of more and more of Tony's personal funds.  While Tony writes about the countless challenges the company faced in its early years, the message is really focused on how to create a company with a culture that sustains happiness for both it's employees and the customers it serves.  Hsieh clearly defines the company's culture with 10 core values that underlie all interactions:

1. Deliver Wow Through Service
2. Embrace and Drive Change
3. Create Fun and a Little Weirdness
4. Be Adventurous, Creative and Open-Minded
5. Pursue Growth and Learning
6. Build Open and Honest Relationships with Communication
7. Build a Positive Team and Family Spirit
8. Do More with Less
9. Be Passionate and Determined
10. Be Humble

The culture at Zappos is preserved at all costs.  And, the thing that Zappos figured out, and continues to deliver on, is the idea that people who don't fit the company culture are better off being paid to leave.  "Everyone that's hired, it doesn't matter what position--you can be an accountant, lawyer, software developer--goes through the exact same training as our call center reps. It's a four-week training program and then they're actually on the phone for two weeks taking calls from customers. At the end of that first week of training we make an offer to the entire class that we'll pay you for the time you've already spent training plus a bonus of $2,000 to quit and leave the company right now."

Paying new employees to leave may seem odd, but for Tony, it makes simple sense. "Really, the goal of that originally was to weed out the people that are just there for a paycheck."

In the end, the culture is about more than money. "It's not me saying to our employees, this is where our culture is. It's more about giving employees permission and encouraging them to just be themselves.

The book goes on to colorfully describe the company's growing pains and mounting tensions in the board room.  Despite explosive growth, a number of board members viewed the company's culture as a pet project — “Tony’s social experiments,” they called it.  The board’s attitude was that his “social experiments” might make for good PR but that they didn’t move the overall business forward. "The board wanted me, or whoever was CEO, to spend less time on worrying about employee happiness and more time selling shoes".  In the end, Tony was pressured to sell Zappos.  Fortunately for all, their acquirer, Amazon, seems to value and share what Zappos values.

The book is titled Delivering Happiness and the subtitle is A Path to Profits, Passion and Purpose. Tony Hsieh says in the book that research found that the best companies in terms of long-term financial performance are ones that are able to combine profits, passion and purpose. "There's three types of happiness and really happiness is about being able to combine pleasure, passion, and purpose in one's personal life. I think it's helpful and useful to actually think about all three in terms of how you can make customers happier, employees happier, and ultimately, investors happier."  So, if you’re an entrepreneur, thinking of becoming an entrepreneur, or just curious as to what it really takes to build a successful team, this book is a must read.  Happy reading.

Delivering Happiness - Book Giveaway

by Gregory VandenBosch

I’ve followed Zappos and their CEO, Tony Hsieh’s blog for quite a while. Recently I read about his latest project, his new book, Delivering Happiness. While researching its release, I read about an opportunity for bloggers to receive an advance copy of his book to review and promote. I applied, was surprisingly approved, and recently read the book.  I’ll be posting my review next week when the book is officially released.  So, stay tuned.

In the meantime, I’m offering the readers of this blog an opportunity to win a copy of Tony's book. And, in keeping with Zappos’ refreshing commitment to deliver ‘WOW’ through service, I was given two extra copies for this purpose. I’ll ship your copy free of charge, with no shipping costs to you. So, two people will receive a free copy of the book next week. Cool, huh?

Here’s what you need to do:

1. Keep doing what you do and read this blog.
2. Write your comments to any of the new or previous posts. Post your comments between now and 12:00 AM on June 11th.
3. The top two people with the most comments on the site between now and 12:00 AM on June 11 will receive their free copy of the book.

12 Ways to Get Off Your Ass and Out of Your Comfort Zone

by Brett Miller


Want to be more creative? Take a step back and look at your daily routine.

If you are like most people you get up about the same time everyday, eat similar things for breakfast each day, take a familiar route to work, have a list of tasks to get done before lunch, eat lunch, get some more work done, head home the way you always do, have some dinner and do your normal evening activities before turning in for the night. Then you get up and do it all again. We are all creatures of habit. There is comfort in this predictability. This is all well and good if you are content with your level of thinking and creativity moving along at the same predictable pace.

If you want to elevate your creative thinking, you need to get off your ass and break out of that comfort zone. To get a new perspective on things you can’t just sit in your “ivory tower” and expect it to come to you in a flash of genius. You need to deliberately get out there and experience new things and meet new people.
Here are 12 routine-breaking things that will give you a new perspective and open your mind to new thinking (kind of a 12-Step Program for unleashing creativity):

1. Take a new form of transportation to work next week.

2. Get out of your normal work environment at least 4 hours each week.

3. Strike up a conversation with a complete stranger.

4. Take a “Radical Sabbatical” with your team and experience something you all have never done together before and share perspectives with each other afterward. This could be an hour, a day or a week together.

5. Set up a monthly lunch with someone outside your department or company and get his or her perspective on a problem you are trying to solve.

6. Ask your family (especially your kids if you have them) to help you solve a problem.

7. Read a magazine, book or blog that you would not normally read.

8. Watch television programs that you would not normally watch.

9. Listen to radio stations or music you would not normally listen to.

10. Take a walk in a park, go to a museum, a zoo or a movie during office hours. (Gasp!)

11. Go shopping (to an actual store, not on the Internet) for something you don’t need or even want. Talk to the salesperson and ask a lot of questions.

12. Eat only things you have never tried before for a week.

So, what are you waiting for? Get up, get out there and become more creative! What else would you add to the list?

Place Bets on Passionate People

by Tony Hsieh

Tony Hsieh is the CEO of Zappos.com, Inc. During the past 10 years, the company has grown from almost no sales to more than $1 billion in annual gross merchandise sales, driven primarily by repeat customers and word of mouth. Below is an excerpt from Tony's forthcoming book that describes the beginning of Zappos.

Nick [Zappos' original founder] summarized his entire pitch in three sentences: "Footwear is a $40 billion industry in the United States, of which catalog sales make up $2 billion. It is likely that e-commerce will continue to grow. And it is likely that people will continue to wear shoes in the foreseeable future."

A few weeks later, Nick contacted us and said that he wanted to set up a lunch meeting. He'd found someone named Fred who worked in the men's shoe department at Nordstrom and was interested in joining the company, but only if the company got funding beyond the small friends-and-family round that Nick had already raised. Nick also asked me what I thought of "Zapos" as the name of for the company, derived from zapatos, which was the Spanish word for "shoes." I told him that he should add another p to it so that people wouldn't mispronounce it and accidentally say ZAY-pos.

And thus, the name Zappos was born.

A few days later, Alfred [Zappos' current CFO and COO] and I met with Nick and Fred at Mel's, a 1950s-themed diner a block away from where we lived. As we talked about the potential of Zappos, I did my best to not let the fact that Fred was a spitting image of Nicolas Cage distract me from the business conversation. Fred was thirty-three years old, tall, and really did look like he could be Nicolas Cage's stunt double.

I ordered the turkey melt, with a side of chicken noodle soup to dip the sandwich in. Fred ordered a turkey burger. Exactly 10 years later, Fred and I would return to Mel's and order the same thing to celebrate our ten-year meeting-versary together.

Nick talked about the progress that the website had made over the past few weeks. They were already getting $2,000 worth of orders a week, and the numbers were growing. They weren't making any money, because anytime an order was placed, Nick would run to the local shoe store, buy the item, and then ship it out to the customer. Nick wanted to put up the website just to prove that people would actually be willing to buy shoes online.

There were literally thousands of different brands in the footwear industry. The real business idea was to eventually form partnerships with hundreds of brands, and have each of the brands provide Zappos with an inventory feed of what was in each of their warehouses. Zappos would take orders from customers on the Internet, then transmit the order to the manufacturer of each brand, which would then ship directly to the Zappos customer.

This was known as a "drop ship" relationship, and although it already existed in many other industries, drop shipping had never been done before in the footwear industry. Nick and Fred were betting that they would be able to convince the brands at the next shoe show to start drop shipping, and then Zappos would not have to own any inventory or worry about running a warehouse.

Fred told us that he'd climbed the corporate ladder at Nordstrom for eight years, just bought a house, and just had his first kid. He knew that joining Zappos would be a big risk, but he was ready to take a leap of faith if Venture Frogs would provide the seed funding for the company.

Alfred and I looked at each other. Nick and Fred were exactly the type of people we were looking to invest in. We didn't know if the shoe idea would work or not, but they were clearly passionate and willing to place big bets, so we were willing to bet on them too.

A week after our seed investment, Fred quit his job at Nordstrom. He was officially a Zappos employee now. He and Nick headed to the shoe show in Las Vegas the very next day.

The Key to Spotting Disruption Before It Happens

by Scott Anthony


The April 15 issue of The Economist published a simple chart that gave me chills. Look at it for a minute. What looks scary to you?

The chart displayed the number of pieces of mail sent by year over the last decade. When you look at the chart, the first thing you probably noticed was the precipitous decline in mail volume over the past few years. Indeed, mail volume has sagged 17 percent since 2006. Even though the postal service has furiously cut staff over that time period, it's still pleading with regulators to allow it to consider additional strategic responses to address the disruption clearly affecting its business.

That's not what scared me though. I found the years from 2000 to 2006 to be particularly frightening, when nothing much was happening in mail volume.

How could a relatively flat line be scary?

It just looked so eerily familiar. Go back and look at what happened to CD sales from 1996 to 2001. Or check out newspaper company revenues from 1996 to 2005. Or Kodak's film sales during the 1990s. Or Blockbuster's revenues in the early part of the 2000s. Or Digital Equipment Corporation's revenues in the 1980s. And on and on and on.

In the early days of transformation, market leaders tend not to feel deep pain. The transformation takes root away from the mainstream, or in a seemingly non-connected market. It's not yet good enough for mainstream markets. Or, the overall increase in consumption acts as a "rising tide" that lifts the boats in the mainstream market. This makes it easy for executives to say, "I get what you are talking about. But my business is healthy! It's all overblown."

It's only after the not-good-enough transformation gets better that a "Big Switch" begins. And when that magic tipping point hits, the switch accelerates rapidly.

The lesson for executives is that it's important to look beyond revenue or basic market share data to determine whether or not a would-be disruption is a legitimate threat. If the U.S. Postal Service had measured its market share of "pieces of communication" (which, it very well might have) it would have noticed sharp share declines even as its revenue was increasing. Similarly, while Digital Equipment Corp. might have felt great that its revenues went up from $3 billion to $11 billion during the 1980s, that growth paled in comparison to the explosive growth in the personal computer market.

Another Big Switch in the offing might be television viewership. I remember an executive from a leading cable broadcaster telling me a couple of years ago, "This YouTube thing is all hype. You add up all the hours ever spent on YouTube, and it's less aggregate time then one night of primetime."

That's correct, and while television ratings have declined over the past few years, they haven't fallen off a cliff. But I have observed my own family's habits shifting. We increasingly watch content on portable devices and our computers. For the most part, this viewing is additive, but you can see the Big Switch coming. I hope that cable executive is looking at share the right way, and responding accordingly.

Spotting transformation requires looking beyond the traditional boundaries of your business. Growing revenues can hide a looming threat that demands your immediate attention.

The Myth Of Consumer-Directed Healthcare

by Elizabeth Boehm


At the heart of every healthcare expenditure is a consumer. This consumer determines whether and where to seek diagnosis, undergo tests, and follow up on the advice and treatment suggestions of medical professionals. Thus consumers have an enormous influence over medical costs. This fact is not lost on health plans, technology vendors, or even policy makers, all of whom have been seeking to enable "consumerism" by giving consumers tools to take more control over their healthcare decisions. But somehow these tools — which include tax-advantaged health savings accounts (HSAs), personal health records (PHRs), and even health coaching and behavior change support programs — never seem to unleash the consumer-driven revolution that proponents promise. For example, Forrester's research shows a decline in consumer engagement in the "consumer-directed health plan" market, even as adoption of health savings accounts increases. And despite pushes by both Google and Microsoft, only about 3% of US online consumers report having an Internet-based PHR.

Why is this? Are consumers incapable of taking charge of their healthcare decisions? Are they still shackled to the legacy of the Marcus Welby-era passive patient paradigm? Not likely. Successful campaigns by patient groups to accelerate market availability of treatments in the AIDS market suggest that motivated and empowered healthcare consumers can and do exist. And they can move mountains.

The real damper on consumerism in healthcare is lack of information. This is the paradox of the healthcare information age — consumers have more access to more medical information than they have ever had before. More than many other industries, the Internet has democratized access to information about health trends, medical data, and information about traditional and alternative health resources. But consumers still lack the basic information they need to make informed health decisions.

Consumer-directed health depends on consumers making cost-benefit decisions and trade-offs regarding their healthcare consumption. That's a difficult proposition. First, determining the benefits of tests and treatments depends on many factors, including evidence of efficacy, consumer preference, and the level of invasiveness or side effects of the treatment. As much as we know about medicine today, what we don't know is at least as vast. Emerging science in genomics, proteomics, and even our basic understanding of disease mechanisms and their comorbid interactions means that clinical knowledge doubles roughly every 18 months.

Surely the benefit side of cost-benefit trade-off decisions are complex enough. The cost side should be easy. But costs are obfuscated by insurers who want to protect their proprietary negotiating tactics and providers who want to be able to make up insurance shortfalls with their cash-paying patients. Try calling up a radiology center to find out what an MRI will cost you versus an x-ray. Most can't tell you until after they've prepared your bill. Similarly with health insurers, ask for your portion of the cost of a course of treatment or piece of durable medical equipment and you'll likely get a series of ranges and contingencies in response.

If the US wants to get serious about consumer-directed healthcare, we have some changes to make:

1. We have to mandate that insurers and medical providers make their costs available to consumers. This isn't impossible. Pioneering efforts by Maine and New Hampshire have made comparative payment data available to consumers online.

2. We have to teach consumers about the consequences of their choices—and make those consequences immediate and personal. Choosing more expensive care has to cost consumers more—especially if its cost can't be justified by a measurable difference in quality.

3. We have to boost consumers' health and health-finance literacy—and hold stakeholders accountable for clear, plain language communication. Credit cards now have to clearly inform consumers of costs and charges, both short and long term. Health insurers should have to do the same.

Ultimately solving the US healthcare crisis is a complex and many-faceted problem. Consumerism can and should be a part of it.

The Intersection of Retail and Healthcare

by Michael Howe


Whatever comes of the reform efforts in Washington, D.C., the focus of the U.S. health care system has already shifted toward a patient-controlled (not just patient-centered) delivery system. WebMD, DestinationRx, and other online resources are creating informed, intelligent, and empowered consumers who are focused on prevention more so than treatment, and who want their providers' practices to reflect that shift.

Of course, people of different generations have vastly different needs, expectations, preferences, and influencers. Members of the Greatest Generation for instance, are focused on compliance, and they expect their health care system to be directive — "What do I need to do, which meds should I take, to get well?" By contrast, members of Generation X want education and would rather take health matters into their own hands — "Give me an otoscope, show me how to use it, and I'll monitor my child's ear infection."

It's not news that consumers are assuming greater control over their own health. But what may be novel to health care companies is their need to take the service principles from consumer-focused organizations — managing customers' expectations and experiences, for instance, and conducting consumer research — and apply them to their operations.

Some consumer companies such as CVS, Procter & Gamble, Cerner, Wal-Mart, and Walgreens are already influencing the way people make their health care decisions — that is, based on the quality of the experience and the providers' efforts to engage them meaningfully. P&G, for example, will begin providing health care services for the first time when it assumes ownership of MDVIP, a concierge network of 350 physicians. Meanwhile, when IT provider Cerner acquires IMC HealthCare, expected mid-year, it will become the operator of 23 workplace clinics for 15 different corporations.

Retail clinics like CVS MinuteClinic, the company I led from 2005 to 2008, are taking over many of the traditional tasks of the private physician's practice, and new technologies (like glucose monitors and other wireless monitors) are facilitating patient mobility and comfort, enabling continuity of care, but requiring far less direct interaction with physicians.

With the complexity of the U.S. health care system, even the most seasoned consumer-focused executives can have a hard time seeing these sorts of opportunities. When I first interviewed to lead CVS MinuteClinic in 2005, I was coming directly from a career in the consumer space with assignments at P&G and PepsiCo. And so while leading MinuteClinic, I applied the critical lessons I learned from my experiences in another service-oriented organization — Arby's. As CEO there, I led a brand turnaround where we focused on improving the quality of the food and customers' in-store experiences. I applied these same principles of "continuous improvement" and "customer engagement" at MinuteClinic, which in three years grew from 19 clinics in two states to 530 clinics in 27 states; and 81 employees to nearly 3,000. We used consumer research to determine people's expectations, and we built our unique delivery platform accordingly.

It all sounds logical, right? Megatrends demand this sort of change. But it's not necessarily an easy leap for health care providers (doctors, employers, and payers) and regulators to make. They don't quite get that patients are moving toward providers that can offer them higher quality of care, better customer service, and innovative ways to receive the health services they need.

Physicians have data in hand suggesting that the quality of their bedside manner is directly correlated to patient outcomes, but still they can't always wrap their heads around the importance of service principles. Payers don't grasp it either. One BC/BS group flat out refused to do business with MinuteClinic until we took unorthodox actions — we provided health care services to BC/BS subscribers at their normal copay levels, and we collected and sent 3,200 postcards from those consumers, proving the power and benefits of this sort of consumer-focused model. Within two weeks of receiving the postcard delivery, BC/BS asked us to become a network provider accepting the mandate of their membership.

Established health care leaders must look outside the industry to understand how to adapt to this new reality. Physicians will no longer be able to act as simple compliance officers — diagnosing diseases, assigning treatments and making sure patients stick to their regimens. Instead, they must become educators, coaches and advisers who cater their services to the unique circumstances and demands of individual patients.

Regulatory reform is also vital to rid the system of reimbursement incentives that prevent providers from using their teams most efficiently. To gain the greatest benefit from health care reform, leaders must eliminate other practices that thwart the delivery of "anytime, anywhere" service, such as the insurance limitations imposed by the individual states, state medical licensure practices, and HIPAA sensitivity around information sharing.

As more and more providers adapt their methods of delivering care to better reflect consumer values and expectations, it will result in the effective, convenient and affordable health care system that we all envision and hope will one day be reality.

A Brief History of Health Insurance and Perspectives on Recent Reform Attempts

By Gregory VandenBosch


Health reform is on the front of nearly every newspaper and the lead on most every newscast. But, based on their coverage so far, all I really know is that the Democrats in Congress are rejoicing and the Republicans are vowing to fight it. So, in an effort to better understand what’s going on today, I thought it would be helpful to get a better idea of what happened in the past. Here’s what I found:

Health insurance in the United States is a relatively new phenomenon. The first insurance plans began during the Civil War (1861-1865). The earliest ones only offered coverage against accidents related from travel by rail or steamboat. However, the plans did pave the way more comprehensive plans covering all illnesses and injuries.

The Massachusetts Health Insurance Company offered the first group health policy selling comprehensive benefits in 1847. In 1929, the first modern group health insurance plan was formed. A group of teachers in Dallas, Texas, contracted with Baylor Hospital for room, board, and medical services in exchange for a monthly fee. Several large life insurance companies entered the health insurance field in the 1930’s and 1940’s as the popularity of health insurance increased. In 1932 non-profit Blue Cross Blue Shield offered the first group health plans. Blue Cross Blue Shield plans were successful because they involved discounted contracts negotiated with doctors and hospitals. In return for promises of increased volume and prompt payment, providers gave discounts to the Blue Cross Blue Shield plans.

The Blues, in their early days, charged everyone the same premium, regardless of age, sex, or pre-existing conditions. This was partly because the Blues were quasi-philanthropic organizations and because the Blues were created by hospitals. Therefore, they were mainly interested in signing up potential hospital patients. They were sufficiently benevolent that when Harry Truman proposed a national health-care plan, opponents were able to defeat it by arguing that the nonprofit sector had the problem well in hand. However, as private insurers entered the market they reconfigured premiums by calculating relative risk, and some avoided the riskiest potential customers altogether.

Employee benefit plans proliferated in the 1940’s and 1950’s. Strong unions bargained for better benefit packages, including tax-free, employer-sponsored health insurance. Wartime (1939-1945) wage freezes imposed by the government actually accelerated the spread of group health care. Unable by law to attract workers by paying more, employers instead improved their benefit packages, adding health care.

Government programs to cover health care costs began to expand during the 1950s and 1960s. Disability benefits were included in social security coverage for the first time in 1954. When the government created Medicare and Medicaid programs in 1965, private sources still paid 75 percent of all of the health care costs.

As health-insurance costs rose during the 1970s and 1980s—driven both by improving medical technology and by the growing inefficiencies of the health-care system—health maintenance organizations, which had been around since the beginning, began to proliferate. Like the Blues, HMOs became victims of their own success. Initially they were mainly non-profit, but as the business opportunities grew, many for-profit HMO competitors were created and, eventually they displaced many of the nonprofit HMOs. (12 percent of the market was served by for-profits in 1981; by 1997 that figure was nearly 65 percent.)

Managed care kept cost increases in check for a while during the 1990s, but eventually costs started to rise again. Today most employers are reducing or, in some cases, eliminating health-care benefits for employees

Health care reform was a major concern of the Clinton administration; however, the 1993 Clinton health care plan, developed by a group headed by First Lady Hillary Clinton, was not enacted into law. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) made it easier for workers to keep health insurance coverage when they change jobs or lose a job, and also made use of national data standards for tracking, reporting and protecting personal health information.

During the 2004 presidential election, both the George W. Bush and John Kerry campaigns offered health care proposals. As president, Bush signed into law the Medicare Prescription Drug, Improvement, and Modernization Act, which included a prescription drug plan for elderly and disabled Americans.

In February 2009, President Barack Obama signed a re-authorization of the State Children's Health Insurance Program, which extended coverage to millions of additional children, and the American Recovery and Reinvestment Act which included funding for computerized medical records and preventive services.

On March 21, 2010, the U.S. House of Representatives passed the Senate version of its health care reform bill. On the 23rd, President Obama signed it into law.

Perspective on Recent Reform Attempts:

The Affordable Care Act—otherwise known as ObamaCare—isn't the first attempt to expand health insurance coverage in America. Before Washington passed the law, a number of states took smaller-scale attempts at the job - each of which proved far more expensive than planned.

As spectacular failures go, it's hard to do worse than Tennessee. This early state attempt to dramatically increase health coverage, dubbed TennCare, started off promisingly. In 1994, the first year of its operation, the system added half a million new individuals to its rolls. Premiums were cheap—just $2.74 per month for people right above the poverty line—and policy makers loved it. The Urban Institute, for example, gave it good marks for "improving coverage of the uninsurable or high-risk individuals with very limited access to private coverage." At its peak, the program covered 1.4 million individuals—nearly a quarter of the state's population and more than any other state's Medicaid program—leaving just 6 percent of the state's population uninsured. But those benefits came at a high price. By 2001, the system's costs were growing faster than the state budget. The drive to increase coverage had not been matched by the drive to control costs. Spending on drug coverage, in particular, had gone out of control: The state topped the nation in prescription drug use, and the program put no cap on how many prescription drugs a patient could receive. The result was that, by 2004, TennCare's drug benefits cost the state more than its entire higher education program. Meanwhile, in 1998, the program was opened to individuals at twice the poverty level, even if they had access to employer-provided insurance. In short, the program's costs were uncontrolled and unsustainable. By 2004, the budget had jumped from $2.6 billion to $6.9 billion, and it accounted for a quarter of the state's appropriations. A McKinsey report projected that the program's costs could hit $12.8 billion by 2008, consuming 36 percent of state appropriations and 91 percent of new state tax revenues. On the question of the system's fiscal sustainability, the report concluded that, even if a number of planned reforms were implemented, the program would simply "not be financially viable." Democratic Gov. Phil Bredesen declared the report "sobering," and, rather than allow the state to face bankruptcy, quickly scaled the state back to a traditional Medicaid model, dropping about 200,000 from the program in a period of about four months. Though the state still calls its Medicaid program TennCare, Bredesen's decision to scale back effectively shut the program down. In 2007, he told the journal Health Affairs, "The idea of TennCare, as it was implemented, failed."

Maine took a different route to expanding coverage, but it also resulted in failure. In 2003, the state started Dirigo Care, which, it was promised, would cover each and every one of the state's 128,000 uninsured by 2009. The program was given a one-time $53 million grant to get things started, but was intended to be eventually self-sustaining. It wasn't. In 2009, the year in which the program was to have successfully covered all of the uninsured, the uninsured rate still hovered around 10 percent—effectively unchanged from when the program began. Taxpayers and insurers, however, had picked up an additional $155 million in unexpected costs—all while the state was wading deeper into massive budget shortfalls and increased debt. The program has not been shut down, but because expected cost-savings did not materialize, it's been all but abandoned. As of September 2009, only 9,600 individuals remained covered through the plan.

Then there is the Massachusetts plan, the model for ObamaCare. The state's health care program has successfully expanded coverage to about 97 percent of the state's population, but the price tag may be more than the state can bear. When the program was signed into law, estimates indicated that the cost of its health insurance subsidies would be about $725 million per year. But by 2008, those projections had been revised. New estimates indicated that the plan was to cost $869 million in 2009 and $880 million in 2010. More recently, the governor's office announced a $294 million shortfall on health care funds, and state health insurance commissioners have warned that, on its current course, the program may be headed for bankruptcy. According to an analysis by the Rand Corporation, "in the absence of policy change, health care spending in Massachusetts is projected to nearly double to $123 billion in 2020, increasing 8 percent faster than the state’s gross domestic product (GDP)." The state's treasurer, a former Democrat who recently split with his party, says that the program has survived only because of federal assistance. Defenders of the program argue that it's not really a budget buster because the state's budget was already in trouble. But for those worried about ObamaCare's potential effects on the federal budget, that's hardly comforting. The Congressional Budget Office (CBO) has warned that, without significant change, the U.S. fiscal situation is "unsustainable," with publicly held debt likely to reach a potentially destabilizing 90 percent of GDP by 2020. The CBO scored ObamaCare as a net reduction in the deficit, but those projections are tremendously uncertain at best. As Alan Greenspan warned last month, if the CBO's estimates are wrong, the consequences could be "severe".