"When You Build a Service, You Can Touch Millions " as opposed to a product that typically reaches only one point over time, so says Reid Hoffman in the NY Times on Sunday, November 6th.
One type of service that touches millions, or hundreds of millions directly, predicts problems so that interventions are possible. Here are service-oriented companies in healthcare that interest me.
After all, we need to cut costs. One way of doing it is with technology that monitors and alerts when there is a problem. The good news - it does this well and cheaper than a clinician.
Cogito Health delivers "analytics that help people and organizations hear the biologically-based "honest" signals that underlie normal conversation. These "honest" signals can be used through speech behavior analysis to detect depression", facilitating intervention and referral ahead of a health event.
Asthma Signals provides "an early warning service, integrating location-based trigger data, reinforcing existing asthma care protocols, and using family-friendly text messaging and web-based alerts to avert pediatric asthma events." (Did you know that asthma is the #1 chronic disease in children in America?)
And beyond healthcare?
Silvertail Systems monitors behavior and website usage, identifying suspicious activity so that fraud can be stopped before it occurs.
Another type of service delivers care or support at a lower cost. We are used to FAQs, but how about delivering a diagnosis, your Rx, updates of electronic health records and payments via telephone or webcam conversation? How about services where you used to make a phone call or go to a meeting, but no longer do?
Teladoc and American Well (and others) deliver care 24/7 for the over 50% of conditions that patients experience that really don't require a doctor's visit. They deliver huge savings over emergency rooms or the doctor's office. And you can make that call at 2 AM if you need to!
OneRecovery provides a safe, healthy and healing community of individuals in recovery from alcoholism, drug abuse and eating disorders.
ZocDoc allows you to make your doctor's appointment online, saving your time and that of the office staff.
Here's one I like that "breaks the code" for spurring energy efficiency and is also a boon for local employment, financial services and manufacturing.
The Carbon War Room (Richard Branson's energy think tank) assessed the blockages for performing energy retrofits. They conceived of a program for commercial property owners requiring no upfront money and low rate financing paid back at less than the monthly savings on their energy bill. No public financing is involved.
Ygrene Energy Fund signs up municipalities to collect payments, manages the loan process, identifies a lead contractor, and engages financial institutions. The first announcement -
Justin Gillis' September 19 NY Times article described a Ygrene consortium with Lockheed Martin, Barclays Capital and others that plans to invest as much as $650 million over the next few years to slash the energy consumption of buildings in the Miami and Sacramento areas.
# # # # # # #JANUARY 2010 NEWSLETTER:
RESTART, REBOOT AND RE-ENERGIZE
Recently, I have met with a number of CEOs and investors who are grappling with the question of how to resurrect or accelerate growth for their companies. Does this sound like you? Yes, some of these companies just finished a frustrating 2009 but all were profitable and none were shrinking. One was recently acquired so there should be synergies from the combination; another has been growing at 350% per year for the last three years; a third is trying to get a new channel to deliver on its promise; a fourth is enamored of its technology but frankly, the market can't figure out how to use it.
It is especially tough to figure out ways to jumpstart growth when you are busy running the operation so I thought I'd pose a few questions to ask yourself if you are faced with this challenge.
1. Can customers and prospects access effective marketing materials that explain clearly what problems your products and services solve, and demonstrate easily how they would use them? It is difficult for sales people to demonstrate the value of your products without sales tools that help explain today's complex solutions to intractable business problems. Can you imagine getting a channel partner to deliver new business without well-designed marketing and sales support?
2. Are your products and services aligned with today's market? I recently read an article that stated that 90% of successful companies had to throw out the product concept on which the company was founded and start over. Not that the technology was discarded, but the products and services were re-purposed to address critical problems that needed solving, not the untested problems that the founders thought were out there, but weren't.
3. How do customers and prospects experience your company - - your people, your products, your support, your competitive environment? You may think all is well, but it is always a good idea to find out from those who have actually had the experience with your organization and its competitors to see what they think. If you don't know, you can't build on the good things or fix the ones that are getting in your way.
4. Are you thinking ahead so that you know how to adjust, when to take advantage of a market opening, and where to align resources over the next five years? It's easy to stay so involved with today's growth, just fulfilling the orders and responding to new customers, that you don't keep watching the horizon when things will change. Sales of existing products will plateau, crises will subside, and new competitors will appear. It may happen in five years or it may happen in two months. If you don't know, you are jeopardizing your future and you are missing opportunities right now.
The questions above should focus your attention on how well your organization is executing, not just on your business plan. Yes, it's fun to concentrate on strategy and think that if we have figured that out, success will be certain. But just as important is really, really good execution. As investors or as leaders, we need to "inspect what we expect" and help our organizations deliver superbly.
Too many CEOs just don't do that.
Last year. I observed a client CEO who didn't step in to make sure that the demo for an online product worked flawlessly before it was shown to prospective customers, despite complaints from the sales organization. Can you imagine demo'ing a new online service that had features that didn't work and that periodically crashed during the demo? As a sales person, how would you feel without the tools to do your job?
A few years ago a client asked me to capture feedback about one of their subsidiary companies. The company just wasn't performing. During in-depth interviews, customers volunteered shortfalls in the product line and suggested impactful changes, while also sharing their experience with competitors. This input from customers (and, by the way, from competitors' customers) allowed this company to make simple changes and to improve its execution on a number of fronts - - enough to resurrect growth in a declining market.
Recently I helped the management team of a fast growing company think way, way outside of their traditional product box to take advantage of critical problems during this financial crisis that will substantially change how loans are underwritten in the future. With twenty years experience in their narrow industry, this was really difficult for these guys but they did a great job! In a two-day work session, we examined very specific questions from the views of six different market segments, and this team was able to create new service concepts (and the underlying implementation requirements) that will spur growth for the next few years.
Lastly, an investor's portfolio company resisted adjusting its services to meet real market needs; they clung to ideas about products that just didn't pan out. As I said before, this is a huge problem for entrepreneurs who hold onto their original idea long past the point of usefulness. This can be a fatal mistake and I'll share the following advice (and help) I gave them that helped re-purpose their business.
· First, understand today's specific market problems including what they are costing and the urgency to solve them.
· Second, be flexible and fast. Expect to build something that will change and expand and address problems as yet unknown. Architect your service so that it is as nimble as the market needs, and much more nimble than what your competitors deliver.
· Third, plan on services that are delivered economically and where expenditures and costs are variable. I don't see many large investments made in "heavy" installations now; Software-as-a-Service and cloud computing are dramatically cutting costs and, as an added benefit, they support transaction pricing.
· Fourth, build services that can be easily adapted and installed in weeks, not months. Design them to meet the needs of many customers where by turning switches on and off, features can be customized fast.
· Fifth, think of your service as more than the obvious - - for instance, this client's service was also a data engine. (IDG projects 4% growth in the business intelligence market to $25 billion this year alone.)
I hope these questions are helpful if you find yourself wanting to jumpstart growth in 2010. If this was useful, let's talk. I'd like to hear about your challenges and share ideas.
# # # # # # #
September 2009 Newsletter -
Business Intelligence - - What You Need To Know
You may have thought that the traditional definition of business intelligence just led to a decision, and a decision without action is useless. I agree with you, and we've seen too many examples where no action, or incomplete follow-through has ended in failure. So let's extend the BI concept past decision-making into the action taken as a result. Now, we have a true business solution. The purpose of a business intelligence solution is to facilitate smart action to meet a desired goalBut back to you. Going back to your role with a company that supplies part of a BI solution, a keen understanding of where that part is in the whole, and the value that part brings, will help you maximize your investment. · If your company supplies a part colored in "green" above, it's a lower value part of the solution. After all, data is available on the internet for free. Content providers are struggling to re-purpose their content to increase its value (and price).
If you are an investor or the CEO of a business intelligence company, what do you say when someone asks you what "business intelligence" is?
Can you explain this complicated concept and describe how your company qualifies as part of a critical BI solution?
Are you comfortable explaining why, in 2009, business analytics software is projected by IDC to grow 4% to $25 billion this year alone?
LET'S LOOK AT THOSE QUESTIONS ONE AT A TIME
What Is Business Intelligence (BI)?
Suspecting that you've been examining our recent economic crisis carefully, and that you've already read A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers, and if you remarked to your colleagues about IBM's recent acquisition of SPSS for $1.2 billion - - - then you're understanding the importance of business intelligence. Gartner Group predicts that too many leaders still don't comprehend business intelligence however, so you are ahead of the game. Gartner also predicts that "because of lack of information, processes, and tools, through 2012, more than 35 per cent of the top 5,000 global companies will regularly fail to make insightful decisions about significant changes in their business and markets. " I bet you're thinking what I am - "Yes, and we're all suffering now because of this colossal failure of insightful decisions."
If you have invested in or if you run a business intelligence company, it's critical to know exactly how your company will help customers make insightful decisions.
My next question is "What do I mean by a part of a critical BI solution"?
Most companies, even IBM, only own a slice of a solution and must partner with others to deliver the whole pie. To get us on the same page, let's look at Wikipedia's short history of the concept of business intelligence:
· "In a 1958 article, IBM researcher Hans Peter Luhn used the term business intelligence. He defined intelligence as: "the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal."
· In 1989 Howard Dresner (later a Gartner Group analyst) proposed BI as an umbrella term to describe "concepts and methods to improve business decision making by using fact-based support systems." It was not until the late 1990s that this usage was widespread."
So there are various parts of the BI solution (facts, support systems, concepts, methods) and we can envision it like this:
· If your company is in a "red" zone you're in luck. Because of its special expertise and close ties to the end product your company is a higher value part of the solution and it should command a higher price.
Your objective should be to become part of a total solution. Applications that solve business problems, especially problems that are of high importance to a customer, command prices based on the value of the solution delivered.
Finally, let's talk about why forecasters are projecting such aggressive growth in BI
Especially in this economic environment, the only solutions that will get funded are those that solve big, hairy problems. And if you think about it, the biggest problems in our economy stem from decisions made with incomplete or imperfect intelligence.
What are some of the most visible big, hairy problems right now? Certainly the financial system and healthcare qualify. They suffer from dispersed, hard-to-retrieve information and they have the added cachet of committed government investment.
But you will have to work closely with market participants to unearth their most critical problems and the turmoil caused by not fixing them. Often those folks won't want to expose the dark side. Getting past initial resistance and discovering exactly how much it is costing (or risking) is part of the fascination of building business intelligence solutions. Questions such as "If not solved now, what will it cost next year?" "What is the risk?" "Why?" We are looking for the BIG numbers - - the little ones won't get funded.
What's your strategy? First, work with the most likely markets to find out where your company can uniquely contribute to insightful decision-making about a nasty unsolved problem. Most likely you will have part of the business solution, so you will need to partner with others to deliver a high value solution. But partnering to deliver perceived high value increases the value of all parts - - yours and theirs.
# # # # # # #
August 2009 Newsletter - RE- INVENT OR RE-PURPOSE?
You may be asking that question of yourself, wondering what to do to get traction in this chaotic market. Recently, I worked with a company that stubbornly stuck to its original business plan even though the market never responded to its product and it was burning through available cash at an alarming rate. But with their market in disarray, there was an opportunity to re-purpose current services to address urgent problems.
Does this sound like you?
WHEN DO YOU NEED TO RE-INVENT?
If the market is truly going away, then it's time to examine your company's strengths to discover how to use them in a new market.
Here's a challenge. I'm sure that you, too, are watching the changes in movie distribution, wondering where that industry is going. Guy Kawasaki, investor and author of "The Art of the Start", recently wrote that young men between 18 and 24 who watch movies on their cell phones resist paying anything for services. They won't even knowingly buy something that they saw in an ad. Movies are geared to 18 to 24 year old males, which give us pause, doesn't it?
Businesses operating in the movie industry are busily re-inventing themselves and some are being successful. Re-invention, however, takes time, capital and the determination to look with clear eyes internally and externally at what it will take to become successful again.
WHEN DO YOU NEED TO RE-PURPOSE?
Often a market may change enough to require different solutions for a whole new set of problems. But the market is still viable - - its needs may be different - - but the market is still there and will be there for years to come. Often there are solutions, skills and experiences that can be re-purposed to solve today's problems.
A good example is the current mortgage and real estate crisis which has caused such havoc in our financial system and among homeowners.
What has gone away for the time being? Hundreds of thousands of lending, mortgage brokerage and mortgage processing jobs, and we may not need them back for a few years. What has replaced those lost jobs? Hundreds of thousands of loan modification servicers, needed to handle the huge volume of default customers desperately trying to hold onto their homes. This is an example of skills and manpower that can be re-purposed for the current crisis.
HOW DO WE SUCCESSFULLY RE-PURPOSE PRODUCTS AND SERVICES?
First, by really understanding today's specific market problems including what they are costing and the urgency to solve them. Too many companies are wedded to what the market needed five years ago.
Second, by being flexible and fast. Expect to build something that will change and expand and address problems as yet unkown. Architect your service so that it is as nimble as the market needs, and much more nimble than what your competitors deliver.
Third, by planning on services that are delivered economically and where expenditures and costs are variable. I don't see many large investments made in "heavy" installations now; Software-as-a-Service and cloud computing are dramatically cutting costs and they support transaction pricing.
Fourth, by building services that can be easily adapted and installed in weeks, not months. Design them to meet the needs of many customers, not just the one that has just signed a contract. By turning switches on and off, features can be customized fast.
Fifth, by thinking of our service as a data engine. IDG projects 4% growth in the business intelligence market (to $25 billion) this year alone. Data is still siloed and dispersed and therein lies an opportunity.
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