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Learnings on Value Propositions for modelH
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Learnings on Value Propositions for modelH

Understanding the Value Proposition Building Block

Here are the questions asked on the Osterwalder model:

  • What value do we deliver to the customer?
  • Which one of our customer’s problems are we helping to solve?
  • What bundles of products and services are we offering to each Customer Segment?

We added these question specific to our healthcare model.

  1. What compels a purchase decision by the Buyer?
  2. What aspects of the User’s life do you deliver value?
  3. Which jobs, pains, and gains need to be addressed in the Value Proposition?
  4. How much time does it take for the Value Proposition to be delivered?
  5. What social value(s) is met (if any) while delivering the Value Proposition?
  6. What bundles of products and services are offered in the Value Proposition?
  7. How can the Value Proposition be personalized based on the Customer Segments need(s)?
  8. What Intermediaries derive value from our Value Proposition?
  9. How does the business model gain insights from Customer Segment interactions?
  10. What Key Behaviors are required for the Buyer & User to realize the Value Proposition?
  11. What Experiences are required for the Buyer & User to realize the Value Proposition?
  12. What Key Influencers are required for the Buyer & User to realize the Value Proposition?

modelH Canvas 5 Value Proposition Highlight

How to Create Healthcare Value Propositions

Creating a Value Proposition for your healthcare business model can be generally accomplished through the 3 steps addressed in Part 1. Creating a “shared valued” Value Proposition (as defined in Porter’s1 model of healthcare value) is much tougher and is addressed in Part 2. Understanding how your Value Proposition’s products and service fit into your customer’s value drivers is addressed in Part 3.

Building a General Healthcare Value Proposition

Most products and services are thought of in the terms of the “Benefits” and “Features” they possess. Good business models have to think past this inwardly facing view and instead look to the value they create. To do this, take a look at the 3 steps to develop a meaningful Value Proposition.

1st – Establish a Position of Value with Someone Specific

First, your business model must establish a position of value with a specific Customer Segment. This means reaching a point at which a clearly identified Buyer and/or End User is aware that your business is offering them something that is valuable, relevant, and complementary to their specific health JTBD (jobs-to-be-done). This position of value serves as a point of initial engagement with your Customer Segment, as well as forming the basis for all ongoing interactions. The aim of understanding your Customer Segment is to focus on what matters most to them while making a healthcare related purchase decisions. These “key matters” are called Value Drivers. Keep in mind that Value Drivers are both known and unknown to the healthcare consumer. In the simplest terms, healthcare consumers are looking for solutions that meet their JTBD based on alignment with their Value Drivers. So to build a good product or service, ensure your product’s Value Proposition meets your ideal customer’s Value Drivers.

2nd – Increase Your Understanding of that Value Position

Second, involves a commitment to “ever-increasing” your understanding of the Customer Segment(s) you engage. This understanding of both Buyer and/or User is critical to Customer Intimacy2, which is characterized by occupying no more than a few high-value customer niches and being obsessive about understanding those customers in detail. Market Leaders with this focus excel at customer attention and customer service – examples include the family doctor and the personal trainer. A business model must also create the insight needed to turn a prospect into an actual customer who is willing to share personal and health information in a two-way exchange. This exchange is vital for any healthcare business model and places the business in the position to monetization the relationship.

3rd – Develop Your Product Market Fit Iteratively

Third, based on your Customer Segment understanding, identify the Value Propositions (products and service) with the greatest potential for alignment with the JTBD of your Buyers and/or Users. This is what Marc Andreessen calls Product Market Fit3. This third step implies continually shaping your business model’s solutions to fit an increasingly refined definition of your Customer Segment. This requires marketing solutions in a manner consistent with each customer’s stated preferences and again capturing the important health and behavior data in a two-way exchange. To do this, use a Minimum Viable Product (MVP4) approach to defining your Value Proposition. It is also important to note that your Value Proposition must extend past just your Customer Segments, and be applicable to your Intermediaries and Key Partners.

Building a Universal Healthcare Value Proposition

For healthcare business models, the secret to creating the “best” Value Proposition lies in marrying the collective value derived by all stakeholders in such a way that a virtuous cycle is created. Across the value chain of healthcare, there are four key stakeholders: patients, providers, payers, and purveyors. The patient is the User of the Value Proposition, who also may or may not be the Buyer of it. Providers are those Key Partners that provision some form of care delivery to the User. The payer is the Buyer in part or total for Value Proposition to be delivered to the User (patient). And purveyors are those Key Partners that perform some vital function in the design and/or delivery of that care for the User through Key Partners (Providers and Payers).

Keep this concept in perspective – the party who consumes the product of healthcare (the “patient”) is usually not the one who pays for it, or at least not most of it. The party that pays for it (the “payer”) is best served when it is not used, and is therefore motivated to push for less of it. Furthermore, the parties that deliver it (the “provider”), and the parties that support its delivery (the “purveyor”), are not aligned to place realistic boundaries on its cost, thus forcing the system into bankruptcy. Due to this divided nature, the healthcare ecosystem is overrun with inefficiencies and creates dis-incentives between stakeholders so that each maximizes their own value, often at the expense of the others. Your business model must avoid this trap.

If the JTBD (job-to-be-done) building block defines what utility a User is looking for, a consolidated Value Proposition defines the shared value that exists between the four key stakeholders. Because of this complex interrelation, the standard pains and gains model in Osterwalder’s Value Proposition Canvas5 doesn’t really work well. Users have their own defined value based on their JTBD. So how do you define value for the patient, provider, payer, and purveyor regardless of which is your actual User or Buyer?

As it relates to the Patients, there are three key components for a Value Proposition:

  • Utility: Patient-Buyers, like all consumers, will justify a purchase because you solve their particular JTBD.
  • Influence: Patient-Buyers will also justify a purchase because they are persuaded to it through Key Influencers, such as their providers or purveyors.
  • Need: Patient-Buyers will also justify a purchase because a Key Partner in the process of their healthcare decision-making has required your solution as part of their own Value Proposition.

As it relates to the Providers, there are four key components for a Value Proposition:

  • Utility: Provider-Buyers, like all consumers, will justify a purchase because you solved their particular JTBD.
  • Reduce Costs: Provider-Buyers will also justify a purchase because your solution reduces their healthcare provisioning costs – either directly or from productivity increases.
  • Increase Revenue: Provider-Buyers will justify a purchase because your solution increases their revenues by increasing the volume of patients throughout. This allows for more higher priced services, or increased customer (patient) loyalty. Moreover, the new Accountable Care organizations can actually result in increased revenue for a Provider-Buyer as they reduce costs.
  • Need: Provider-Buyers will also justify a purchase because in the creation of their own Value Proposition an Externality (usually the Government in the form of CMS or state licensing agencies) requires it.

As it relates to the Payers, there are four key components for a Value Proposition:

  • Utility: Payer-Buyers, like all consumers and some government and business buyers, will justify a purchase because it solves their particular JTBD.
  • Reducing Costs: Payer-Buyers, like health insurers and employers, will justify a purchase because your solution reduces their healthcare converge costs – either directly or from productivity increases.
  • Increasing Revenue: Payer-Buyers, like health insurers or growing third-party partners, will justify a purchase because your solution increases their revenues through the volume of sales, a price increase, and/or increased customer loyalty.
  • Need: Patient-Buyers will also justify a purchase because in the creation of their own Value Proposition and an Externality (usually the Government in the form of CMS or state insurance regulators) requires it.

As it relates to the Purveyors, there are three key components for a Value Proposition:

  • Reducing Costs: Purveyor-Buyers, like pharmaceutical and durable medical equipment companies, will justify a purchase because your solution reduces their costs – either directly, through cheaper access to Patients, Providers, or Payers, or from productivity increases.
  • Increasing Revenue: Purveyor-Buyers, like pharmaceutical and diagnostic companies, will justify a purchase because your solution increases their revenues through the volume of sales, a price increase, and/or increased customer loyalty.
  • Need: Purveyor-Buyers will also justify a purchase because in the creation of their own Value Proposition and an Externality (usually the Government in the form of CMS or the FDA) requires it.

Understanding How Your Product Fits into Your Customer’s Value Drivers

Most products and services are thought of in the terms of the “Benefits” and “Features” they possess. Good business models have to think past this inwardly facing view and instead look to the value they create.

To do this, take a look at the current set of products, services, and information that make up your Value Proposition. Do the Benefits provided by your product Features add to your Value Proposition? Do the services you provide augment your product Features? Does the information used to support usage of your products and services speak to the Value Proposition or something else? How many of your product Features and Benefits are really important to your Customer Segments? How many are inconsequential? How many are actually creating a negative impact?

The goods and services that comprise a Value Proposition can be broken down into 3 classifications: Health Direct, Health Related, and Health Relevant. Within these classifications, the goods and services will either be considered In-Context, or Opportunistic.

Health Direct

Products and services that directly affect a person’s health can be thought of as Health Direct. Some simple examples include immunizations and vaccinations. Some more complex examples are those items prescribed by a doctor to solve the JTBD of a particular health issue such as drugs, therapies, and durable medical equipment.

Health Related

Products and services that are used to maintain or improve overall health, but not necessarily address a particular medical JTBD (condition) can be thought of as Health Related. Some examples include “wellness” products like screenings, massage, personal training, and supplements.

Health Relevant

Products and services that are health and wellness related, but can be bought for usage in other areas, are considered Health Relevant. An example is a pair of running shoes bought for their aesthetic value more than their connection to personal training, but can be used for that purpose as well.

In-Context

Products and services that can be recommended as part of a specific JTBD are considered In-context of that JTBD. This is consistent with the Value Proposition generation model described above. For example, that same pair of running shoes are in-context with the JTBD of getting regular exercise as part of a Doctor-prescribed Key Behavior for a User with high cholesterol.

Opportunistic

Products and services that are not part of a specific JTBD (Health Direct, Related, or Relevant) but are still valuable to a User’s total health (as described the in the wellbeing model above) can be considered Opportunistic. For example, a User with a JTBD of financial security would be interested in the In-context product of ID Theft Protection. It would be reasonable and relevant to approach this same User with the Opportunistic product of Social Media Reputation Management though the underlying connection between financial security and personal information security.

Take the time to incorporate these approaches into the Value Proposition block in your business model canvas. Regardless if your business model is aimed at Patients, Providers, Payers, and or Purveyors, creating a Value Proposition from a shared sense of value will go a long way to ensuring your business idea has sustainability.

What is Next?

Next up we are going to look at the Key Behaviors needed from the User and Buyer to ensure the Value Proposition is effectively received.

 

To your health,

The Team at imagine.GO

 

1 What Is Value in Health Care? Michael E. Porter, Ph.D. N Engl J Med 2010; 363:2477-2481December 23, 2010DOI: 10.1056/NEJMp1011024, available on http://www.nejm.org/doi/full/10.1056/NEJMp1011024

2 The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus, Dominate Your Market by Michael Treacy and Fred Wiersema Customer Intimacy

3 The PMARCA Guide To Startups Part 4: The only thing that matters by Marc Andreessen, originally published on his blog, blog.pmarca.com, available on http://pmarchive.com/guide_to_startups_part4.html

4 The Lean Startup Methodology by Eric Reis, available on http://theleanstartup.com/#principles

5 The Value Proposition Designer Canvas by Alex Osterwalder, available on http://businessmodelalchemist.com/business-model-alchemist/2012/08/achieve-product-market-fit-with-our-brand-new-value-proposition-designer.html

Learnings on Jobs-to-be-done (JTBD) for modelH
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Learnings on Jobs-to-be-done (JTBD) for modelH

A “job-to-be-done” is the high-level goal that a person is trying to accomplish. This is a simple idea with profound implications. Understanding a consumer’s “job-to-be-done” requires that you resist thinking in terms of your product and/or service and what you must do to sell, service, or provide it. Instead, think in terms of what the consumer is trying to accomplish.

By understanding consumers’ healthcare jobs-to-be-done (JTBD), we can create a tailored value proposition and an intentional experience for them. Think of it as a promise of value to be delivered and a belief from the consumer that it will be experienced.

Still not sure about a JTBD.  Watch this video from the inventor of the concept Clayton Christensen.

We just wrapped up our fifth business building block sprint on Jobs-to-be-done (JTBD). In summary, the sprint for Project 1.4 on JTBD completed 2 objectives:

  • Questions to ask on the canvas for the JTBD building block
  • Help on how to create healthcare JTBD 

 

modelH Canvas 4 JTBD Highlight

Questions to Ask on the Canvas for the JTBD Block

We defined the questions that should be added to our business model canvas for helping practitioners define their Customer Segment’s healthcare JTBD?

  • JTBD: What is the job-to-be-done? I want to … action words + object of action + context
  • Current Approach: What is their current approach to solving their JTBD now?
  • Benchmark(s): What do they compare their current approach to – good or bad?
  • Performance Criteria: What criteria are used to judge the effort & experience of the current approach?
  • Barriers: What prevents them from trying a different approach?
  • Behaviors: What Key Behaviors are needed to drive completion of their JTBD?
  • Data: What Platform (data) is needed to drive the completion of their JTBD?
  • Value: What creates value in their minds in regards of their JTBD? 

 

modelH Canvas 4 JTBD Highlight

The Most Important Healthcare JTBD

The single most important JTBD in healthcare is “Health” itself. This, or some derivative of this, is what drives the industry. Even with this clarifying fact, and as simple as this sounds, it is not an easy task to identify the User’s health JTBD. For example, in the aspect of physical health alone, there are four sub-categories: wellness, episodic, accurate, and chronic to consider. And, health is comprised of much more than just physical health. It can be mental, spiritual, and much more.

A good basis for identifying a User’s health JTBD is the Washington State University Wellbeing Model1, which breaks health dimensions down into Financial, Emotional, Intellectual, Social, Physical, Occupational, Environmental, and Spiritual. In this model, “Health” (or as they call it Wellbeing) is the combination of the related JTBD from across these categories. In this model, any single health JTBD is actually drawing from several dimensions. This complexity is why so many healthcare business model Value Propositions fall short.

Clayton Christensen, who developed the JTBD concept, noted that users don’t want drill bits, they want holes. However, a Customer Segment defining their JTBD “wanting to drill a hole”, is misleading. The verb is a factor in the JTBD, but the final state is the truest answer being sought. That is to say that in this case the User might want the hole to make their spouse happy, or to be paid by their client, or to show off their art work, or a host of other reasons. Suffice to say, the User wants the hole and the mental value and rewards that the hole provides them. The danger in this thinking when applied to healthcare lies in the limited knowledge of the User in defining their JTBD.

In healthcare this is demonstrated as a patient stating their JTBD is “wanting to get well”. Based on the nature of their malady (episodic, acute, or chronic) the Value Proposition needed to produce this “end state” can be quite significant. For example, for a Type 2 diabetic to “get well” they need a lifelong commitment to blood sugar monitoring, healthy eating, regular exercise, and possibly, diabetes medication or insulin therapy2. Any Value Proposition short of this complete regimen would fail the patient and lead to long term issues elsewhere.

 

How to Build a Healthcare Job-to-be-done

It is important that in healthcare, every JTBD is actually comprised of two parts – utility and mentality. A utility JTBD is the high-level goal that a person is trying to accomplish. The mentality JTBD is the set of Key Behaviors that are needed to complete the utility JTBD

So how do you define a healthcare JTBD that can effectively serve to refine your business model’s Value Proposition?

First, start with the concept of “Treasure Mapping” the User’s JTBD through the various states of completeness. This involves identifying where a User is right now (“You are here”) in their JTBD, as well as where the User would like to be (“X marks the spot”) as part of their ultimate “end state”. An example would be a User with a JTBD of “lowering their blood pressure”. Before taking medication, this JTBD needs a Value Proposition that includes a change in diet to include less salt and more water, a regular exercise regimen, and limiting the amount of alcohol consumed3. Treasure Mapping out where the User needs to start and progress through in order to lower their blood pressure is a good way to construct their JTBD. Keep in mind that most User’s do not have a full picture of all of the points along their JTBD treasure map. You will need to account for this in how you construct your Value Proposition from their JTBD and deliver it through your Channels and Customer Relationships.

Second, identify the driver(s) behind the User’s JTBD. Most Users are dragged through the healthcare system kicking and screaming, which makes both patient and provider miserable. Understanding the User’s capacity to engage in solving their JTBD is critical to delivering your full Value Proposition. These driver(s) , or Key Behaviors, are an essential part of designing a healthcare JTBD. There are countless models to use from Maslow to Prochaska. If you can identify what mentality JTBD needs to be solved in parallel with the tangible utility JTBD, you have a much better picture of how a solution should look and how your Value Proposition should be delivered. It is important to note that this point may seem to overlap with the Customer Relationship building block, but it is actually quite independent. Customer Relationships are built on a shared purpose between the business and the Customer Segment. Key Behaviors are solely the User’s. Key Behaviors are required to make the business model work. For example, on the part of the provider the Key Behavior might be bedside manner and communication vehicle that can completely and comfortably educate the patient on condition. Another example on the part of the patient, the Key Behavior is a willingness to embrace and execute on their utility JTBD by overcoming any mentality JTBD that would prevent it.

 

Getting the Data Needed to Support the Healthcare JTBD

No matter what the JTBD, utility or mental, there will always be a need for the Buyer and User to enter in or allow access to certain data so the Value Proposition can be tailored to their JTBD. An increased understanding of User is critical to discovering their ongoing JTBD and building a lifelong relationship. A JTBD can be derived from your own experience and assumptions, but are best when they are supported by data that has been market validated.

To get access to this Buyer and User data, the business model must present a legitimate reason for every data element requested or accessed, and be transparent with the Buyer and User as to what data is used for and why. Within a JTBD, a small amount of information can go a long way towards tailoring a Value Proposition. It is important to the business model to determine the right and wrong amount of information needed to help the User achieve their JTBD goals. This is done through the business model’s Platform.

How your business model’s Platform obtains the data is as important to the JTBD as the Customer Relationship is to the Customer Segment. Most of your JTBD progress data should be automatically updated. However, your model should also allow the User a method of self-reporting their JTBD progress on your Platform. This gives the User a way achieve their mentality JTBD by contributing to the tailoring of their own utility JTBD.

In addition to the observed facts of the JTBD progress, another part of the necessary Platform data is to understand Buyer & User preferences. Understanding these preferences enables your business model to deliver the Value Proposition in a manner consistent with their choosing. Preferences consist of the frequency of communication, communication channels, and tone of communication. Preferences are best gained by asking about their need for deviations from recommended communication frequencies, channels, and tone.

Take the time to incorporate these approaches into the JTBD Block in your business model canvas. Regardless if your business model is aimed at Patients, Providers, Payers, and or Purveyors, the need for creating accurate JTBD greatly improves your Value Proposition and its chance of Customer Segment adoption.

 

What is Next?

Next up we are going to look at the Key Behaviors needed from the User and Buyer to ensure the Value Proposition is effectively received.

 

To your health,

The Team at imagine.GO

 

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Learnings on Buyers and Users for modelH
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Learnings on Buyers and Users for modelH

We just wrapped up our first business building block sprint on Customer Segments. I wanted to thank the modelH Community for the fantastic participation over the last 2 weeks. In summary, the sprint for Project 1.1 on Customer Segments completed 3 main objectives:

  1. A Revised Image for Customer Segments
  2. Customer Segmentation Models for Healthcare
  3. Questions to Ask on the Canvas for the Customer Segment Block

modelH - 1.1 Customer Segmentats Summary Baterrii

1st – A Revised Image for Customer Segments (Buyers and Users)

Through our canvas, we are asking all healthcare businesses to think downstream far enough to understand how they impact the patient and their care – or as we are calling it, participating in a sense of shared value. So even though a specific business model may have a Buyer who is not the actual healthcare end User, the business model does have an effect on one or all of the “value lenses” we have proposed:

  1. Improved consumer experience yielding an informed decision maker aligned to their risk and reward,
  2. Increased access to necessary care through an engaged delivery system, and
  3. Reduced aggregate cost of care, with a market-driven, balanced incentive and reward model.

So we are modifying the canvas image itself to have 3 parts within the Customer Segment block.

a Buyer (the customer of the business),

modelH Canvas 1 Buyer Highlight

a User (the person who will use the product or by-product of the business), and

modelH Canvas 2 User Highlight

an Intermediary (the person who filters, persuades, and affects User healthcare decisions).

modelH Canvas 3 Intermediary Highlight

When the User and Buyer are not the same, and they almost never are in healthcare, it splits elements of the business model into two (or more) paths.  As an example, one User and one Buyer create two Relationships, two distribution strategies (Channels), two Value Propositions, etc.

We feel that our health model canvas in both form and function must enable practitioners to account for 1) the overall value created and 2) multiple paths to get there. So, along with the revised image, we are applying the following rules to the Customer Segment block.

  1. Users should always be considered an individual (consumer).
  2. Buyers can be the user, a business or a government.
  3. Users and Buyers have different driving motivations and thus different Value Propositions.
  4. Intermediaries act in conflict or benefit between the Value Proposition, Buyer, and the User.

 

2nd – Customer Segmentation Models for Healthcare

We also had some very detailed ideas submitted on segmentation models that can be used specifically for healthcare customers. I highly encourage you to read them, use it in your own work and give us feedback and case studies. In addition to the customer segmentation models put forward in the Osterwalder Model, the healthcare specific ones we came up with are listed below in alphabetical order:

Customer Segmentation by Archetype (Behaviors)

This looks at segmenting by different Archetype categories of people based on their needs, attitudes, and behaviors to healthcare decisions. Some of the defining elements are health behaviors and attitudes, the perceived control over health now and in the future, and individual preferences for seeking and receiving healthcare information. There are some excellent commercial models available.

Customer Segmentation by Life Condition (Health Status)

This looks at segmenting by the different health concerns that can affect us all as we age and seek to understand and assess our health status, and navigate a complicated and fragmented health marketplace. The “status” of health becomes more relevant to consumers once they have been diagnosed, so this model looks at both pre and post awareness of, and management of, a consumer’s health conditions. Life Conditions include segments such as high blood pressure, cholesterol, diabetes, etc.

In fact, Life Conditions are a actually better market indicator for how healthcare consumers will act rather than age. As an example, let’s compare music preferences. Seniors and 30 year olds rarely like the same music (unless it is Bruce Springsteen!) However, a 30 year old diabetic acts pretty much the same as a 65 year old diabetic. And correspondingly, a 65 year old “health nut” acts much closer to a 35 year old “health nut” than a 65 year old diabetic.

Customer Segmentation by Life Stage (Demographics)

This looks at segmenting by the major milestones each consumer reaches in life, such as birth, adolescence, young adulthood, adulthood, retirement, etc. With each of these Life Stages come significant healthcare decisions and the jobs-to-done associated within them. For example, the Life Stage for Becoming a Parent may involve the need to tackle multiple jobs-to-be-done such as getting pregnant, child birth, preparing the home environment, etc. action.

These milestones make for a natural way to define targeted value propositions. For example, seniors have very different healthcare needs than young adults who are starting a family. In fact, the three highest cost milestones in each person’s life are usually their early childhood (including birth), followed by when they have their own child, and then when they enter retirement through death.

Customer Segmentation by Life Style (Job-to-be-done – JTBD)

This approach is one that I developed nearly 4 years ago when I built a consumer health-focused ecommerce company called GuideWell. We decided to approach to a segmentation format based on Clayton Christianson’s concept of consumer jobs-to-be-done (JTBD). This is a non-traditional approach. Traditional segmentation puts a consumer into a single segment ‘bucket’. We realize that people are multi-faceted and segmenting them singularly leads to improper product market fit.

This looks at segmenting by each consumer’s JTBD at a specific place in time. For example, a physically fit individual may not want to have an extensive conversation about basic exercise principles, but may want to know a great deal (read exhaustive conversion) about better sleep. The same person has a different reaction to their different JTBD even though they are in the same Life Stage and Life Condition. Life Style segmentation is a way to look at people based on the tailored guidance they seek for the key activities they pursue. Companies that offer “Life Style” solutions seek to help consumers with their specific JTBD, such as “Look and Feel Younger,” “Get Ripped,” “Get Outside,” “Have a Better Smile,” or even “Go Green.”

The problem lies in making an educated guess on the consumer’s JTBD. This works well when your business model’s value proposition is designed to bring a tailored set of goods to the consumer from everything that is available, but narrowed down based on their specific JTBDs.

3rd – Questions to Ask on the Canvas for the Customer Segment Block

We also defined the questions that should be added to our business model canvas for helping practitioners define their customer segments.

What are the Questions that should be answered when developing Customer Segments for a healthcare business model?

In addition to the questions asked in Osterwalder’s model:

  • For whom are we creating value?
  • Who are our most important customers?
  • What type of market is this business model: Mass Market, Niche Market, Segmented, Diversified, Multi-sided Platform?

We added the following as well:

  • Is the User of our product, or its derivative, also the Buyer of the product?
  • What is the relationship between the Buyer and the User?
  • What nomenclature does the market use to define the User in this business model: Patient, Provider, Member, Insurers, Other?
  • How do you define a lead (for your Buyers)?
  • How do you define a customer (for your Buyers)?
  • What model will be used to distinguish between various User types (customer segments): Archetype (Behaviors), Life Condition (Health Status), Life Style (Job-to-be-done), Life Stage (Demographics)?
  • What is the total addressable market size (TAM), or the revenue opportunity available for the value proposition?
  • What is the serviceable addressable market size (SAM), or the customers that can be reached out of the total addressable market (TAM)?
  • What is the target market size (TM), or the size of the initial focus for your minimum viable product release of your value proposition?

 

What is Next?

Next up we are going to look at the Intermediaries who filter, persuade, and affect User healthcare decisions.

Interested in what we are doing? Step up to the plate an get involved.

 

To your health,

The Team at imagine.GO

 

How to Send a Personalized Bill to Your Customer
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How to Send a Personalized Bill to Your Customer

I just received a new bill from AT&T – and get this – it was a personalized video of my charges.  Yes, that is correct, a video.  It was my actual bill, with my actual charges explained.  And it was cool. I watched it three times and then recorded it and made a video to share. Here is the short video I made of my experience:

An Old Dog with Some Cool New Tricks

To be sure, I am not a raving fan of AT&T but I respect their product offering, and they seem to be getting much better at customer service. In truth, their coverage where I live at the beach in Florida is terrible. But, for the most part, they are pretty spectacular anywhere else I travel for work.  I pay around $130 to $150 every month for their services. I know and trust and rely on their product.  But, historically speaking I have had two issues with their product – at least from the arena of understanding my bill charges and getting someone one the phone to help me get answers.   I can sympathize as they have a lot of customers to deal with daily. However, I am still the customer, and I pay them close to $1500 per year. I have the right to expect better.  Such is life.

I have upgraded my phone and service several times in the life of my relationship with AT&T. Invariably, I am always confused at the one-off charges I see on the bill and in many cases, I have had the need to call and clarify what they were. I dread this scenario because I know it will be several trips through their telephone prompt system, then saying the same thing to at least three reps that have a somewhat less than mastery of English.  One month ago, I upgraded my iPhone to the new 5 (my relationship with Apple is a story in itself, and someday I may let you know about it).

So imagine my surprise when I received an email from AT&T with a link asking me to watch a video about my new bill. The call to action was clear and the broadcast email was well done, so I obliged. It took me to a page at the AT&T site where I saw a video that explained my most recent bill, in clear detail – even the one off charge. It was very well done, and it was tailored just for me.  I can still get access to the regular online or printed bill as well – but I feel no need to now.

AT&T Video Bill Email

How did they do it? I am not so naïve to think AT&T chose to invest resources in the AV department to create a video just for me – so I have to assume this was done by some smart new vendor that can tie into their systems and use list data to create custom videos. Whatever the reason, the result was that I understood the bill, and I did not feel a need to call AT&T – this saving them the transaction cost.  I have to assume the economics are for the mass/custom video versus the support line.  Furthermore, they saved me aggravation and got me talking in a positive light about AT&T. Nice work.

AT&T Video Bill

One other thing, because this is new technology and a new experience (I am sure they tested it quite a bit), AT&T was smart enough to ask me some survey questions at the end to see what I thought about it. Thus, validating their efforts. Again, nice work.

AT&T Video Bill with Questions

If My Phone Provider Can Do It, Why Can’t My Healthcare?

As I said, I spend approximately $130 with my phone provider each month. By contrast, I spend $400 with my health insurance provider.  As bad as my old phone bill was, by contrast, it is like a new Harry Potter novel (FYI I love Harry Potter books) compared to the bill I get from my insurance company. Or should I say, the “THIS IS NOT A BILL” I get from my health plan.  Take a look at a sample Explanation of Benefits (EOB) below.

Firstly, I find it somewhat ironic that it is called an Explanation of Benefits – as it is neither a benefit nor a good explanation of what I owe. I am not picking on any one plan – I just happened to be able to find a sample EOB for them online. And not wanting to post my own, I had to have something to speak to, so they are the lucky winners. In truth, from what I know and what I have heard, all if not almost all insurance companies are this bad.

Here is what drives me crazy about this document. It gives me more than I need in a poorly laid out manner, so it guarantees my confusion. Thus, resulting in my need to call them. Thus, having to deal with the call center for the insurance company. Thus, ensuring I add anger to my confusion. This repeat cycle is a never-ending loop for million of customers across the country.

When will the health insurance companies get it right? If AT&T can do it, I now expect them can as well.

Explanation of Benefits with Notes

To your health,

The Team at imagine.GO

 

modelH – Health Model Co-Creation Forum (part 4)
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modelH – Health Model Co-Creation Forum (part 4)

After reading my 3 earlier posts, I hope we have you convinced that this is a worthwhile effort and that you should join us. By joining the forum – you join the movement to create a better healthcare system.

The solutions for transforming healthcare will come from harnessing diverse ideas from across the ecosystem of healthcare stakeholders. We are inviting individuals inside and outside of the healthcare industry to join us on one platform to ignite conversations and build solutions for new business models within US healthcare.

That means you – yes, you are invited!

When you sign up, you will join other passionate healthcare and innovation professionals to create meaningful change in the US healthcare industry. You will also cultivate new professional relationships, elevate your personal brands and identities, and receive direct attribution in my forthcoming book as permanent proof of the important co-creative role you played.

Please know this is not a marketing scam – we are sincere in our work and care deeply about our goals. Our end result will be a book published in 2014 that you will get to share in the credits for creating.

How to Participate in modelH

Well, first you have to register on the modelH site.  We suggest you read up on the whole project here first – http://bit.ly/modelHForum.

After that, there will be three Phases to the modelH project, which will last through at least March of 2014.

model Business Model Canvas for Healthcare

The three Phases are:

  • 1. CoCreate a healthcare business model generator, called modelH. We will draw from the work of Alexander Osterwalder and Yves Pigneur in their book, “Business Model Generation: A Handbook For Visionaries, Game Changers, and Challengers” to create a new framework for developing health model innovation throughout the remainder of the project. Building the modelH engine is the most critical part of the project, and we’ll be devoting most of our time – 4-5 months – on this module.
  • 2. Generate and evaluate ideas through the modelH engine. Next, we’ll gather your inspiration, insights, and research to develop ideas that can be tested in the modelH engine. These ideas will address our three main areas of concern for healthcare: creating positive consumption experiences, improving the care delivery mechanism, and aligning payments and incentives. If we’ve built modelH correctly, we will be able to produce innovative business models that reflect a new direction for US healthcare. We expect to spend 2-3 months on this module of the project.
  • 3. Validate the health model innovation solutions. The final step is to review our modelH solutions to ensure they are fair, reasonable, and feasible. Once validated, Kevin Riley will be compiling the work into a visual playbook to be published later in 2014. We expect to spend 1-2 months on this module.

This project is a labor of love for all of us and the modelH team is fronting the cost to put all of this together. Our reward is the same as your reward: pride in creating a new path forward for US healthcare. It’s an opportunity to do something meaningful that has the potential to effect change on a system that is in dire need of change and to positively impact the lives of millions of Americans. We’ll also provide attribution to all contributors in the book as proof of the important role you play.

Keep in mind that this is an experimental project, and we expect some bumps along the way. If you encounter troubles, inconsistencies, or simply need clarity on how it all works, kindly let us know so we can improve the process. Also, we will have a firm “no jerks” policy in place within the modelH forum. We want disruptive thinkers, not disruptive individuals. If you are serious about making something that will help all of us create the healthcare system we so desperately need, please join in with a heart and mind for that task. If not, please sit this one out.

So, step up to the plate and get involved.

 

To your health,

The Team at imagine.GO

 

modelH – Health Model Co-Creation Forum (part 3)
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modelH – Health Model Co-Creation Forum (part 3)

What is a business model canvas? Wikipedia defines it as “a strategic management template for developing new or documenting existing business models”. It is not a business plan, but rather a visual language designed to align business activities that produce value by illustrating potential trade-offs. The idea was initially proposed by Alexander Osterwalder.

A business model canvas for the American healthcare system

Phase 1 of the modelH CoCreation Forum aims to create a business model canvas specifically for healthcare. To do so we must first agree on what defines value within the American healthcare ecosystem. Our definition of value is based on Michael Porter’s work in What is Value in Health Care? – “the patient health outcome achieved per healthcare dollar spent”.  Therefore, a value-based healthcare business model must result in:

  • Increased access to necessary care through an engaged delivery system;
  • Reduced aggregate cost of care, with a market-driven, balanced incentive and reward model; and
  • Improved consumer experience yielding an informed decision maker aligned to their risk and reward.

Our healthcare business model canvas, which we are calling modelH, must also work in a market-driven system.  Better ideas can then be generated and evaluated using that engine because they 1) create shared value and 2) can succeed in the marketplace. Likewise, current models and trends can be evaluated through this engine to see if they are effective.

The basis for modelH is Alex Osterwalder’s work on business model generation but modified to fit the uniqueness of the American healthcare domain. Our community will participate in modifying the Osterwalder model as needed to create the modelH Healthcare Business Model Canvas.

Alex Osterwalder Business Model Canvas

Source: The Business Model Canvas by Alexander Osterwalder

Our work on Phase 1 of for modelH will take on two distinct conversation types.

The 1st conversation type will be to look at the core Building Blocks of Osterwalder’s model and debate their nuances in regards to healthcare business models. Wikipedia defines these core elements as:

  • Customer Segments – the customer groupings a business model serves.
  • Value Propositions – the collection of products and services a business offers to its customers.
  • Channels – the way a company brings its value proposition (product) to its customer segments.
  • Customer Relationships – the type of connection a company wants to create with their customer.
  • Key Activities – the most important tasks in the execution of a company’s value proposition.
  • Key Resources – the internal assets required to create value propositions for customer segments.
  • Key Partners – the external relationships needed so a company can focus on their Key Activities.
  • Costs – the most important financial concerns of a company’s business model.
  • Revenue – the way a company makes income from each customer segment.

 

The 2nd conversation type will be to define the new Building Blocks needed for healthcare and how they should be incorporated into the canvas. The additions to be discussed are:

  • Externalities – the external forces (regulations) imposed on healthcare business models.
  • Jobs-to-be-Done – the customer’s JTBDs, which may not adhere to a company’s value proposition.
  • Intermediaries – the influencers/intermediaries between the healthcare customer and the product.
  • Experiences – due to multiple intermediaries, customer experience bears a greater look.
  • Cost Drivers – for healthcare to exists, the cost drivers must come under control.
  • Payments Sources – in healthcare, customers are separated from payment sources in many cases.
  • Platform – the healthcare ecosystem is interdependent, requiring an infrastructure to work.

We will do this in the order of importance to a business model – starting with the Customer and ending with the Platform. The result will look something like this:

 modelH business model canvas for healthcare

Source: The Healthcare Business Model Canvas by Kevin Riley

So, step up to the plate and get involved.

 

To your health,

The Team at imagine.GO

 

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modelH – Health Model Co-Creation Forum (part 2)

Hello again. I wanted to give you all another update on the big project I am calling modelH.  This project is a dynamic collaboration between Innovation Excellence, Batterii, and a bunch of great healthcare thinkers including me.

Last week I told you about what we were trying to solve. This week I aim to tell you how.

I need your help to make this work. But before we ask you to get involved, let’s talk more about how we can solve this problem – together.

modelH_Sketch 2

How do we solve the problem?

The American healthcare system is not so much broken as made up of working parts not working together.

The modelH team believes the ecosystem can be fixed! The answer lies in aligning the business model, so all stakeholders share an understanding of “value” across the themes of consumption, delivery, and financing. Our definition of value is based on that of Michael Porter, put forth in his paper entitled What is Value in Health Care?. Value in healthcare is measured as the patient health outcome achieved per healthcare dollar spent. A better healthcare business model must then result in:

  1. Improved consumer experience yielding an informed decision maker aligned to their risk and reward,
  2. Increased access to necessary care through an engaged delivery system, and
  3. Reduced aggregate cost of care, with a market-driven, balanced incentive and reward model.

Our goal of Health Model Innovation is lofty, but achievable. We believe modelH will result in a practical guide to fixing the healthcare system that all stakeholders can use to create better aligned and market-sustaining business models.

But our goal is too big and too important to try and solve alone. This cannot be done without the actual stakeholders co-creating the solution together, outside of an over-focus on any particular theme, or an over-influence from any stakeholder group.

  1. Phase 1 is to agree on the framework and tenants of a healthcare business model canvas.  This will create a structured means for business model generation, similar to the one developed by Alexander Osterwalder and team, but designed to work in the American healthcare system.
  2. Phase 2 will use the healthcare business model generator to develop and evaluate innovative market models and business ideas with the hope that some party within the ecosystem, or even outside of it, takes them to market.
  3. Phase 3 will take our findings and publish them in a visual playbook for all healthcare innovators to use.

Stay tuned – next week we will discuss how to build a business model canvas for the American healthcare system.

So, step up to the plate an get involved.

 

To your health,

The Team at imagine.GO

 

You Need an Innovation Center
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You Need an Innovation Center

Any healthcare company that builds products or talks with customers ought to have an “Innovation Center”. The idea is to create a physical facility that is part consumer lab, part living laboratory, and part workplace- aimed at designing and delivering the healthcare models of the future. It will be an environment where all organizational and community stakeholders can experience your company’s view of the future of healthcare and be inspired to help create it. An Innovation Center can incorporate the brand promise within a physical setting. An Innovation Center shows true commitment to practice innovation in healthcare. It is time for all healthcare companies embrace the future the way the Mayo Clinic has done for years.

To get started on what I am about to talk about, watch this virtual walk-through of the Mayo Clinic Center for Innovation.

What is an Innovation Center and Why Would You Need One?

The main objectives for an Innovation Center are:

  • 1. Designing
  • 2. Prototyping
  • 3. Collaborating
  • 4. Simulating
  • 5. Validating
  • 6. Envisioning

Lets discus them in some detail.

1. Designing.

Job # 1 of an Innovation Center should be to create (and improve upon) intentional experiences for your customers. You cannot have a good experience without good design. The Customer lab can serve as the place to visualize and practice Design Thinking. Wikipedia defines Design Thinking as “a style of thinking [designed with] the ability to combine empathy for the context of a problem, creativity in the generation of insights and solutions, and rationality to analyze and fit solutions to the context. “

An Innovation Center lets you teach the process and the methods of Design Thinking. These are the tools and techniques that great designers use to generate ideas and solve problems. Your aim should be to create an employee base trained in the arts of creative problem-solving.

Design Thinking for Developing Innovative Communication Strategies By Don Bulmer
Source: Design Thinking for Developing Innovative Communication Strategies By Don Bulmer

2. Prototyping.

Job # 2 of an Innovation Center should be to create faster paths to market for new products and models. One such method to do this is referred to as rapid prototyping and uses the discipline of Minimum Viable Product (MVP). MVP enables designers to validate assumptions about their “product” in two important aspects: its value and the demand for it.

By definition, MVP is the version of a product that gets built through one cycle of a build, measure, and learn loop – as fast as possible. Once the MVP is confirmed (keep in mind it may take a few iterations), other lean methodologies can be employed to build upon it. An Innovation Center allows this rapid prototyping to occur outside the traction of the legacy product and technology build systems at your company. MVP delivered through an Innovation Center enables product developers, system designers, and business analysts to determine whether people want what they are building – in a manner that gauges acceptance and demand – yet preserves capital and time for your company.

3. Collaborating.

Where Good Ideas Come From- Steven Johnson

Job # 3 of an Innovation Center should be to create a physical place designed to facilitate adult learning and team collaboration. As discussed in the book Where Good Ideas Come From: The Natural History of Innovation, big ideas are a series of smaller ideas coming together to form something that is meaningful to the market. The Innovation Center should be a co-laboratory that brings multi-disciplinary thinkers together on a common problem. Think of it as a modern version of a Library, except you are allowed to talk, experiment, and interact on topics of importance to your customers and your company.

You cannot ask people to collaborate on work if there has been no historical support for collaboration at your company – they simply just do not know how. They remember when they were kids but were programmed out of that model through a progression of educational settings and work scenarios where individual work product was the mode of operation. Asking people to change their work models without giving a realistic means to do so is merely rhetoric. An Innovation Center is designed to force interaction between co-workers. When combined with modern adult learning techniques like teaching collaboration, an Innovation Center can be the breakthrough that your company needs to re-educate its employees on how to work together.

4. Simulating.

Job # 4 of an Innovation Center should be to create a place to simulate customer interactions. Simulation is another great tool for adult education. While classroom learning and computer-based training still have their (small) place in the arsenal of training tools, nothing substitutes simulating a real life scenario to embed the training into the mind, and actions, of the trainee.

If your current training facilities do not invoke/inspire interest and a spirit of learning about how the customer feels in response to your customer-facing interactions – consider extending the facilities into an Innovation Center. Use the space as a simulation center to teach how to deliver the best results to a member and video it to review in private.

I had the opportunity to a take tour of the CAMLS — Center For Advanced Medical Learning And Simulation in Tampa, FL. I was highly impressed with this innovation facility and what it will accomplish for the future of medicine and healthcare. You can see some images from my time there in this short video.

5. Validating.

Job # 5 of an Innovation Center should be to create a place to have customers provide feedback on your company’s products and services. Part of the MVP concept mentioned above requires feedback. Healthcare is not like software – it is harder to have Beta users and not create tenuous or even dangerous situations. Proper validation through customer feedback is essential to great product design.

An Innovation Center as a customer lab allows this to happen with the control and confines of your company and reduces the need to pay outside parties to accomplish this oft-repeated task. To be a great consumer company, your company should foster its ability to do firsthand consumer research.

6. Working.

Job # 6 of an Innovation Center should be to your workplace of the future. Unless your company offers workspace like Google (and there are many of these, especially in Austin!) – consider using your space to transform your company’s cube farm into a dynamic workplace. Even if you are doing the best work on Earth, if you are sitting in a cube farm only lit by artificial overhead lighting, chances are you are miserable. Employers are obligated to make great environments for all people to work in, not just the executives. But convincing leaders about what this space should look like is hard to do.

An Innovation Center is supposed to look different – so make it your staging ground for your transforming workplace. Build it with the most modern yet simple furniture. Give it the technology bells and whistles that are fun to use and make people happier when using them. Keep it open and well lit. Provide couches and comfortable chairs to think in. Make it like everybody’s favorite thinking place – Starbuck’s. This will greatly enhance the employee experience and value proposition – and as a result, create a more productive workforce.

Starbucks

7. Envisioning.

Job #7 of an Innovation Center should be to create a fluid understanding of what the future of healthcare might look like. According to Microsoft, their “Microsoft Innovation Centers (MICs ) are state of the art technology facilities for collaboration on innovative research, technology or software solutions, involving a combination of government, academic and industry participants.” Apparently there are now more than 100 Microsoft Innovation Centers worldwide. IBM has several IBM Innovation Centers as well. The concept used at Microsoft’s Innovation Center is “Behind this door lies the future – not a vision of what we want, but a vision of what will be.” Your company should adopt this philosophy as well.

Microsoft Innovation Center

Telling is greatly improved by showing. Teaching a man to fish is how the old adage goes – try putting the pole in his hand near the water, and you are off to the races. Showing removes the need for employees to try and interpret what your leaders are envisioning. Instead, it evokes people to quickly debate on what they see or come up with ideas on how best to implement them. This should be a focus for your company.

Justifying the Cost

In Summary, an Innovation Center can be easily justified as both a capital expenditure and a resource development tool. To compete in a consumer economy, a company needs the capacity to think, react, and dream at the speed of the customer. The natural functioning of business units is contrary to this need. A customer lab opens up the ability for consumer thinking for the whole company, without jeopardizing the current operations.

So the question is not, how can an insurance plan justify an innovation center on an ongoing basis? – but how can they not if they want to become great consumer healthcare companies?

But a word of caution on this idea – companies and the people that work for them change – what is needed today will be old hat tomorrow. If you are going to build your own innovation center – don’t pour it in concrete. Meaning, save room for new ideas and build it modularly so sections that are no longer relevant can be removed.

 

To your health,

The Team at imagine.GO

 

 

modelH – Health Model Co-Creation Forum (part 1)
imagine.GO

modelH – Health Model Co-Creation Forum (part 1)

Hello to all. I am working on a new project I am calling modelH.   This project is a dynamic collaboration between me, Innovation Excellence, Batterii, and a bunch of great healthcare thinkers.

Batterii’s CoCreation® Platform powers this project, and my Business Model Method for Collaborative Healthcare Innovation guides it. Innovation Excellence’s worldwide Community of disruptive innovators fuels it.

Our goal is to create a business model canvas specifically designed to generate and evaluate healthcare business models that can create positive consumption experiences, improve care delivery, and align and control costs.  We then want to use our framework to co-create and test some innovative healthcare business models. The results will be compiled in a book to be released in 2014.

modelH - Health Model Co-Creation Forum
modelH – Health Model Co-Creation Forum

What is the problem we are trying to solve?

The American healthcare “ecosystem” in its basic form operates along 3 themes: care consumption, care delivery, and care financing. These domains are interdependent points of interaction along a value chain of healthcare. To impact one point, you really impact them all. Make no mistake – healthcare is a business! The problem is that very few people create business models that are considerate of all three points of view – and certainly no one has come up with a framework to make this easier.

Also, across the value chain of healthcare, there are four key stakeholders: patients, providers, payers, and purveyors. To put it in simple terms, the party who consumes the product of healthcare (the “patient”) is usually not the one who pays for it, or at least not most of it. The party that pays for it (the “payer”) is best served when it is not used, and is therefore motivated to push for less of it. Furthermore, the parties that deliver it (the “provider”), and the parties that support its delivery (the “purveyor”), are not aligned to place realistic boundaries on its cost, thus forcing the system into bankruptcy. Due to its divided nature, the ecosystem is overrun with inefficiencies and creates dis-incentives across themes and between stakeholders so that each maximizes their own value, often at the expense of the others.

But the system is not so much broken as made up of working parts not working together. Our diagnosis of the problem is a misalignment of the ecosystem’s building blocks. Our prescription is to reset these building blocks into a better working order. The outcome will be a healthy and aligned ecosystem that is both market-driven and cost conscious.

There is no better time to try and fix the healthcare system than amidst the current environment of reform. The team behind the modelH CoCreation Forum feels that a collaborative and systematic approach is the only means to overcome the interconnectivity barriers that exist to get past where others have failed. We have the means to accomplish this collaboration though Batterii’s CoCreation® Platform. We have the right approach for how to systemically validate a healthcare-specific business model through Kevin Riley’s Business Model Method for Collaborative Healthcare Innovation.  And through Innovation Excellence and our own networks, we have access to a community of radical innovators with representation across all key stakeholders, as well as business model experts, ready to engage with us in this year-long project.

This is where you come in! But before we ask you to get involved, let’s talk more about how we can solve this problem – together.

So, step up to the plate an get involved.

 

To your health,

The Team at imagine.GO

 

Are Healthcare Companies Focused on their Consumers Needs or their Own Products?
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Are Healthcare Companies Focused on their Consumers Needs or their Own Products?

Insurance companies are trying to connect with consumers in the marketplace – but are they focused on the consumers needs or their own products?

I will be speaking at the World Congress 3rd Annual Leadership Summit on Ancillary Products and Voluntary Benefits on March 13-15 in Lake Mary, FL.  Please join me there.

What You Will Learn

During this session you will learn:

  • What is retail health, really?
  • What does a health solution look like?
  • What products are relevant to consumers for their health jobs-to-be-done?
  • Can you server members and non-members alike, simultaneously?

 

To your health,

The Team at imagine.GO