Tuesday, July 28, 2009
Teams designing an effective healthcare system for the masses have challenges on sustaining innovation that are slightly different from those faced by mass market consumer products companies.
For a mass market beverage company, the challenge in supporting innovation may exemplified by the case of the Quaker Oats Company product portfolio acquisition. However, for regulators designing an effective healthcare system, the real challenge in societal optimization of healthcare lies in supporting innovation "pathways" through:
1> supporting basic research, and,
2> providing markets, processes and infrastructure for very expensive drugs to hit the market, and,
3> providing patients means to seek solutions outside the "mass" healthcare system.
For patients that have to pay out of pocket, then the government must make this process seamless, painless, and provide structures that help individuals extract some "economic rent" from (no apparent or direct attached economic benefit to) society. Depending on the context, you could call easy access to private, non profit foundations, to help fund your recovery, a form of economic rent.
In fact, the government may leverage experience with organ transplants for designing these "innovation pathways": http://www.organtransplants.org/understanding/unos/
The three points listed above are examples of the way certain "types" of innovation may stop getting support once creating and sustaining a mass market healthcare system becomes a prime focus of the society. I realize I am effectively proposing an indirect subsidy for innovation. I am in favor of this sort of indirect subsidy, because my hypothesis is that this may have a multiplier effect on drug research. My perspective is that this indirect subsidy would be similar to the investment in national highways in the last century.
What do you think?
Friday, July 24, 2009
1> Private health insurance must remain available.
2> Consumers must pay less for healthcare.
So, why are we still debating? The "how" is keeping us busy! You, as the consumer and the raison d'etre of this battle, can seek the following from your representatives:
1> A baseline of the current healthcare costs, overt and covert, by consumer segments.
2> Projected costs for current and proposed healthcare plans.
3> Healthcare market structure definition and guidelines for market agent behavior, tied to measurable outcomes, that all entities- private and government- must adhere to.
In plain old straight talk, the answers to these questions help *you* decide.
Both Democrats and Republicans have leveraged the government as a market agent in the financial services industry. This learning could be transferred to the Healthcare industry. It may shed light on triggers for the government to become a service provider market player and also triggers for the government to exit the service provider value chain to return to just regulating the market.
In terms of cost, talk to any healthcare practitioner and he/ she will tell you its all about incentives. What would you change if an internist is not paid by an insurance company for taking steps that help prevent a more expensive medical condition later because it is not part of her job description? What would you change if you thought someone was recommending tests for sleep apnea when its a case of tonsilitis? This requires clarity on not just market structures, but also incentive processes.
To summarize: These questions with help each party in the debate develop a contextual, competitive positioning strategy to achieve recognizable differentiation in the market through both methods and outcomes.
If you are wondering how we can continue supporting broad innovation in healthcare, see here:
* Peter Singer's New York Times article on healthcare: http://www.nytimes.com/2009/07/19/magazine/19healthcare-t.html?pagewanted=5
What do you think?
Saturday, July 18, 2009
The leads to a question. A Big, Hairy, Audacious Question.
How do you define Real Economic Recovery?
1> GDP growth? Economic recovery could be defined as a specific technical recovery from a recession as indicated by GDP numbers.
2> Employment Growth? Would you define economic recovery as a scenario where 96% of the country returns to productive work and innovation flourishes? Would this thought be in line with Schiller's and Roubini's contention that "animal spirits" play a part in worsening the economy?
I threw "innovation flourishes" in there, despite some question over whether government intervention in innovation helps. E.g. MITI in Japan.
3> GDP size? Would you define economic recovery in terms of GDP size? i.e. the world may not be what it used to be, but the world returns to some semblance of "normal" economic activity? Simply put, if financial institution balance sheets need to contract for a return to "normalcy", couldn't GDP numbers contract as we return to "normal" economic activity? Would this not really be a resetting of the GDP scale?
What does this mean to your daily life? Are there other, more effective recovery measures we could develop?
What do you think?
The Big, Hairy, Audacious Context
GDP as a "measure" vs. GDP as an indicator of true economic activity.
To illustrate an extreme case in point, there are remote parts of the world, say a self sustaining tribe in a remote village in India (an interesting example with a dichotomy between the stock market oriented urban economy vs. the rural economy), where people work hard every day to ensure that they can feed themselves. Individuals in this tribe own no land- its a jungle- and they move from clearing to clearing. From their perspective, they live full, healthy, economically productive lives.
However, due to the fact that this tribe exists in a very remote region, it not part of a GDP measurement.
On the other hand, GDP might stop contracting, and even improve for successive quarters, while job losses continue, and few new ideas that truly improve lives are launched.
Government Investment in "Infrastructure" for Economic Recovery
Is government investment in infrastructure a critical tool for economic recovery? If so, would energy and healthcare qualify as "infrastructure"? This based on a loose definition of infrastructure as a series of standard frameworks that simplify people's lives and make them more productive in leveraging their strengths?
E.g. Given the inverted population pyramid, could healthcare qualify to be called infrastructure, just like national highways?
Note: * Thanks to Amit for posting this on the Macroeconomics forum- it got me thinking about this topic again.
Brief Summary: How do we develop tools for governments to take decisions on the economic crisis? Create Socio-Economic Anthropological models that not only leverage standard parsimonious economic models and capital market inefficiencies, but also incorporate people's behaviour, potentially through market research tools. International finance and relative "behavior" of economies needs to be considered as well- stay tuned.
The Economist has an interesting article (yet again- thanks to Lori Sullivan for sharing) on how economics needs to change to adapt to the real world: http://www.economist.com/opinion/displaystory.cfm?story_id=14031376
It wraps up with a wonderful line-"...in the end economists are social scientists, trying to understand the real world". You can read the backgrounders listed at the end of the post, so I will refrain from an I-told-you-so-last-week.
Can Economic Models Actively Help Generate Solutions and Make Decisions?
The honest answer- I don't know. However, analytical approaches need to "improve". Referring to Public Enemies in a previous post was only a half joke.
Economic models need to incorporate additional variables as proxies of elements of the economy. This is more than economics learning from finance and vice versa.
This is more than economics
acknowledging capital market inefficiencies via economic models incorporating the inefficiencies in some way.
People's behavior is also an element of the economy.
Socio-Economic Anthropological Modeling? Or,
How to Get a Context to an Economic Environment?
1> The elements that make up the economy today are different than those in the 1930s. The U.S. economy today has a large services component.
2> The people that make up the economy today broadly differ in age groups, education levels and skill sets. The sectors you may want to stimulate to revive "animal spirits" need to match this demographic structure of the population.
3> People today may also behave differently than those in the 1930s. At the risk of throwing in a *seemlingly* vague commentary, here is an article that attempts to characterize an entire
generation of young Japanese:http://online.wsj.com/article/SB122548483530388957.html
4> Would we go so far as to say that the "animal spirit" of the 1930s was different that the "animal spirit" today? To throw in a little more science into the art, could we utilize market research (say clustering) techniques to characterize behavior of populations?
5> Can we then build Socio-Economic Anthropological models that bring in the "animal spirit" aspect of the economy to more accurately reflect the economy? Then, can we potentially predict the impact of actions meant to improve the economy?
What do you think?
From the I Told You So Dept., the "because I-have-been-telling-it-so-for-a-couple-of-years, and the-jury-is-not-out-yet" desk
So what am I talking about? Previous posts give you some background:
1> Economic Crisis and the Art of The Stimulus- To Boldly Go Where No Man Has Gone Before? http://randomjunkyramblings.blogspot.com/2009/07/economic-crisis-and-art-of-stimulus-to.html
2> Financial Transactions, Trust and Keynesian "Animal Spirits" http://randomjunkyramblings.blogspot.com/2009/01/financial-transactions-trust-and.html
3> Financial Markets, Economic Crises And Global Co-ordination http://randomjunkyramblings.blogspot.com/2009/01/stiglitz-wrote-interesting-article-in.html
4> There is an international finance component that needs to be analyzed as well. A case in point- the global impact of the Lehmann collapse. Stay tuned.
Christina Romer wrote an interesting guest article in the Economist on the Lessons on 1937:
The article states that the response to the fiscal stimulus in the early 1930s was pretty rapid, and cautions against switching to a contractionary fiscal and monetary policy too soon.
My take? I found it interesting that Ms. Romer picked healthcare reform as an example of how the government could bring about long term fiscal stability, given the various trade offs the government can make. Overall, the chart, and the numbers certainly tell a story.
Does Ms. Romer's argument convince? Yet?
Despite the seemingly obvious story we can glean from the chart, I would like to I would like to dig a little more into life and times in the 1930s. This is not my excuse to watch Public Enemies (deft touch there, isn't it?).
What would be the clincher?
I would like to leverage the economic data artefacts of the time strictly as socio-economic archeaological evidence that develop a socio-economic anthropological view (phew!) of the time.
Socio-Economic Anthropological Snapshot? What? Why?
1> If we seek solutions, then we need to delve into why some solutions worked in the past. A cool chart demonstrating exponential growth as a result of a stimulus is really a starting point.
2> How is this different from research already published? Isn't there enough research out there that succintly (parsimoniously) captures conditions in the 1930s via standard economic models?
A great example of how I differ can be found here: http://freakonomics.blogs.nytimes.com/2009/07/10/loneliness-or-cheap-wine/?pagemode=print
3> Socio-economic anthropological snapshot? Phew! Yes, if the objective is to stimulate the economic engine, how else do you do it without understanding the motivations behind the number?
4> How specifically does a "better understanding" help us act? This understanding may tell us whether the current socio-economic climate contains "discontinuties" that would impact the models [**] we are counting on to help us solve the current crisis. This understanding of the discontinuities may help us improve the solution.
5> If it further helps drive home the point, here's an apocalytic scenario I have previously posted about: http://randomjunkyramblings.blogspot.com/2009/05/innovation-sentiment-economics-and.html
What do YOU think? As always, I welcome your insights.
[**} Am I being "circular" here? Or am I truly rejecting economic modeling as an approach?
- My contention is that current models may not help us define solutions.
- At the risk of sounding like a behavioral economist, we need to dig a little deeper into the context and gain insights.
- However, as an agent in a behavioral market, how can I count on I getting real insights on potential differences between the crisis in the 1930s and the crisis we face now?
- Even if I do, should I not be able to find proxy variables to develop a "new model" that leads to an actionable approach?
1> The ideas were first published on a macroeconomics forum on July 12, 2009 while gaping at Tim Geithner on Fareed Zakaria GPS. Many thanks to Prof. Rosensweig for the wonderful forum.
2> The ideas in the post above are a further elaborate my thoughts below, earlier this year:
3> The next post stretches my ideas on economic models a little further:
Thursday, July 09, 2009
Sustaining a Brand Conversation: To Strategize, or not to Strategize, about Social Media? A Note to Brand Marketers
Why should you care about the Social Media industry beyond what you are doing in it? Why should you care about how it evolves?
You care about sustaining a Customer Centric Conversation with your customer. That's why.
You are already a step ahead of the competition if you are asking these questions.
Some might question why we need to think about market structures, channels, consumer behavior, and returns on investment in the Social Media industry. Fair enough. There is enough activity in the hyper-competitive Social Media market right now for folks to dive in and get a lot of the work done quickly in funky, interesting ways, while helping the market evolve as a byproduct. We could even discount research that discounts first mover advantage.
Recently, Facebook surged past MySpace in Monthly Unique Visitors. If that news made you wonder how you are impacted, or how your company's busy work in Social Media is impacted, you are asking the right questions.
If You want to sustain a conversation with your customer, without being distracted by the ebb and flow of the social media buzz around you, you know you want to tie in your social media tactics with strategic market insights.
Instead of steps that assist your journey toward an effective social media presence, your search leads you to information on how to get things done. Lets change that. Right here. Right now.
Here are four thought enablers that help you cut through the clutter to formulate a social media strategy.
The Interplay between Marketing and Social Media:
1. Marketing is currently following Social Media: What we define as conversational marketing right now, is just marketing catching up with social media. Social media can be abstracted as a process of developing new channels of communication. How you leverage these channels is driven by your brand. Marketing in these channels will mature when brands begin to consistently leverage the innovation in channels for improved resonance.
2. Marketing Future 2.0 goes beyond Web 2.0: Marketing has a few steps to take before it truly takes off, and leaves social media behind to become a platform. I will hold on my vision for marketing here.
3. The Social Media Industry is a Market: Social media will become a platform and will have a few dominant players like platform markets do. However, the innovation game is not over yet. While some players have taken an early lead and have shown the legs to innovate, social media tools have not reached a communication channel innovation plateau yet.
4. Value: Value, value, value! How do we justify social media spend to a corporate? How do we tie it into the brands, say, in terms of a Brand Equity Pyramid? This is the outcome of some ruminating on my previous blog here: http://randomjunkyramblings.blogspot.com/2009/06/brands-economics-blink-twitter-facebook.html
Needless to say, the note assumes that you already are pursuing social media opportunities for your brand. If you do not have your feet wet yet, you are welcome to read some of my previous posts below for some ideas- I would heartily welcome a conversation on those points of view.
This loops us back to the next post that started this train of thought, proving that Execution -> Metrics -> Strategy are not linear, but form a circular reference, and spiral into greater maturity as the industry matures. Therein lies the risk and the reward.
While I am at it, here's a blatant plug: please feel free to contact me for more! You know how to find me.
Psst... Watch out for my Twitter game- BigBirdBots!
Thursday, July 02, 2009
At a wonderfully hosted interactive media event last evening, I sprung 2 stats at a social media strategist, while emphasizing the need to critically look at trends and consumer behavior. The bright strategist I was chatting with was aware of each of them, however, when we put them together and... here, I will let you decide:
1> Average number of Twitter followers: 126.
2> Over 30% of Twitter users tweet once, never to return.
On that note, let me splash some more statistics around this page for further insightful conversation with you: http://blogs.harvardbusiness.org/cs/2009/06/new_twitter_research_men_follo.html
What do you think?
Update: I usually restrict my unrestrained editorializing to face to face conversation. However, thanks to a twitter (Thanks D.B.) note, I will let loose a little. :-D
From the Dept. of Stick-Yer-Neck-Out-And-Live-To-Tell, the Die-Hard-With-A-Clue desk.
Why should you really care about the Social Media industry beyond what you are doing in it? Why should you care about how it is evolving?
The statistics below kicked off an interesting conversation with a social media strategist. The math jumps at you. The average number of twitter followers could be skewed by the 30% who never return, and the Twitter BigBirds TM (Sidebar: CNN and Ashton Kutcher are Twitter BigBirds; No disrespect to Tweet TM). Our conversation converged on the fact that business acumen remains key to success here.
The theme of this conversation dovetailed with the theme of another with Susan Lewis who is at work finding sponsors for her Twitter game. The fundamental question here is: How do we help a corporate entity justify its spend in social media, beyond harking to the old Internet boom eyeball metrics?
Finally, is it just about measurement? What are we looking to achieve with the measurements? Stepping back from the metrics, how should brand marketers be thinking about their social media presence?
More on this in part Duh: