Project starts and signoffs: lessons from the Costa Concordia cruise tragedy

The Costa Concordia Cruise tragedy is horrendous. That the captain might have wanted to please  the head waiter , who comes from Giglio, by going too near the shore is inexplicable.

Particularly for the hapless passengers on the cruise. It's one thing, if you are on a small boat alone, its entirely different if there are thousands of passengers and a booming global cruise industry: that never really forgets the Titanic.

Bringing a ship to dock is metaphorically very similar to project sign offs- just as the "set sail" maritime  similie is  often  used when starting off a project.  Here are some key take aways for leaders and managers from the Costa Concordia tragedy and the conduct of its Captain  Francesco Schettino:

  1. Think  Sully Sullenberger and his great leadership as Captain of the US Airways flight 1549 that lost engine power and landed on the Hudson river with no injuries or loss of life. Lesson: Captain takes full charge in case something goes wrong,unexpectedly.
  2. Airplanes can be on auto-pilot when the weather is fine and the plane is in flight. Pilots manage take-offs and landings personally. Just as you'd put your car on cruise control  only when the highway is clear. Lesson: Project starts are like take-offs and project signoffs are hand-offs to the client and the project leader must be personally involved. Just a good hand-off builds loads of B2B satisfaction. 
  3. Never show lack of discipline ( as Captain  Francesco Schettino) during the project sign-off phase. In other words, the project ending phase is like an aircraft landing and needs rigid adherence to protocol and process.Lesson: Follow established protocol and process during project starts and signoffs.

Let us hope that the passengers and their families  of the Costa Concordia are able to overcome this needless tragedy.

Doctor private practices are caught up in $1 Trillion health insurance B2B negotiations

Call it the mother of all high value B2B negotiations– estimated at $1 Trillion  and 40% of total health-care spending in the US. This from research by Robin Lee of NYU who made a great presentation of  his work at Yale  School of Management, last month.

When you hear of doctors going broke with private practice , and that 50% doctors in the US are in private practice you start understanding the importance of the $1 trillion B2B negotiations in the US health-care market. Here are how things work in this industry in the B2B sense:

  • Insurance companies pitch to employers (B2B) and employers try and get the best deal they can and employees are increasingly asked to pay more by way of co-pays. But more on this B2B piece in another post.OK there is some B2C here when individuals buy health insurance.
  • Insurance companies negotiate B2B with the hospitals/doctor practices. Individual  practice doctors are offered very low reimbursements and they are in no position to negotiate with 5000 patients compared to the 100,000 in hospitals. Why? one more  reason is that hey- they are doctors just wanting to do a small business, passionately interested in their patients,reputation and expertise. Here is a doctor'story, and many doctors today find it simpler to work for a hospital because apart from getting better pay there are less headaches that come with running a small practice.

When a doctor closes a small practice or small business even to join a larger hospital – you can be sure that (a) the office loses a tenant (b) some of the doctor's office employees get laid off (c) the pharmaceutical/medical equipment company rep's jobs shrink. The latter because now the hospital account rep just sees one more doctor.

But the real harm is to the patient who does not see a private practice doctor. For routine ailments, there is no preventive medicine than a good private practice doctor, who can really save money for the whole system by timely, patient-centric  personal involvement.

Becoming a physician is hard work of many ,many years  and doctors need to be motivated by at least reasonable rewards from the insurance system including both the government and private sectors. If more doctors give up private practice in America, it cannot be good for the people or the economy.

AT&T wireless improves service quality 25% – but still considered “neutral” carrier

AT&T wireless got poor consumer satisfaction ratings from Consumer Reports  and was not allowed to buy T-Mobile as Government regulators and the public were skeptical. Well the good news is that AT&T dropped call rates have improved by 25%.  This is a massive improvement – and yet the customer perception ratings have  gotten to only"neutral. "  But that's a positive direction!

In fact, many folks who had iPhones with AT&T moved to Verizon – firmly perceived as the carrier with the best reception. Apparently, the Verizon network has been having outages because  of  perhaps the demand for bandwidth that all those iPhones,iPads and Verizon Wireless services require. But people were more upset with the $2 bill payment fee  which Verizon  finally withdrew. What's interesting is that most people would tell you that Verizon  has "much" better service than AT&T and that is a great marketing success by Verizon. Remember:  Can you hear me now?

AT&T on the other hand did a brilliant thing by tying up  exclusively with iPhone and Apple. The several years experience  and struggles with smart phones and mobile technology  has re-oriented AT&T 's thinking towards improving bandwidth. As Chairman and CEO Randall Stephenson explains in an interview with Fortune that AT&T aims to focus on the infrastructure piece of getting the physical fibre into locations that allow wiress transmission. Next they want to buy the "air" or bandwidth and on that the company spent  $20Billion last year. So the 25% improvement has not come cheap and keep in mind that AT&T offers unlimited wireless data to its old customers to stop them from moving to other carriers who have usage limits on their data plans.

AT&T is clear that they want to move into an entirely wireless and mobile type of technology offering and for this they would need to develop the backend infrastructure and make  spectrum available.

Given that the AT&T and Apple iPhone organizations seem to work well together shows that the customer service  end is improving with years of working together. For example,  a few years ago they would bounce the customer from AT&T call center to the AT&T store to the Apple store but there is a market improvement at that end.

The question is when will the AT&T  wireless "neutral" ratings improve to "positive"  ?  Could AT&T service   be ever perceived better than Verizon?  Perhaps-  if the AT&T spectrum availability stays ahead of the zooming wireless bandwidth demand.

Kodak bankruptcy: when digital technology overtakes brilliant marketing

It was just a few years ago that you dropped off your Kodak film roll at Walmart or numerous Kodak processors and they would have prints ready for you with the negatives. With the Kodak bankruptcy news one is not entirely sure whether Walmart photo centers offer film processing at all today! The website does allow you to upload digital photos and get prints. A pioneer in photography  with brilliant marketing  Kodak went on clinging to the brick business like kiosks for self service enlargements, 800 film speed disposable cameras and a range of good digital cameras  that proved to be too little and too late as  Kodak's whole business model depended on film.  Incidentally, those in the digital camera market are in serious trouble – from cell phone cameras. Just check out the great quality photos you get from cell phones today.

And this after generations of Kodak marketers did a brilliant job of marketing that included teaching photography to the consumer of the time. Watch the commercial alongside. Even professional photographers are feeling sad today.

Here is one company that had brilliant marketing but lost touch with the market and was trying to reverse the inexorable digital technology trend.  You really can't explain the self service Kodak kiosks because you never saw people lining up for self service  for average photos from a machine when you could get awesome inexpensive prints from the  photo center so long as you were willing to bring your photos on a flash drive or better still upload them through your camera's digital memory. Or if you really wanted to "Do-it Yourself"  you could take prints from your personal printer. Infact, today total photos clicked and digitally stored or shared in social media are probably far in excess of what is printed at home or from a photo center.

And the Kodak problem persists with organizations in every industry- that  large segments of your market will switch to at least part digital solutions is something most folks (in any former  "bricks" business ) are not able to embrace.  And without embracing change – it's hard to adapt and compete.

Starbucks:raises prices promotes “Create jobs for USA”

What is the price of a small (called tall for that upbeat feel) Starbucks regular coffee ? Well, the Pike Place Roast does does come under $1.60 but it doesn't matter as most people order something much grander and spent over $6 on average per visit in 2008. Starbucks re-organized under founder Howard Schultz and seems to be on track  again with more stores,hiring and a price increase  that is making headlines. Prices are likely to go up by 10 cents for tall lattes in the North East USA. The price increase is affordable for the Starbucks target market and is good news for the economy, at least for the wealthier folks. But what about the poor in the US or the  bottom of the pyramid?

It was in an associated CNN story that the Starbucks promoted "Create jobs for USA"  was  mentioned. Launched in late 2011 the idea is nice and attempts to innovatively link the relatively well off Starbucks customer with  a philanthropic effort to create jobs via financing small businesses in the US .

Founder Howard Schultz  famously grew up in the New York projects and epitomizes the American Dream. Now, Schultz  says (see video)  that the long recession has made large sections of the US population skeptical that things will become much better for those at the bottom of the US pyramid. So "Create jobs for USA" is an idea to  raise funds by offering a wrist band for donations of over $5 to Starbucks customers who come in to their stores. In alliance with Opportunity Finance Network , the Starbucks foundation hopes to increase the funding to small businesses, the engine of jobs in the US.  The typical Starbucks customer should be amenable to donating for such a cause. Also  given the Starbucks record of corporate social responsibility , for example it provides medical insurance to all employees and follows ethical and responsible coffee procurement practices, it does look like "Create jobs for USA" will be able to help create jobs at the community and small business level in the US.

As the economy turns around in 2012: re-training opportunities in the healthcare value chain

As 2011 winds down there is positive news in the quarterly jobless numbers,in real estate and the stock market. 2012 should be better than the last four years of the recession. OK it may not be boom time but there does appear to be the right signals for at least modestly better economic times ahead in the US. So where are some opportunities if you want to retrain and re-skill , even if you have a job?

One definite opportunity area is healthcare which is in focus ever since the healthcare reform by Democrats and President Obama that Republicans derisively call Obamacare and promise to repeal if they come to power in 2012. But guess what: no matter what the law or politics of healthcare there are opportunities galore for re-training, re-skilling to make healthcare more efficient and reach all Americans. People are living longer– just because of better medical research and its dissemination and well- better healthcare ! This spawns a whole bunch of requirements including gym trainers, physiotherapists,  home care for the elderly, senior living,leisure and entertainment. Just look at the huge growth rate of seniors in the US.

And then you look at the healthcare opportunities at various points of the value chain of healthcare delivery in the Fortune list of hot careers for 2012:

  1. Information technology opportunities exist at every point of healthcare. Start with patient records, to insurance billing and claims – you name it and there is something to be improved and costs reduced.
  2. Healthcare professions considered high growth include direct service providers like nurses, physical therapists,dieticians and  dental hygienists as “wellness” becomes more important.
  3. Healthcare support staff requirements in administration, marketing, finance are likely to grow as you cannot really deliver the entire healthcare online and a whole bunch of people beyond just the doctor is needed.
  4. Engineers for whom the medical equipment business is a growing area.
  5. Industrial skills including welders, electricians who specialize in the  healthcare sector  is  a great possibility for those in the trades.
  6. Big pharma will see less recruitment as small biotechs and pharma try to be more agile in drug discovery and will need research folks and associated support staff to run small organizations effectively.
  7. Sales is a huge field for health insurance in B2B and B2C side as the market develops.There should be considerable growth in the digital marketing and sales funnel in all parts of the healthcare channel including hospital to patient. 
  8. Accounting and finance skills in the health sector is a specialized skill and is just likely   to grow.
  9. Discount retailers are trying to offer both prescription drugs at low cost and first stop       instant medical care. Just look at how everyone has got into the “Flu shot” business this year!
  10. Management skills for any part of the healthcare value chain should be in high demand by start-ups and existing players that are trying to innovate in the healthcare sector.

So just as you are thinking of new year resolutions around weight loss and healthier eating consider: that  no matter what your professional interest there is some opportunity in the healthcare value chain that can be developed.

Wishing all blog readers a Very Happy 2012 !

Nike Air Jordan frenzy,Payroll Tax deal and the iPhone 4S Santa’s Christmas assistant Siri: is the economy turning around?

The  1Billion $ + Air Jordan brand of Nike shoes had frenzied crowds buying the Black and White  Jordans that went on sale at mid-night Thursday. People lined up in thousands all over the US and needed police protection as they walked back to the parking lot with the $180 shoes. Many were put up at eBay and folks were asking for $500 to sell their "catch". Interestingly,in the rush to buy the new Jordans, some of the brand's fans left their perfectly good Nike shoes behind if you see the ABC video here ! The excitement around the brand  got so out of control that Nike had to request loyalists to be safe and respectful. 

If consumers in such large numbers could take such a lot of trouble for shoes, it sure could be a sign of increasing US consumer confidence.

Also helping public  confidence was the two month extension of the payroll tax cut just before Christmas. That both parties could work together is happy news.

In the electronics space,the iPhone4S  (with voice assistant  Siri)  was doing very brisk business. The iPhone Santa Ad is among the most successful ads of the holiday season. 

The Apple business is highly digitized and integrates  stores and website really well. If you could not find a 16 G White iPhone 4s in any Apple Store in Connecticut on Thursday, you were required to 'reserve" an iPhone starting at 9 pm at the Apple website. The only problem was that the Apple booking system went on crashing for at least 15-20 minutes before one could search for availability. Only one out of five stores had the iPhone and we could reserve one on line. At the store, after only a brief wait, we got the phone.  That there was digital overload (no pushing inside the Apple mall store though!) for the iPhone4S is a good sign for the economy. It appears that 2012 will be better for business than 2011.

This blog wishes its readers a Merry Christmas!

College Text Book Rentals: Chegg is like Netflix for the supply chain- but a social cause marketer at the front end

Ask any US college student and they’ll tell you how expensive college books are. To come up with a working  textbook rental model for this $10 billion segment of the book market is just brilliant for Chegg.com. At the back end Chegg.com has a Netflix type model for logistics. It even has former Netflix Chief Operating Officer Tom Dillon to manage the logistics and distribution (as of January 4, 2011) .

[ Note: This post was originally published on December 21, 2011. It was reviewed and updated for links and formatting on February 6, 2021. The textbook business has gone enormous changes particularly after COVID. Similarly, student behavior has changed a lot eg. younger folks are more on Instagram than Facebook as the video below suggests. Note that this post gives you a sense of how things were in 2011.]

In this video, Chegg CEO Dan Rosenweig explains some of the Chegg model. While Netflix founder Reed Hastings famously founded Netflix upon being charged a $40 late fee for a video cassette, for Chegg.com it is the college experience with high cost  text books of founders Osman Rashid and Ayush Phumbhra  that seems to have nailed the “customer need” part of this wonderful innovation.

The great recession with rising college costs and crushing student loans have turned the Chegg model to something of a social cause. By planting a tree for every book , Chegg has been able to align an environmental  cause to its business model as well.

Apart from the logistics and distribution/return channel similarities with Netflix there is a major differences between Netflix and Chegg in terms of opportunities for the creators of content ( Movie makers for Netflix and College Text book writing industry for  Chegg). Movie makers with a small audience or less clout with theatres would not be able to get the movie to the audience. Netflix was able to provide the long tail opportunity to such movie makers.In contrast, 80% of College Text books are produced by four publishers and upper level courses have small numbers but students have to get the books, in many cases with a financial struggle. With Chegg probably the students’ life will be easier.

Given the other social media type of approaches (sharing of schedules on Facebook including an iPhone app ) that Chegg is employing – the college textbook market is ready for disruption. Time for textbook publishers, their sales force and college text book stores to take a look at their business model.

About StratoServe.

AT&T and T-Mobile merger off: when upstream supply chain consolidation alarms consumers

Supply chain consolidation is a huge mantra in supply management. When you consolidate supplies with fewer suppliers, things become easier to manage . And this is exactly what At&T was trying to do by buying up T-Mobile so that all that wireless bandwidth became available to feed the zooming demand for wireless data via mobile phones,iPads and so on. The AT&T  and T Mobile merger would have  created an entity with 120 million customers, the largest telecom company and with Verizon controlling 80% of the US market.

So what is the problem : when band width becomes available it's good for AT&T, T-Mobile and the entire industry? Not so if you watch this video from LA Times. Obviously, supply chain consolidation is not going well in this case of upstream supply chain consolidation.

It's not so much that monopolies are frowned upon as much as in the heyday of antitrust law enforcement. But in this particular case consumers seem to have bad experiences with US cell phone operators. In fact, from the other end of the supply chain,i.e., the customer end both AT&T and T-Mobile are consistently rated at the bottom by Consumer Reports. And these bad ratings could not help the merger case that AT&T and T-Mobile were trying to build on the grounds of increasing bandwidth.

On the other hand if within the wireless industry, AT&T and T-Mobile had very high customer satisfaction perhaps the supply chain consolidation logic might have worked with the public and the Government regulators. 

Both AT&T and T-Mobile have a lot of work to do. And that work is not on the upstream consolidation of  spectrum but trying to get the wireless customer side right.

Where did medical transcription, tax preparation, legal documents work get outsourced? To self-service technology

Just a few years ago if you traveled in small town India you would see billboards  offering medical transcription training. Students would be put through rigorous training to learn medical terms and also go through intense training to understand the American physician's accent on each of these highly technical medical terms. For the assurance was that once the doctor dictated notes in America and uploaded the audio file the transcription would be available the next morning in America – with 99% accuracy at a fraction of the cost to transcribe in America. Today medical transcription is slow business in India.

Tax preparation was also an activity that paid some extra money to the tax preparer who did not have to be a CPA and even CPA's had some extra income during tax season. Similarly, legal documents like Wills provided simple work and a modest fee to the typical town lawyer in America.

All these three professional services type of work in America got outsourced but not to India or another low cost location. They got outsourced to self-service technology. Here is what is happening:

  • Medical transcription is becoming obsolete as electronic medical records via hand held devices become more accessible. Doctors follow evidence based medicine and check mark boxes on their devices. When integrated with insurance billing the diagnosis,treatment and billing is all squared away. Perfectly.
  • Tax preparation is also taken over by tax preparation software . For next year Intuit the makers of Turbo Tax will offer free telephone advise to capture a segment of customers who feel challenged and  go to tax prep chains like H&R Block. Turbo Tax via self service  costs $44 and a return at H&R Block costs $188. 
  • Legal Document Services are expensive and according to a report 80% Americans cannot afford legal fees and therefore take the help of sites like Legalzoom and Rocket Lawyer. In the process the local lawyer loses fees.

So no matter what your organization's service offering, be sure that what can be done by self-service technology will be done so by your customers. It is therefore timely to think about expanding your services to offer unbeatable value to your customers. Value that builds on your expertise and the work that your customer can do via self service. A tough one sometimes when you are competing against self-service technology and not just low-cost overseas competition.