Human Capital Alliance Inc, Thailand, Singapore: Reinventing in Disruptive Environments

Human Capital Alliance senior advisor K I Woo tells why businesses must continuously reinvent themselves.

In today’s highly turbulent disruptive business environments, companies must continuously reinvent themselves to be sustainable.

Mark Bertolini, Aetna Insurance Company’s CEO, David Duncan and Andrew Waldeck Innosight partners said in their recent Harvard Busi    ness article that companies must identify key marketplace “fault lines”.

“No business survives over the long term without reinventing itself, but knowing when it is time to transform is difficult.”

Knowing when to change

Knowing when it is time to transform, the authors said can be even more difficult. Several interrelated “fault lines” usually indicate that the ground beneath a company is unstable. These fault lines focus on several key fundamentals questions: whether the business serves the right customers, uses the right performance metrics, is properly positioned in its industry and deploys the right business model.

Fault lines

1.Is business model aimed at right customers?

For most of 160 years, Aetna serviced mainly large corporations, government, universities and other employers. “Typically, one person or small department chose health plans for entire organization” Aetna’s core competency was selling to intermediaries rather than end consumers. Because managers and brokers were always trying to demonstrate value to their organizations, the business came to mean always offering something “new”. Few members used the new features in a given year but paid higher and higher premiums. These one-size fits all plans satisfied primary customers’ needs (benefits managers) but not the true end customers.

Switching to B2C emphasis:

Aetna immediately began develop new products and services directly targeted at end-user needs and began helping consumers make informed decision about health.  The business model’s primary purpose was to develop the right health plan for situations and hospitals, clinics and providers and most of all provide higher quality lower-cost cares.

Questions asked:

1.What are each group’s unmet needs? Do they vary across different customer types?

2.Can new competitors seized opportunities from potential customers we are servicing?

3.Are customers loyal to our product or captive because of lack of options and would they defect if they could?

4.If we are a B2B company, do business customers’ needs conflict with those of end consumers?

5.Could emerging technologies simply change how end users’ needs are met?

2.Performance metrics

When industries reach inflection points old metrics are often deceptive and sometimes dangerous. Once reliable measurements, may often lead to sharp declines or even failures, even though short term results may be healthy. For instance, health benefits managers may want the largest physician and hospital networks possible within a cost range and minimum complaints. Aetna began measuring three factors that were most valuable to future customers:

1.Improving care experience

2.Improving populations’ health

3.Reducing costs

New focus:

Aetna’s old business model focused on acquiring new customers, building the customer base and lower risk exposures. After considering the following questions, its new model focused on retaining existing customers.

1.Do we understand what our customers really value? How well does our production performance or service match customers definitions of value?

2.Will customer of tomorrow define quality differently from today’s customers?

3.How closely do customer satisfaction and financial metrics correlate? Are customers’ satisfaction scores as strong as our financial indicators?

4.Are we measuring units and volumes rather than outcomes? If outcomes, are we measuring ones that matter to customers, or ones that matter to us?

5.Do our products or services have more features or complexity than most or our customers’ value?

6.Is there a new metric that aligns with the needs of future customers?

READ: 3. Industry Position