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HEALTHCARE REFORMor
CUSTOMER FOCUSED HEALTH MOMENTUM?
HARVARD BUSINESS SCHOOL CLUB OF WASHINGTON, DC
ENTREPRENEURSHIP ROUNDTABLE
January 21, 2010
We Build Growth Momentum for Life Sciences Companies
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"HOW COULD SUCH TRULY TALENTED PEOPLE ALLOW THEMSELVES TO GET INTO SUCH A MORASS?“
LOU GERSTNER
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Healthcare Reform
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What is The Momentum Effect?
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TME is Efficient Growth Strategy based on:
Compelling customer insights
Customer focus product development
Vibrant customer engagement
* The Momentum Effect, JC Larreche, Wharton School Publishing
Amazon.com
Ranked 4th inBest Books of 2008Business and Investing
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TME: Efficient Growth Through Customer-Based Strategies
Momentum-Powered Firms (Pioneers)outperform the DJ Index by 80%
Pushers: 3% increase in marketing/sales ratio, no market cap change vs. DJIA
Plodders: no change in ratio, 28% decrease in cap
Pioneers: 4% decrease, 80% increase in cap
0
500
1000
1500
2000
2500
1 2 3 4 5 6 7 8 9 10 11
Series1 Series2
Revenues grow faster than marketing spend in momentum-powered firms
Revenues Marketing Expenditures
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The Momentum Effect in Action
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Initiate: The Customer Insights PipelineInspire: The Unlimited Potential Spirit
Cut: Compensating StrategiesRedeploy: Towards Customer Engagement
Efficient Growth Through Customer-based Strategies
A VISION
4 ACTIONS
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Momentum Companies & Brands
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Case Study 1: SKYPE (1/5)
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eBay acquisition of Skype for $3.1 B in 2005
> $3 B valuation in 3 years
53 M users in 3 years
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Case Study 1: SKYPE (2/5)
The Value-Creation Process
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Value Origination
Focus: Customers
Value Capture
Focus: Partners & Competitors
Value Extraction
Focus: Internal Efficiency
SkypeOut: Additional subscribing service cross-sold to call landline phones
Following charged-for products (Text messaging, cell phone calls…)
Partnerships with manufacturers of headsets and Internet-enabled handsets
Appropriation of dissatisfied customers from telecom providers
Internet chat, video transmission and audio communication in the same tool
Software simple to use, easy to install, reliable, free
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Case Study 1: SKYPE (3/5)
Momentum Design generates customer traction
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Need for a new telecommunication model
Culture of free exchange of information
Communication
Low cost
Freedom of Access
Reliability
Shared enjoyment
Valuable advertising target with networking power and high potential for paid premium products
“The whole world can talk for free”
Compelling
Value
Compelling
Insights
Compelling
Equity
Power Offer
DesignMomentum
Design
What do these
customers
value ?
What’s the
offer ?
What value
do they have
To Skype ?
What is
the customer
insight ?
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Case Study 1: SKYPE (4/5)
Momentum Execution accelerates growth
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Convenient
Simple to use
Easy to install
Reliable
Breaking free of excessive charges from telecoms providers
Resistance to exploitation from quasi-monopolistic situations
Member of a trendy club
Sharing a good deal
Software already on PC
Prompt from other users
Contact with community
Vibrant
Satisfaction
Power Offer
Execution
Vibrant
Engagement
Vibrant
RetentionMomentum
Execution
What drives
emotion ?
What drives
action ?
What drives
advocacy ?
What’s the
offer ?
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Case Study 1: SKYPE (5/5)
Skype: a Customer Momentum Leadership Company
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“The model for us is viral growth. We try to get as many people as possible to use Skype for free and some of them become paying users. We are not pushing it because it is a network effect. If you push too hard to convert free users to paying users, you limit growth. It is like putting to much charcoal on a barbecue” *
“Some people want to monetize – that is, move users from Skype’s free service to paid for ones – faster, but the key is to figure out what is the right speed for monetization. If you act too aggressively, there is a real risk you will lose the huge active user base” *
* NiklasZennström, Skype’s co-founder and former CEO
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Small business opportunity
High value potential
in terms of:
Case Study 2: GLEEVEC (1/2)
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Unprofitable at first sight
But exceptionally effective to prolong cancer patients’ lives
Made an urgent priority by the CEO, D. Vasella, despite a low ROI
Concept of customer wider than simply the product purchaser
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Case Study 2: GLEEVEC (2/2)
Leveraging internal and external Momentum
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Building internal and external Momentum that powered a record breaking performance
Vision:
Internal Momentum External Momentum
Strategic Objectives:
Inspire the Unlimited Potential Spirit
Key Strategies:
Results:
Motivate employees Engage important stakeholders
Patients enrollment in clinical trials lasted 4 months instead of 3 years
Drug arrived on market after only 3 years
The R&D team committed itself to beat the management’s deadlines
Employees volunteered for over-time work
Targeted group of stakeholders offer each something different to the firm
The press created a buzz around the new “ wonder drug”
FDA approved the drug in 10 weeks, the fastest ever sanctioning for a new drug
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Michael Porter’s PrescriptionHealthcare needs more competition
“Value is the engine of self feeding improvement”
1. Incentives based on improved Health
2. Differentiated Provider Services
3. No Restriction to Access
4. Easy Access to Medical Information
5. Transparent Pricing
6. Simplified Billing
7. No Discrimination in Insurance Underwriting
8. Minimal Coverage for all
9. Payer strategies based on Efficiency and Choice
10. Fewer useless lawsuits (Tort Reform)
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Tel: 1 212 584 4284
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