why we need to take a customer focused approach to healthcare

21WestPartners

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

21WestPartners2

Copyright © 2009 | 21 West Partners LLC. All Rights Reserved

21WestPartners

"HOW COULD SUCH TRULY TALENTED PEOPLE ALLOW THEMSELVES TO GET INTO SUCH A MORASS?“

LOU GERSTNER

Date 3Copyright © 2009 | 21 West Partners LLC. All Rights Reserved

Healthcare Reform

21WestPartnersMOMENTUMEFFECTSPARTNERS

What is The Momentum Effect?

4


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


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

5



The Momentum Effect in Action

6


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


Momentum Companies & Brands

7



Case Study 1: SKYPE (1/5)

8


eBay acquisition of Skype for $3.1 B in 2005

> $3 B valuation in 3 years

53 M users in 3 years



The Value-Creation Process

9


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



Momentum Design generates customer traction

10


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 ?



Momentum Execution accelerates growth

11


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 ?



Skype: a Customer Momentum Leadership Company

12


“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


Small business opportunity

High value potential

in terms of:

Case Study 2: GLEEVEC (1/2)

13


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


Case Study 2: GLEEVEC (2/2)

Leveraging internal and external Momentum

14


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


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)

15


21WestPartners

1120 Avenue of the Americas

7th Floor

New York, NY 10036

Tel: 1 212 584 4284

www.21westpartners.com

Copyright © 2009 | 21 West Partners LLC. All Rights ReservedOctober 2009 16Copyright © 2009 | 21 West Partners LLC. All Rights Reserved

why we need to take a customer focused approach to healthcare

Documents