Fire drills. That’s what a lot of healthcare strategic planning looks like.
The need for a decision arises, and instead of looking to data and quality market insight, Product and Sales leaders (and even executives) are guided by budgets, influence from the board, and worse, political pressure around pet projects. Decisions get made without detail or rigor and are shaped from the top down, rather than from the perspective of client needs, market reality, and strategic goals.
As we head into 2017’s Strategic Planning season, I want to share some industry-specific lessons I’ve learned from situations where strategic decisions were based on gut instinct, client demands, and politics. I also want to help you avoid making those same mistakes.
The most important tool in making those smart strategic decisions? Informed data that is contextualized within the reality of healthcare.
Gut Reaction Decision-Making in Practice
In my first role as a Product Manager I learned about gut reaction decision-making.
Every year at that organization, IT development capacity was over-committed, and every year they would go through the process of randomly cutting items off the product roadmap. They would review products, scraping them to their bare bones, frequently cutting critical features. One of those features was often reporting and, unfortunately, when you don’t have reporting, you don’t have the essential ability to prove ROI to your clients.
Leadership thought they were paring things down to their minimum viable product form, but they trimmed so much that what was left wasn’t actually a product at all.
All this happened because the decision-making process wasn’t based on business cases or market sizing. No. It was based on existing client demands (they understandably didn’t want to bail on client promises), gut instincts, and politics that frequently centered around executive pet projects.
If you work in a similar environment, informed data is crucial. It gives you the power to counter subjective decision-making as smoothly as possible and build successful strategic plans in even the most political environments. (For example: It’s difficult for an executive to justify holding on to a pet project that has no real ROI when the company can focus on two or three products with huge revenue potential in 2017.)
Gut Reaction: Our target segment of healthcare is enormous. We’ve got tons of potential!
The Reality of Informed Data: Not all white space is created equal and the reality of healthcare is that many companies will not switch until someone dies or retires.
You can look at a segment of healthcare vendors, such as claims processing systems, and the market potential looks huge. The reality is, though, nobody is switching. It would take 15 years and a death to get most facilities to rip out their claims system and switch to a new one.
The challenge here is that in examining this segment, you can receive uninformed data from even highly-experienced (and frequently expensive) analysts or investment bankers, and they’ll come back to you with a market size that completely misses the fact there is simply no replacement market for claims processing systems.
Data matters, but context is everything.
Gut Reaction: We build what our clients need.
The Reality of Informed Data: Some companies will build their roadmap based on client requests, one tweak at a time. Although this sounds like a market-focused approach, it misses the big picture.
Product Roadmap Planning should reflect the goals of the organization over the next 3-5 years including maintenance and enhancements on live products. As you build enhancements to your current products, you need to validate that this functionality will drive more demand for your solution, provide upsell opportunity, or help retain clients. New functionality should be relatively universal, and valued by more than 1 or 2 customers. It should also align with your organizational strategy by serving the market you target. If your current roadmap is just a jumble of features and functionality that have grown out of client needs and tweaks, that’s a problem.
Fortunately, you probably just need a simple roadmap cleanup.
Informed data can be used to investigate the true needs of your clients, get beyond what they shout out in demands, and build out short- and long-term market planning for your organization.
Gut Reaction: Everything’s better if we do it in-house. That’s who we are.
The Reality of Informed Data: Partnerships and acquisitions can sometimes be beneficial, but many organizations shy away from them for cultural reasons.
This is an issue I’ve run into repeatedly in healthcare, and it can be a terribly expensive one.
Planning your portfolio involves choosing between options including developing a new product, acquiring one from outside your organization, partnering with another organization to meet your goals, and sunsetting an existing product altogether. You will need to consider multiple factors that range from pricing to ROI, but each of those should be supported by quality, informed data.
Pro Tip: Every new product or solution doesn’t need to be built by your team. It might seem like a better idea to build in house, especially if your organization has a history of not partnering, but when planning an effective portfolio, it is best to look at all of the options.
Gut Reaction: We’re pricing too high.
The Reality of Informed Data: You could be in the wrong market or simply missing key features.
At some point in time, you’ve likely received feedback from your sales team that your pricing is off. This could be true for the product, but you could also simply be knocking on the wrong doors. When this happens, you’re at a point where a decision needs to be made to either
Before you lower your price, make sure you are targeting the right market with the right product. In order to diagnose what the real problem is, you will need informed data to build out a successful win/loss analysis and understand the logic behind the pricing of your product before you take action.
Business Case Development
Gut Reaction: We have already invested so much, let’s get this new functionality rolled out.
The Reality of Informed Data: Stop, accept sunk costs, and figure out what the market needs.
Data is data, but as I mentioned before, not all data is created equal.
One of the best examples I’ve seen of the importance of a strong business case starts with the mistake of continuing to invest in a product that has no ROI. Those products that have a small and loyal client base or old platforms where clients refuse to migrate might be costing your organization more in client services, maintenance, R&D and executive fire-fighting time than you could ever guess.
If you suspect you have one of these problems, create a P&L that looks at all of the costs relative to the revenue. If you are losing money on the product and it does not serve as a loss leader for another project or some other strategic purpose, it is time to start the sunset planning process. You might actually be surprised that there are often win-win solutions for both you and your clients once you decide to sunset a product. (I have actually sunset a product before while simultaneously bringing on a white label solution that was cheaper and far superior to our in-house solution.)
I’ve referred to informed data repeatedly here for a reason.
It is easy to do the math and the modeling but for true, 360-degree feedback, expertise is required. (This is doubly true if you don’t keep a head of product or head of product strategy on staff.)
You’ll find that these services can range from quite low dollar (services that employ a team of entry-level, non-specialized analysts who dig into a market) to very expensive (using staff who might be experienced with data, but can still be complete novices to a niche like healthcare).
To acquire truly informed data, you’ll need a partner that really understands the market and can give you the right level of insight to make informed decisions — that’s what we offer you at Eliciting Insights.
Contact us today to get the most out of your investment, and start building your strategic planning on a foundation of informed data.