Controlling Health Care Costs - Anthem Shows the Way

The rapidly rising cost of health care is one of the most pressing issues that the U.S. is facing today and it is eating into the income gains of the average American family. The increase in health insurance premiums is leaving people with less cash to spend on other essentials. According a survey on employer-sponsored health benefits conducted by the Kaiser Family Foundation and the Health Research and Education Trust in 2010, premiums for single and family coverage rose over 9% since last year. The cost of premiums for families has risen from $13,770 in 2010 to $15,073.

Individuals are advised that maintaining a healthy lifestyle and choosing the right health plan can control the amount they spend on healthcare. And it's really commendable when a leading health insurance provider comes forward to help members do this. With its history of financial stability, Anthem is showing the way with a slew of efforts to control rising healthcare costs for individuals, families, employers, and the nation at large.

Anthem Strategies to Rein In Health Care Spending

More costly technology, prescription drug costs and use, unhealthy lifestyles, unnecessary tests and procedures, and health care fraud are some of the main reasons for rising health care costs.

Premium break-up shows that private health insurer profits make up just 3% of the total amount. Up to 87% goes into medical services and products and the remaining 10% goes into paying for administrative services like claims processing, enrollment, billing, provider credentialing and complying with government rules. Anthem's is trying to focus on all these aspects to help rein in costs:

• Helping Anthem plan members save money on care: Anthem has developed two programs to do this - one uses Google Maps, an online tool and targeted outreach to help members avoid costly and unnecessary emergency room visits; the other helps members avoid high costs for services like MRIs and CT scans. Anthem negotiates with providers to get the best deal for its members and saves millions of health care dollars annually.

• Measures to try and lower drug costs: Anthem has set up outreach
programs that aim to improve medication compliance and encourage the use of generic drugs when the doctor recommends them. Anthem is also working towards reducing harmful drug events and promoting the better use of medicines.

• Programs to help members lead a healthy lifestyle: Anthem's health assessment tool allows members to assess their health condition and take measures to reduce risk factors like obesity and smoking. Members with serious or chronic medical issues can manage their health with Anthem's programs that come with 24-7 nursing care.

• Promoting quality care: Anthem is fixing performance-based payment for doctors and thereby encouraging treatments that generally work. This health care insurer has special teams working to prevent, find and recover dollars lost to fraud.

• Controlling administrative costs: Internal cost control measures that Anthem is adopting include investment in efficient technology to streamline claims payment, help reduce costs and improve customer service. These measures are aimed at controlling customers' health insurance premiums.

The effects of Health Care reform could vary between individuals, with some paying more and others less. Nevertheless, Anthem's attempts to lower health care costs set a laudable example for the health insurance industry. 

by: Tracy Mc Manamon

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Business Planning: It's The Second Quarter... Do You Know Where Your Business Is?

Can you believe the first quarter of the year is almost over?! When you look at your business, the amount of money you've earned, the number of new clients you've added, are you 25% to where you want to be for the year? If not, why not? And what do you plan to do about it?

I'm sure you've heard the adage, "If you're failing to plan, you're planning to fail." And you probably thought, "Gee that's clever, a little corny, but it doesn't really apply to me." Well, I urge you to think again.

I work with a lot of independent professionals and self employed business people, and over the years I've noticed a definite commonality amongst those who are very successful, and those who are continuing to struggle - my most successful clients always have a plan.

I realize that many entrepreneurs get scared by the term business plan. They imagine some monstrous document with multiple appendices that lands with a thud on their banker's desk. And at first, some new clients are hesitant to spend their time creating a business plan. They claim their business is too little, they don't need bank funding, there's no need for a business plan. Sound familiar?

While it's true that I have created business plans that ended in million + dollar bank financing, when coaching my entrepreneurial clients, this is not what I mean when I suggest creating a business plan. Since, chances are, you don't intend to get bank financing what you really need is an easy to understand, concise plan that you can refer to often.

As an entrepreneur, I bet you're constantly getting distracted, bombarded from every direction (I know I am). You need a plan that can map out your business activities and help you set goals and objectives. You need something that's easy to read and that will keep you on track when those million distractions and "next great ideas" keep popping up.

So I challenge you to sit down this weekend and start creating your simple business plan. Just grab a few sheets of paper and briefly outline exactly where you want to be in nine months and exactly how you plan to get there. Don't worry about grammar or sentence structure or spelling; this is for your eyes only.

And then - and this is the most important step - pull your plan out and review it each morning. Take five minutes to ask yourself, "Do the things I'm going to do today fit into this plan and how will they bring me closer to where I want to be in nine months?"

Action Item - Don't get scared off by the thought of creating a business plan. Instead, start small by creating your mission statement. Just answer these three questions:

1. What is the purpose of your company - what needs are you trying to fulfill?

2. What is the business of your company - what are you doing to fulfill those needs?

3. What are the values of your company - what are your guiding principles and beliefs?

Now, take those answers and in one concise paragraph, explain what you do, why you do it and what you stand for. And viola, your mission statement is done!

Now, go find some more clients!

by: Karen Scharf

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Transforming Manufacturing Waste into Profit

It's been said that "one man's trash is another man's treasure." HBS Assistant Professor Deishin Lee, however, has taken that old adage a step further in her recent working paper Turning Waste into By-Product by showing how it's possible for companies to turn their trash into their own treasure.

The concept of by-product synergy (BPS) consists of taking the waste stream from one production process and using it to make a new product. The concept is hardly new—in agriculture, cast-off corn husks are converted to animal feed, and discarded cow parts are turned into everything from leather to jet engine lubricant.

But Lee's research extends the concept into industrial processes, using an analytical model to show that a modern manufacturing plant can use BPS to make any number of new products in order to both reduce environmental impact and increase profits.

"Every manufacturing process creates something—a car, paint, chairs—but in addition, other outputs are collaterately generated," says Lee. "The default disposition of these outputs has been some form of waste disposal, but we need to change that mindset."

In the simplest analysis, productively using waste instead of trashing it can cut costs by reducing disposal fees. Some companies have taken that a step further by opening up additional revenue streams through by-product sales. But according to Lee, the greatest returns are realized when a company widens its scope to think strategically to consider it as a joint production process.

"You have to stop thinking of yourself as a company that creates a certain product and instead think about the resources you have (including raw material resources) and how you can use them to produce as much value as possible," says Lee. In some cases, that might mean, paradoxically, creating more waste, not less, in order to maximize profit.

Making a by-product strategy

Lee explains she originally backed into the concept of BPS. Her past research focused on environmental sustainability, examining how companies could minimize their impact on the environment. Thinking that a recycling firm would be the most logical place to start, she contacted Gordon Forward, CEO of Chaparral Steel, a Texas firm using recycled steel to make new products. But when she contacted him, he was extremely excited about the notion of by-product synergy, something he experienced first-hand in a partnership with cement manufacturer Texas Industries to use the steel slag waste stream to make Portland cement. "He said he challenged his organization to think not as a steel company or a cement company, but as a company that had resources and capabilities and asked, 'What could we do with that?'"

Intrigued by the concept, Lee began researching the possibilities. She developed a model with three scenarios based on the relative value of the original product, the by-product, cost of waste disposal, and cost of raw materials. In the first scenario, where the by-product is of low value, a company might maximize profit by only turning some of the waste into a new by-product, while still disposing of some of it through traditional means. In the second scenario, as the value of the by-product increases, it might make more sense to actually increase the production of your primary product in order to increase more "waste." In that case, even though profits might fall for your primary product as the market becomes saturated, the increased profits from the secondary product would more than compensate for the loss.

In addition, the production of more waste might have other beneficial consequences as well. One case study Lee examined is a manufacturer called Cook Composites and Polymers Co., which produces gel coats for high-end yachts. One of the wastes produced in the manufacturing process is styrene, a chemical used to clean molds between batches, which can also be used to make coating for concrete. Productively using the styrene waste stream gave the company more degrees of freedom to optimize the now joint production process, creating a win-win situation.

Using the waste stream to make new products doesn't always create such serendipitous scenarios. A classic example, says Lee, are chicken wings. Years ago, wings were thought of as waste, processed into any manner of lesser quality chicken products. When buffalo wings began appearing at every football game tailgate party, however, wings suddenly became a hot commodity. Since BPS implies a proportional quantity relationship between products, it becomes more complicated to manage production. Should the demand for breast meat be driving the production of chicken, or should it be the wings?

The third scenario Lee considered is where the by-product becomes more profitable than the original product. In that case, an industrial manufacturer might deal with the problem by sourcing virgin material to create more of the secondary product. Not only does the company reduce costs for the original product by cutting down on waste, but it also gains competitive advantage over other companies for the secondary product that are limited to sourcing virgin material.

More emissions possible

Ironically, increasing production in this way doesn't always have a net positive effect on the environment; in fact, it can lead to even more production of emissions through increased production of the by-product.
"As you create more value and demand for your by-product, and you increase the quantity of everything, then emissions might increase, depending on process characteristics. That could be the unfortunate part of being successful," says Lee. On the other hand, it's hard to quantify the net effect of the entire joint manufacturing process on the environment, as BPS may change the nature of the environmental impact. After all, she asks, "Is it better to have carbon in the air or toxic waste in landfill?"

Then there's the fact that increasing production could come mostly at the expense of competitors, leading to a net zero effect on industry emissions overall—and in some cases, using the waste for by-product production may decrease emissions over using virgin material. Take Chaparral Steel, where Forward estimated the company cut carbon emissions by 10 percent and decreased energy usage by 10 to 15 percent in the concrete production process because the steel slag had already been treated in a way that is value-added for cement production.

In order to take advantage of those kinds of savings and the potential profits of by-product synergy, a company must broaden its focus beyond a market-driven managerial approach that only takes it cues from what customers want, and also look at what the company is well-positioned to produce.

"If you look at everything as market-driven, it's very unlikely you'll get to operational synergies that fully leverage natural resources and capabilities within the firm," says Lee. "You need to ask what are your resources (raw material, labor, and capital), and how can we organize to maximize the value we create? Merging this with the market perspective can then be very powerful. "

And if your trash turns out to be someone else's treasure, well, then so much the better.

Michael Blanding is a writer based in Brookline, MA.

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It's Harder than Ever to Be a Senior Executive

The job of the senior executive is much more complicated today than it was a decade or two ago — and that trend will continue, especially if you hope to play on a global stage (which is a nearly universal condition these days for many companies). Why? Here are five reasons.

1. Soft skills are more important than ever. Most people come out of business schools fairly well armed with technical skills, but the softer side of management — communication, collaboration, cross-cultural intelligence, for instance — has dramatically grown in importance, and will continue to do so.
And for many people they're harder to learn. To some extent, they come only from experience. I've written about the rising significance of soft skills, including in the March 2011 issue of HBR (coauthored with Kevin L. Kelly and Bryan MacDonald), on how C-level jobs are evolving, and in my upcoming book on communication with Michael Slind[link]. In a knowledge economy, the shift is inevitable; you need to keep up with it.

2. So are technical skills. Though the balance of management skills has been shifting, hard skills are also more important than ever. Regardless of how it's divided, the entire pie of necessary managerial skills has grown. In other words, you need to be better at everything. Technical and functional knowledge are vital to making good judgment calls, being legitimate in the eyes of your people, and making resource allocation decisions. Running a company has become dramatically more complicated, and your skill set has to keep pace.

3. C-level jobs have become less circumscribed. Senior executive roles are increasingly interdependent, so it's less and less viable to remain a focused specialist. The CIO has to know what's going on in finance and marketing, for instance, and P&L experience is important even for support functions like human resources. That's one reason that job rotation is more common than ever as a development tool. A well-rounded executive will rise to the top much more quickly than one with singular expertise.

4. Companies are increasingly global. A handful of industries are still local — waste management, for instance — but most companies are competing on a global scale at some level. And if they aren't, they will be. So executives need a global mindset and a global IQ — and meaningful global experience (a short stint in Sweden won't do).

They need to be open to different experiences, attuned to cultural differences, and comfortable working with a highly diverse and globally dispersed employee and customer base. And the competition for good jobs is fiercer than ever. So, for instance, if you want a top finance job it's not enough to be the best CFO in the U.S.; you have to be the best CFO in the world. Many executive searches are done on a global basis now.

5. You have to be constantly learning. Industries have become much more dynamic — the rules are always changing, new competitors come out of the woodwork, the talent pool has expanded exponentially. To be employable you need to demonstrate a learning orientation, learning agility — defined as an executive's ability to acquire new skills quickly by seeking and learning from new experiences, which allows them to be more adaptable in this uncertain global environment.

Many executives also set up procedures and relationships to have access to constantly changing information and best practices. Reverse mentoring has become popular today for precisely this reason. Younger employees may lack the experience of their senior colleagues, but they've grown up in a different world and are more accustomed to the new rules of business. And industries are crossing boundaries in completely unexpected ways — there was talk recently of Apple looking to buy the distribution rights to U.K. soccer, for example. You never know where the next challenge is going to hit, but it's your job to be prepared.

That's a pretty hefty set of requirements. And to make matters more complicated, companies no longer have the responsibility to help you update your skills. Many will offer various learning opportunities and they're certainly happy if you're able to keep up, but in the end it's up to you. The emerging global executive has tremendous opportunity for an exciting and rewarding career, but it will take a lot of work. So how are you preparing for the future?

This post is part of the HBR Insight Center, The Next Generation of Global Leaders.

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Boris Groysberg
Boris Groysberg is a professor of business administration at Harvard Business School. His work examines how a firm can be systematic in achieving a sustainable competitive advantage by leveraging its talent at all levels of the organization.

Tips: Define How Your Team Will Work

Most team leaders know to help their team define goals, but the conversation shouldn’t stop there. You also need to agree on the mechanics of how the team will get the work done. Here are four things that need to be clear on every team:

• Roles and responsibilities. Every member needs to know their tasks and how their work will contribute to the overall goals. 
• Work processes. You don’t need a notebook full of procedures, but agree on how to carry out the basics — such as decision-making or communicating.
• Rules of engagement. Establish a constructive team culture. Discuss the shared values, norms, and beliefs that will shape the daily give-and-take between team members.
• Performance metrics. How will you measure progress? Define the measures for meeting the goals, and the consequences for not meeting them.

Adapted from "For Your Team's Success, Remember the How" by Linda Hill & Kent Lineback.

Viral Blog Marketing

Sembilan bulan setelah peluncurannya, Notebook HP Dragon dari Hewlett Packard tidak menunjukan penjualan yang memuaskan.

Notebook dengan berat 15 pound ini dilengkapi dengan fitur hard disk sebesar 500GB dan layar 20.1 inci. HP membanderol notebooknya dengan harga $ 4,500, harga yang mahal untuk sebuah notebook.

Berbagai kegiatan promosi mulai iklan di surat kabar, majalah bahkan televisi, tidak sanggup mendongkrak penjualan HP Dragon. Kondisi ini menyebabkan manajemen Hewlett Packard harus mengambil tindakan. Mereka mengontrak konsultan Viral Marketing Buzz Corps. Buzz Corps kemudian memperkenalkan sebuah kampanye di internet dengan nama 31 Days of Dragon. Kampanye ini berjalan dari 9 Mei 2008 sampai 8 Juni 2008.

Selama kampanye itu, mereka menghubungi 31 blogger teknologi yang dinilai paling popular. Para blogger ini biasa memberi ulasan mengenai berbagai macam gadget serta produk-produk berteknologi melalui situsnya. Banyak orang mengunjungi blog mereka ketika akan membeli produk elektronik. Ulasan-ulasan mereka dianggap berguna dalam menentukan pilihan.

Para blogger ini diajak untuk memberi notebook HP Dragon secara gratis pada pengunjung situsnya. Hewlett Packard mengalokasikan waktu yang berbeda untuk para blogger ini, sehingga setiap hari akan ada situs undian yang berbeda. Para blogger ini tidak diberi kompensasi apapun dari Hewlett Packard.

Aturan yang diterapkan Hewlett Packard cukup fleksibel. Setiap blogger memiliki 1 buah notebook untuk diberikan. Blogger harus mempromosikan kampanye ini kepada blogger lainnya. Untuk menentukan pemenangnya Hewlett Packard memberikan kebebasan bagi para blogger ini untuk menentukan aturan mainnya sendiri. Setiap situs blog dapat membuat sendiri design dan promosinya.

Kampanye ini menjadi perbincangan yang hangat di internet. Situs HP Dragon mendapat 380.000 link baru ke situsnya selama 31 hari tersebut. Pengunjung masing-masing blog yang berpartisipasi juga mengalami peningkatan rata-rata 150%.

Selama 31 hari tersebut ridak kurang dari 250ribu orang di Amerika ikut berpartisipasi. Setelah kampanye ini selesai, HP Dragon mendapatkan exposure yang luas. Selama kampanye itu, para blogger menulis ulasan yang baik mengenai HP Dragon. Citra dari HP Dragon juga meningkat, dan yang lebih penting lagi, penjualan HP Dragin meningkat 84% sejak kampanye ini dilaksanakan.

Kampanye ini terbukti berhasil karena memberi keuntungan bagi semua pihak. Bagi Hewlett Packard, selain peningkatan penjualan juga peningkatan citra dan tentunya exposure serta Brand Equity dan yang paling penting adalah hubungan yang lebih baik kepada para konsumen.

Bagi para blogger, adanya kampanye ini meningkatkan jumlah pengunjung dan tentunya kepuasan dari para pengunjungannya sehingga hubungan dengan mereka akan lebih baik. Bagi para konsumen tentunya kesempatan memenangkan sebuah notebook premium dan hubungan langsung ke Hewlett Packard.

Kunci keberhasilan kampanye Hewlett Packard ini adalah kemampuan Buzz Corps sebagai konsultan dalam mengidentifikasi siapa dalam industri ini yang dapat menjadi influencer. Tidak semua orang dapat menjadi influencer. Ada beberapa factor yang diperlukan agar sesorang dapat menjadi influencer yang baik bagi produk yang akan menjadi obyek suatu kampanye Viral Marketing.

Yang pertama adalah para influencer ini haruslah memiliki kredibilitas. Kepercayaan dari para pendengarnya tentunya merupakan key success factor dari seorang influencer. Kredibilitas ini muncul dari dua hal. Yang pertama adalah keahlian. Makin akurat ulasan yang diikuti oleh pembacanya, makin tinggi kredibilitasnya. Selain itu ia harus memiliki kejujuran. Kejujuran ini tentunya harus didukung oleh obyektifitas.

Hal yang kedua yang juga penting adalah seorang influencer haruslah memiliki massa yang cukup. Massa pembaca dan pendengar ulasan inilah yang akan menjadi calon pelanggan. Mereka harus cukup dalam segi jumlah ataupun daya beli. Selain itu pastikan bahwa massa yang dimiliki oleh influencer ini merupakat target market dari organisasi.

Selain kemampuan dalam memilih influencer, kunci keberhasilan yang lain dari kampanye ini adalah strategi Hewlett Packard dalam memberikan solusi bagi para blogger. Massa memang merupakan kunci utama, baik bagi Hewlett Packard maupun para blogger. Hewlett Packard memberi bantuan solusi bagi para blogger untuk meningkatkatkan jumlah massanya dengan memberikan notebook gratis sebagai hadiah bagi para pengunjung blog.

Kesuksesan ini mengisnpirasikan Hewlett Packard untuk melanjutkannya dengan kampanye yang sejenis. Kali ini dengan nama HP Magic Giveaway. Sayang sekali, kampanya ini masih hanya terbatas pada warga negeri Barack Obama. Kapan kira-kira warga Indonesia dapat ikut berpartisipasi?

Penulis: James Indra Winawan, ST, MM.

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