Twelve Days of Christmas for Investors

Twelve Days of Christmas for Investors

The Twelve Days of Christmas refers to an ancient festive season which begins on December 25. Colonial Americans modified this a bit by creating wreaths which they hung on neighbors’ doors on December 24 in anticipation of starting the festival of twelve days, which historically included feasts and celebrations.

Better known is the song “The Twelve Days of Christmas” which is believed to  have started as a French folk rhyme, then later published in 1780 England.  The song commemorates the twelve days of Christmas by offering ever grander gifts on each day of the holiday season.

12Days-1

So, it being Christmas Eve I am stealing this idea completely and offering my list of the 12 gifts investors would like to receive this holiday season from the companies into which they invest:

  1. Stop waxing eloquently about what you did last year or quarter.  Yesterday has come and gone.  Tell me about the future.
  2. Tell me about important trends that are going to impact your business.  Is it demographics, aging population, the ecology movement, digitization, regulatory change, organic foods, mobility, mobile payments, nanotech, biotech… ?  What are the critical trends that will impact your business going forward?
  3. Tell me your future scenarios.  How will these trends change the way your customers and your company will behave?  What are your most likely scenarios (and don’t try to be creative in an effort to preserve the status quo!)
  4. Tell me how the game will change for your industry over the next 1, 3, and 5 years.  How will things be different for the industry, based on the trends and scenarios.  The world is a fast changing place, and I want to know how this will change your industry.
  5. Tell me about the customers you lost last year.  I gain no value from hearing about, or from, your favorite customers that love what currently do.  Instead, bring me info on the customers who are buying alternative products, changing their behaviors, in ways that might impact sales.  Even if these changes are only a small percentage of revenue.
  6. Tell me who the competitors are that are trying to change the game.  Don’t tell me that these companies will fail.  Tell me who the folks are that are really trying to do something new and different.
  7. Tell me about the fringe competitors.  The ones you constantly say do not matter because they are small, or not part of the historical industry, or from some distant location where you don’t now compete.  Tell me about the companies doing the new things which are seen as remote and immaterial, but are nibbling at the edges of the market.
  8. Tell me how you are reacting to potential game changers in your market.  What are your plans to deal with disruptive competitors and disruptive innovations affecting your way of doing business?  Other than working harder, faster, cheaper and planning to do better, what are you planning to do differently?
  9. Tell me how you intend to be a market game changer.  Tell me what you intend to do that aligns with trends and leads the company toward fulfilling future scenarios as a market leader.
  10. Tell me what projects you are undertaking to experiment with new forms of competition, attracting new customers and creating new markets. Tell me about your teams that are working in white space to discover new opportunities.
  11. Tell me how you will disrupt your own organization so the constant effort to enhance the old success formula doesn’t kill any effort to do something new and different.  How will you keep these experimental white space teams from being killed, or simply starved of resources, by the organizational inertia to defend and extend the status quo.
  12. Tell me the goals of these project teams, and how they will be nurtured and supplemented, as well as evaluated, to lead the company in new directions.  Don’t just tell me that you will measure sales or profits, but rather real goals that measure market learning and ability to understand new customer behaviors.

If investors had this transparency, rather than merely reams and reams of historical data, just imagine how much smarter we could all invest.

Happy Holidays!

The Smart Leadership Lessons from Facebook’s WhatsApp Acquisition

The Smart Leadership Lessons from Facebook’s WhatsApp Acquisition

Facebook is acquiring WhatsApp, a company with at most $300M revenues, and 55 employees, for $19billion.  That’s billion – with a “b.” An astonishing figure that is second only to HP’s acquisition of market leader Compaq, which had substantial revenues and profits, as tech acquisitions.  $19B is 13 times Facebook’s (not WhatsApp’s) entire 2013 net income – and almost 2.5 times Facebook’s (again, not WhatsApp’s) 2013 gross revenues!

On the mere face of it this valuation should make the most dispassionate analyst swoon.  In today’s world very established, successful companies sell for far, far lower valuations.  Apple is valued at about 13 times earnings.  Microsoft about 14 times earnings.  Google 33 times.  These are small fractions of the nearly infinite P/E placed on WhatsApp.

But there is a leadership lesson offered here by CEO Zuckerberg’s team that is well worth learning.

Irrelevancy can happen remarkably quickly.  True in any industry, but especially in digital technology. Examples: Research-in-Motion/Blackberry.  Motorola.  Dell.  HP all lost relevancy in months and are struggling.  (For those who want non-tech examples think of Circuit City, Best Buy, Sears, JCPenney, Abercrombie and Fitch.)  Each of these companies was an industry leader that lust its luster, most of its customers, a big chunk of its employees and much of its market valuation in months when the company missed a market shift.

Although leadership knew what it had historically done to sell products profitably, in a very short time market trends reduced the value of the company’s historical success formula leaving investors, as well as management, wondering how it was going to compete.

Facebook is not immune to changing market trends.  Although it has been the benchmark for social media, it only achieved that goal after annihilating early leader MySpace.  And although Facebook was built by youthful folks, trends away from using laptops and toward mobile devices have challenged the Facebook platform.  Simultaneously, changing communication requirements have altered the use, and impact, of things like images, photos, charts and text.  All of these have the potential impact of slowly (or not so slowly) eroding the value (which is noticably lofty) of Facebook.

Most leaders address these kinds of challenges by launching new products to leverage the trend.  And Facebook did just that.  Facebook not only worked on making the platform more mobile friendly, but developed its own platform apps for photos and texting and all kinds of new features.

But, and this is critical, external companies did a better job.  Two years ago Instagram emerged as a leader in image sharing.  And WhatsApp has developed a superior answer for messaging.

Historically leadership usually said “we need to find a way to beat these new guys.” They would make it hard to integrate new solutions with their dominant platform in an effort to block growth.  They would spend huge amounts on marketing and branding to try overcoming the emerging leader.  Often they filed intellectual property litigation in an effort to cause short-term business interuption and threaten viability.  They might even try hiring the emerging company’s tech leader away to stop development.

All of these actions were efforts to defend & extend the early leader’s market position.  Even though the market is shifting, and trends are developing externally from the company, leadership will tend to look inside for an answer.  It will often ignore the trend, disparage the competition, keep promising improvements to its historical products and services and blanket the media with PR as to its stated superiority.

But, as that list (above) of companies that lost relevancy demonstrates, this rarely works.  In a highly interconnected, fast-paced, globally competitive marketplace customers go where they want.  Quickly.  Often leaving the early leader with a management team (and Board of Directors) scratching its head and wondering how it lost so much market position, and value, so quickly.

Hand it to Mr. Zuckerberg’s team.  Instead of ignoring trends in its effort to defend & extend its early lead, they reached out and brought the leader to them.  $1B for Instagram was a big investment, especially so close to launching an IPO.  But, it kept Facebook relevant in mobile platforms and imaging.

And making a nosebleed-creating $19B deal for WhatsApp focuses on maintaining relevancy as well.  WhatsApp already processes almost as many messages as the entire telecom industry.  It has 450million users with 70% active daily, which is already 60% the size of Facebook’s daily user community (550million.)  By bringing these people into the Facebook corporate family it assures the company of continued relevancy as the market shifts.  It doesn’t matter if these are the same people, or different people.  The issue is that it keeps Facebook relevant, rather than losing relevance to a competitor.

How will this all be monetized into $19B?  The second brilliant leadership call by Facebook is to not answer that question.

Facebook didn’t know how to monetize its early leadership in users, but management knew it had to find a way.  Now the company has grown from almost no revenues in 2008 to almost $8B in just 5 years.  (Does your company have a plan to add $8B/year of organic revenue growth by 2019?)

So just as Facebook had to find its revenue model (which it is still exploring,) Zuckerberg’s team allows the leadership of Instagram and WhatsApp to remain independent, operating in their own White Space, to grow their user base and learn how to monetize what is an extraordinarily large group of happy folks.  When looking to grow in new markets, and you find a team with the skills to understand the trends, it is independence rather than integration that makes the most sense organizationally.

Thirdly, back to that valuation issue.  $19B is a huge amount of money.  Unless you don’t really spend $19B.  Facebook has the blessed ability to print its own.  Private money that it can use for such acquisitions.  As long as Facebook has a very high market valuation it can make acquisitions with shares, rather than real money.

In the case of both Instagram and WhatsApp the acquisition is being made in a mix of cash, Facebook stock and restricted Facebook stock for employees.  The latter two of these three items are not real money.  They are simply pieces of paper giving claims to ownership of Facebook, which itself is valued at 22 times 2013 revenue and 116 times 2013 earnings.  The price of those shares are all based on expectations; expectations which now require the performance of Instagram and WhatsApp to make happen.

By making acquisitions with Facebook shares the leadership team is able to link the newly acquired managers to the same overall goals as Facebook, while offering an extremely high price but without actually having to raise any money – or spend all that money.

All companies risk of becoming irrelevant.  New technologies, customer behavior patterns, regulations, inventions and innovations constantly challenge old success formulas.  Most leaders fall into a pattern of trying to defend & extend their old business in the face of market shifts, hastening the fall into irrelevancy.  Or they try to acquire a new business, then integrate it into the old business which strips away the new business value and leads, inevitably, to irrelevancy.

The leaders of Facebook are giving us a lesson in an alternative approach.  (1) Recognize the market shift.  Accept it.  If there is a better solution, rush toward it rather than ignoring it.  (2) Bring it into the company, and leave it independent.  Eschew integration and efforts to find “synergy.”  (You never know, in 3 years the company may need to be renamed WhatsApp to reflect a new market paradigm.)  (3) And as long as you can convince investors that you are maintaining your relevancy use your highly valued stock as currency to keep the company moving forward.

These are 3 great lessons for all leadership teams.  And I continue to think Facebook is the one stock to own in 2014.

 

And the Winner Is – Netflix!!

Last week's earning's announcements gave us some big news.  Looking around the tech industry, a number of companies reported about as expected, and their stocks didn't move a lot.  Apple had robust sales and earnings, but missed analyst targets and fell out of bed!  But without a doubt, the big winner was Netflix, which beat expectations and had an enormous ~50% jump in valuation!

My what a difference 18 months makes (see chart.)  For anyone who thinks the stock market is efficient the value of Netflix should make one wonder.  In July, 2011 the stock ended a meteoric run-up to $300/share, only to fall 80% to $60/share by year's end.  After whipsawing between $50 and $130, but spending most of 2012 near the lower number, the stock is now up 3-fold to $160!  Nothing scares investors more than volatility – and this kind of volatility would scare away almost anyone but a day trader!

Yet, through all of this I have been – and I remain – bullish on Netflix.  During its run-up in 2010 I wrote "Why You Should Love Netflix," then when the stock crashed in late 2011 I wrote "The Case for Buying Netflix" and last January I predicted Netflix to be "the turnaround story of 2012."  It would be logical to ask why I would remain bullish through all the ups and downs of this cycle – especially since Netflix is still only about half of its value at its high-point.

Simply put, Netflix has 2 things going for it that portend a successful future:

  1. Netflix is in a very, very fast growing market.  Streaming entertainment.  People have what appears to be an insatiable desire for entertainment, and the market not only has grown at a breathtaking rate, but it will continue to grow extremely fast for several more quarters.  It is unclear where the growth rate may tap out for content delivery – putting Netflix in a market that offers enormous growth for all participants.
  2. Netflix leadership has shown a penchant for having the right strategy to remain a market leader – even when harshly criticized for taking fast action to deal with market shifts.  Specifically, choosing to rapidly cannibalize its own DVD business by aggressively promoting streaming – even at lower margins – meant Netflix chose growth over defensiveness.

In 2011 CEO Reed Hastings was given "CEO of the Year 2010" honors by Fortune magazine.  But in 2011, as he split Netflix into 2 businesses – DVD and streaming – and allowed them to price independently and compete with each other for customer business he was trounced as the "dunce" of tech CEOs

His actions led to a price increase of 60% for anyone who decided to buy both Netflix products, and many customers chose to drop one.  Analysts predicted this to be the end of Netflix. 

But in retrospect we can see the brilliance of this decision.  CEO Hastings actually did what textbooks tell us to do – he began milking the installed, but outdated, DVD business.  He did not kill it, but he began pulling profits and cash out of it to pay for building the faster growing, but lower margin, streaming business.  This allowed Netflix to actually grow revenue, and grow profits, while making the market transition from one platform (DVD) to another (streaming.)

Almost no company pulls off this kind of transition.  Most companies try to defend and extend the company's "core" product far too long, missing the market transition.  But now Netflix is adding around 2 million new streaming customers/quarter, while losing 400,000 DVD subscribers.  And with the price changes, this has allowed the company to add content and expand internationally — and increase profits!!

Marketwatch headlined that "Naysayers Must Feel Foolish."  But truthfully, they were just looking at the wrong numbers.  They were fixated on the shrinking installed base of DVD subscribers.  But by pushing these customers to make a fast decision, Netflix was able to convert most of them to its new streaming business before they went out and bought the service from a competitor. 

Aggressive cannibalization actually was the BEST strategy given how fast tablet and smartphone sales were growing and driving up demand for streaming entertainment.  Capturing the growth market was far, far more valuable than trying to defend the business destined for obsolescence. 

Netflix simply did its planning looking out the windshield, at what the market was going to look like in 3 years, rather than trying to protect what it saw in the rear view mirror.  The market was going to change – really fast.  Faster than most people expected.  Competitors like Hulu and Amazon and even Comcast wanted to grab those customers.  The Netflix goal had to be to go headlong into the cold, but fast moving, water of the new streaming market as aggressively as possible.  Or it would end up like Blockbuster that tried renting DVDs from its stores too long – and wound up in bankruptcy court.

There are people who still doubt that Netflix can compete against other streaming players.  And this has been the knock on Netflix since 2005.  That Amazon, Walmart or Comcast would crush the smaller company.  But what these analysts missed was that Amazon and Walmart are in a war for the future of retail – not entertainment – and their efforts in streaming were more to protect a flank in their retail strategy, not win in streaming entertainment.  Likewise, Comcast and its brethren are out to defend cable TV, not really win at anytime, anywhere streaming entertainment.  Their defensive behavior would never allow them to lead in a fast-growing new marketplace.  Thus the market was left for Netflix to capture – if it had the courage to rapidly cannibalize its base and commit to the new marketplace.

Hulu and Redbox are also competitors.  And they very likely will do very well for several years.  Because the market is growing very fast and can support multiple players.  But Netflix benefits from being first, and being biggest.  It has the most cash flow to invest in additional growth.  It has the largest subscriber base to attract content providers earlier, and offer them the most money.  By maintaining its #1 position – even by cannibalizing itself to do so – Netflix is able to keep the other competitors at bay; reinforcing its leadership position.

There are some good lessons here for everyone:

  1. Think long-term, not short-term.  A king can become a goat only to become a king again if he haa the right strategy.  You probably aren't as good as the press says when they like you, nor as bad as they say when hated.  Don't let yourself be goaded into giving up the long-term win for short-term benefits.
  2. Growth covers a multitude of sins!  The way Netflix launched its 2-division campaign in 2011 was a disaster.  But when a market is growing at 100%+ you can rapidly recover.  Netflix grew its streaming user base by more than 50% last year – and that fixes a lot of mistakes. Anytime you have a choice, go for the fast growing market!!
  3. Follow the trend!  Never fight the trend!  Tablet sales were growing at an amazing clip, while DVD players had no sales gains.  With tablet and smartphone sales eclipsing DVD player sales, the smart move was to go where the trend was headed.  Being first on the trend has high payoff.  Moving slowly is death.  Kodak failed to aggressively convert film camera customers to its own digital cameras, and it filed bankruptcy in 2012.
  4. Dont' forget to be profitable!  Even if it means raising prices on dated solutions that will eventually become obsolete – to customer howls.  You must maximize the profits of an outdated product line as fast as possible. Don't try to defend and extend it.  Those tactics use up cash and resources rather than contributing to future success.
  5. Cannibalizing your installed base is smart when markets shift.  Regardless the margin concerns.  Newspapers said they could not replace "print ad dollars" with "on-line ad dimes" so many went bankrupt defending the paper as the market shifted.  Move fast. Force the cannibalization early so you can convert existing customers to your solution, and keep them, before they go to an emerging competitor.
  6. When you need to move into a new market set up a new division to attack it.  And give them permission to do whatever it takes.  Even if their actions aggravate existing customers and industry participants.  Push them to learn fast, and grow fast – and even to attack old sacred cows (like bundled pricing.)

There were a lot of people who thought my call that Netflix would be the turnaround tech story of 2012 was simply bizarre.  But they didn't realize the implications of the massive trend to tablets and smartphones.  The impact is far-reaching – affecting not only computer companies but television, content delivery and content creation.  Netflix positioned itself to be a winner, and implemented the tactics to make that strategy work despite widespread skepticism. 

Hats off to Netflix leadership.  A rare breed.  That's why long-term investors should own the stock.

Yes, even you can innovate to grow – learn from Skanska

I like writing about tech companies, such as Apple and Facebook, because they show how fast you can apply innovation and grow – whether it is technology, business process or new best practices.  But many people aren't in the tech industry, and think innovation applies a lot less to them.  

Whoa there cowboy, innovation is important to you too!

Few industries are as mired in outdated practices and slow to adopt technology than construction.  Whether times are good, or not, contractors and tradespeople generally do things the way they've been done for decades.  Even customers like to see bids where the practices are traditional and time-worn, often eschewing innovations simply because they like the status quo.

Skanska, a $19B construction firm headquarted in Stockholm, Sweden with $6B of U.S. revenue managed from the New York regional HQ refused to accept this.  When Bill Flemming, President of the Building Group recognized that construction industry productivity had not improved for 40 years, he reckoned that perhaps the weak market wasn't going to get better if he just waited for the economy to improve.  He was sure that field-based ideas could allow Skanska to be better than competitors, and open new revenue sources.

Skanska USA CEO Mike McNally agreed instantly.  In 2009 he brought together his management team to see if they would buy into investing in innovation.  He met the usual objections

  • We're too busy
  • I have too much on my plate
  • Business is already too difficult, I don't need something new
  • Customers aren't asking for it, they want lower prices
  • Who's going to pay for it?  My budget is already too thin!

But, he also recognized that nobody said "this is crazy."  Everyone knew there were good things happening in the organization, but the learning wasn't being replicated across projects to create any leverage.  Ideas were too often tried once, then dropped, or not really tried in earnest.  Mike and Bill intuitively believed innovation would be a game changer.  As he discussed implementing innovation with his team he came to saying "If Apple can do this, we can too!" 

Even though this wasn't a Sweden (or headquarters) based project, Mike decided to create a dedicated innovation group, with its own leader and an initial budget of $500K – about .5% of the Building Group total overhead. 

The team started with a Director of innovation, plus a staff of 2.  They were given the white space to find field based ideas that would work, and push them.  Then build a process for identifying field innovations, testing them, investing and implementing.  From the outset they envisaged a "grant" program where HQ would provide field-based teams with money to test, develop and create roll-out processes for innovations.

Key to success was finding the right first project. And quickly the team knew they had one in one of their initial field projects called Digital Resource Center, which could be used at all construction sites.  This low-cost, rugged PC-based product allowed sub-contractors around the site to view plans and all documentation relevant for their part of the project without having to make frequent trips back to the central construction trailer. 

This saved a lot of time for them, and for Skanska, helping keep the project moving quickly with less time wasted talking.  And at a few thousand dollars per station, the payback was literally measured in days.  Other projects were quick to adopt this "no-brainer."  And soon Skanska was not only seeing faster project completion, but subcontractors willing to bake in better performance on their bids knowing they would be able to track work and identify key information on these field-based rugged PCs.

As Skanska's Innovation Group started making grants for additional projects they set up a process for receiving, reviewing and making grants.  They decided to have a Skansa project leader on each grant, with local Skansa support.  But also each grant would team with a local university which would use student and faculty to help with planning, development, implementation and generate return-on-investment analysis to demonstrate the innovation's efficacy.  This allowed Skansa to bring in outside expertise for better project development and implementation, while also managing cost effectively.

With less than 2 years of Innovation Group effort, Skanska has now invested $1.5M in field-based projects.  The focus has been on low-cost productivity improvements, rather than high-cost, big bets.  Changing the game in construction is a process of winning through lots of innovations that prove themselves to customers and suppliers rather than trying to change a skeptical group overnight.  Payback has been almost immediate for each grant, with ROI literally in the hundreds of percent. 

You likely never heard of Skanska, despite its size.  And that's because its in the business of building bridges, subway stations and other massive projects that we see, but know little about.  They are in an industry known for its lack of innovation, and brute-force approach to getting things done.

But the leadership team at Skanska is proving that anyone can apply innovation for high rates of return. They

  • understood that industry trends were soft, and they needed to change if they wanted to thrive.
  • recognized that the best ideas for innovation would not come from customers, but rather from scanning the horizon for new ideas and then figuring out how to implement themselves
  • weren't afraid to try doing something new.  Even if the customer wasn't asking for it
  • created a dedicated team (and it didn't have to be large) operating in white space, focused on identifying innovations, reviewing them, funding them and bringing in outside resources to help the projects succeed

In addition to growing its traditional business, Skanska is now something of a tech company.  It sells its Digital Resource stations, making money directly off its innovation.  And its iSite Monitor for monitoring environmental conditions on sensitive products, and pushing results to Skanska project leaders as well as clients in real time with an app on their iPhones, is also now a commercial product.

So, what are you waiting on?  You'll never grow, or make returns, like Apple if you don't start innovating.  Take some lessons from Skanska and you just might be a lot more successful.

 

Don’t leave ObamaCare to the Attorneys!

No businessperson thinks the way to solve a business problem is via the courts.  And no issue is larger for American business than health care.  Despite all the hoopla over the Supreme Court reviews this week, this is a lousy way for America to address an extremely critical area.

The growth of America's economy, and its global competitiveness, has a lot riding on health care costs. Looking at the table, below, it is clear that the U.S. is doing a lousy job at managing what is the fastest growing cost in business (data summarized from 24/7 Wall Street.)

Healthcare costs 2011
While America is spending about $8,000 per person, the next 9 countries (in per person cost) all are grouped in roughly the $4,000-$5,000 cost — so America is 67-100% more costly than competitors.  This affects everything America sells – from tractors to software services – forcing higher prices, or lower margins.  And lower margins means less resources for investing in growth!

American health care is limiting the countries overall economic growth capability by consuming dramatically more resources than our competitors.  Where American spends 17.4% of GDP (gross domestic product) on health care, our competitors are generally spending only 11-12% of their resources.  This means America is "taxing" itself an extra 50% for the same services as our competitive countries.  And without demonstrably superior results.  That is money which Americans would gain more benefit if spent on infrastructure, R&D, new product development or even global selling!

Americans seem to be fixated on the past.  How they used to obtain health care services 50 years ago, and the role of insurance 50 years ago.  Looking forward, health care is nothing like it was in 1960.  The days of "Dr. Welby, MD" serving a patient's needs are long gone.  Now it takes teams of physicians, technicians, nurses, diagnosticians, laboratory analysts and buildings full of equipment to care for patients.  And that means America needs a medical delivery system that allows the best use of these resources efficiently and effectively if its citizens are going to be healthier, and move into the life expectancies of competitive countries.

Unfortunately, America seems unwilling to look at its competitors to learn from what they do in order to be more effective.  It would seem obvious that policy makers and those delivering health care could all look at the processes in these other 9 countries and ask "what are they doing, how do they do it, and across all 9 what can we see are the best practices?" 

By studying the competition we could easily learn not only what is being done better, but how we could improve on those practices to be a world leader (which, clearly, we now are not.)  Yet, for the most part those involved in the debate seem adamant to ignore the competition – as if they don't matter.  Even though the cost of such blindness is enormous.

Instead, way too much time is spent asking customers what they want.  But customers have no idea what health care costs.  Either they have insurance, and don't care what specific delivery costs, or they faint dead away when they see the bill for almost any procedure.  People just know that health care can be really good, and they want it.  To them, the cost is somebody else's problem. That offers no insight for creating an effective yet simultaneously efficient system.

America needs to quit thinking it can gradually evolve toward something better.  As Clayton Christensen points out in his book "The Innovator's Prescription: A Disruptive Solution for Health Care" America could implement health care very differently.  And, as each year passes America's competitiveness falls further behind – pushing the country closer and closer to no choice but being disruptive in health care implementation.  That, or losing its vaunted position as market leader!

Is the "individual mandate" legal?  That seems to be arguable.  But, it is disruptive.  It seems the debate centers more on whether Americans are willing to be disruptive, to do something different, than whether they want to solve the problem.  Across a range of possibilities, anything that disrupts the ways of the past seems to be argued to death.  That isn't going to solve this big, and growing, problem.  Americans must become willing to accept some radical change.

The simple approach would be to look at programs in Oregon, Massachusetts and all the states to see what has worked, and what hasn't worked as well.  Instead of judging them in advance, they could be studied to learn.  Then America could take on a series of experiments.  In isolated locations.  Early adopter types could "opt in" on new alternative approaches to payment, and delivery, and see if it makes them happy.  And more stories could be promulgated about how alternatives have worked, and why, helping everyone in the country remove their fear of change by seeing the benefits achieved by early leaders.

Health care delivery, and its cost, in America is a big deal.  Just like the oil price shocks in the 1970s roiled cost structures and threatened the economy, unmanagable health care delivery and cost threatens the country's economic future.  American's surely don't expect a handful of lawyers in black robes to solve the problem.

America needs to learn from its competition, be willing to disrupt past processes and try new approaches that forge a solution which not only delivers better than anyone else (a place where America does seem to still lead) but costs less.  If America could be the first on the moon, first to create the PC and first to connect everyone on smartphones this is a problem which can be solved – but not by attorneys or courts!