by Adam Hartung | Mar 25, 2014 | Current Affairs, Ethics, Leadership, Web/Tech
5:00pm, September 20, 2009 was when I got the call.
Someone’s telling me to call the Wisconsin Highway Patrol, my oldest son was in a terrible accident. Then I call the police, who tell me my son has been airlifted to a hospital. I’m in the car, madly driving 500 miles toward the hospital, talking to the doctor – hearing my son is in bad shape. It looks terminal. Continuing the drive, deep into the blackest night, in the pouring rain.
Then the call from the hospital. My son was dead.
I kept up the drive, made it to the hospital at daybreak. Yes, that is my son. Yes, he is dead.
I guess I had to see it to believe it.
Suddenly a new realization hit me. My son has two brothers. Both in college. Both 500 miles away. They had no idea what my last 14 hours were like. They knew nothing about their brother. How would they learn about this horrific news?
This accident was not a secret. It was newsworthy, even if far from a major city. My dead son had dozens of friends. And they all use Facebook. While as young men my sons don’t pay much attention to news radio or TV, they do pay attention to Facebook. And texting. How long would it take before someone went on-line and started telling the world that their brother was dead?
Do you call your sons on the phone and tell them their brother died?
Not wasting any time, I jumped in the car and started straight for my middle son’s college. He was the closest with his brother. They exchanged texts every day. He would be checking his phone and his Facebook account. I made the decision that this – this one thing – this had to be done in person. I would not call, I would not text, I was going to tell him in person.
But could I beat Facebook and texting?
I loaded up with coffee and went back onto the highway. And started another 10 hour drive. I just kept wondering “how long do I have? How long before these boys find the out – the hard way?”
I called my neighbor and told her the news. I gave her my Facebook access and told her to monitor my account, and to pay attention to any traffic from people in my son’s network. Look for anything that even hinted of bad news. I had to focus on driving and couldn’t distract myself with mobile.
Eight hours later I drove into Chicago. I was between 30 and 90 minutes to my son. Depending on Chicago traffic! But things seemed light; lighter than normal. Maybe, just maybe, I had time.
As I pulled across town I knew I was only 20 minutes from my middle son. Then my phone rang. It was my neighbor. “It’s there Adam. It’s there on Facebook. Somebody found out, and the kids are starting to spread the news. You better hurry.”
As safely, yet quickly, as possible I navigated in front of his 3 flat apartment on the south side. Luckily, a parking spot on the street. I pulled in, jumped out of the car and saw a window open in his apartment. I started calling up “hey, you up there? I need you to come unlock the door. Hey, come to the door.”
Laconically my son came to the door. I could tell by his eyes he didn’t know anything, and was curious why I was there. I went inside, put my arms around him, and told him his brother was dead.
He accused me of a bad joke. I quickly told him an accident happened, where, and that his brother didn’t make it.
Of course, he did not believe me. So he picked up his phone. He started looking for texts. He saw there were none from his brother. Then he jumped to his PC. He pulled up Facebook. He looked for his brother’s page – and then he started seeing the messages. Messages of disbelief, grief, anger and fear as expressed by so many people who are 21 or 22 and suddenly come face to face with mortality.
My son was in shock, as could be expected. But he was with me. Then it hit him “have you told my little brother?” I told him no. “We have to go tell him. Now. Before he finds out some other way.”
We then jumped back in the car and beat it to his younger brother’s college. My youngest son was far less of a social media fan. Also, college soccer kept him very busy. We knew he had been in class and soccer practice most of the day and evening, and he would not check anything until late at night. We had a very good chance that he had not heard anything.
Luckily, when we arrived at his college and found him, he confirmed he had not seen his phone or PC for several hours while at class, practice, eating and finishing homework. We told him the very, very bad news.
I’m glad my sons did not hear of their brother’s death via a text. Or via Facebook. It was a very, very, very difficult day for us. And the next several. Every minute etched forever in our memories.
As the next few days passed we all gained huge comfort from those who reached out to us via text, Facebook and Tweets. Hundreds of messages and postings came in. Social media was a tremendous way for all of us to connect and share stories about my now lost son. Young people told me things I would never have known had they been limited to telling me face-to-face, but which they were willing to share via Facebook. It was incredibly helpful.
We live in a very, very connected world.
Information, even things which may seem obscure in this large global environment, find their way to light quickly. We all want information now – not later. We want to know what, where and when – and we want to know it now. We sign up for email newsletters, Facebook pages, linked-in networks and listen to our colleagues on Twitter so we know things as soon as possible.
This is tough for those who have to communicate bad news. What’s the trade-off? Do you wait and do it personally? Or do you opt for moving quickly? Is it better someone know the information now – even if it is painful – or do you seek to inform them in a personal way to address their needs, emotions and questions? Do you broadcast the news, or keep it small? Do you send it impersonally, or personally? What is important?
Every organization is, to some extent, in the trust business
When you have to deliver bad news, how will you do it? Whether you have to announce a layoff, plant closing, industrial accident, data breach, product recall, product failure, program failure – or even a fatality – you are communicating information that is personal, and emotional. It is information that requires a sense of the person, not just the news. How will the information be received – and what does that mean for how it should be communicated?
It takes continuous effort to build trust, but it can be lost in a single, poorly constructed communication.
Malaysia Airlines had years to plan its communications for a downed plane. How would it tell the world such news? What tools would it use? A preparedness plan should contain not only the action plan, but the communications plan as well. And not only the message, but how it will be delivered. And how all touch points between the organization and the audience will be addressed.
Once flight 370 went missing Malaysia Airlines had days to plan its communications with families. There were several possible scenarios, yet all had a common theme of communicating passenger status. Passengers that are family members. The airline had significant time to plan what it would say, and how. To settle on texting families that their loved ones were forever gone was either incredibly bad planning, or indicates a significant lack of planning communications altogether.
When it was time for my sons to learn their brother was dead someone needed to be there to support them. Someone who cared. It was not news to be internalized without more discussion about what, how and why. All bad news shares this requirement, to address the human need to ask questions. Relying on email, texting, social media, newsletters or broadcast to share bad news ignores the very personal impact bad news has on the recipients.
Nobody wants to deliver bad news, but sometimes it is unavoidable. Being prepared is incredibly important if you want to maintain trust. Otherwise you can look as heartless, and untrustworthy, as Malaysia Airlines.
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by Adam Hartung | Mar 13, 2014 | Food and Drink, Investing, Leadership, Lock-in, Trends
Understanding trends is the most important part of planning.
Yet, most business planning focuses on internal operations and how to improve them, usually neglecting trends and changes in the external environment that threaten not only sales and profits but the business’ very existence.
Take Sbarro’s recent bankruptcy. That was easy to predict, especially since it’s the second time down for the restaurant chain. You have to wonder why leadership didn’t do something different to avoid this fate.
Traditional retail has been in decline for a decade. As consumers buy more stuff on-line, from a rash of retailers old and new, there is simply less stuff being bought at stores. It’s an obvious trend which affects everyone. But we see business leaders surprised by the trend, reacting with store closings and cost reductions, and we are surprised by the headlines:
Thousands of retail stores will close in 2014. It should surprise no one that physical retail traffic has been in dramatic decline. Large malls are shutting down, and being destroyed, as the old “anchor tenants” like Sears and JC Penney flail. Over 200 large malls (over 250,000 square feet) have vacancy rates exceeding 35%. Retail rental prices keep declining as the overbuilt, or under-demolished, retail square footage supply exceeds demand.
Business planning is about defending and extending the past.
Given this publicly available information, you would think a company with most of its revenue tightly linked to traditional retail would —- well —- change. Yet, Sbarro stuck with its business of offering low cost food to mall shoppers. Its leaders continued focusing on defending & extending its old business, improving operations, while trends are clearly killing the business.
Almost all business planning efforts begin by looking at recent history. Planning processes starts with a host of assumptions about the business as it has been, and then try projecting those assumptions forward. Sbarro began when malls were growing, and its plans were built on the assumption that malls thrive. Now malls are dying, but that is not even part of planning for the future. Planning remains fixated on execution of a strategy that is no longer viable .
No one can “fix” Sbarro – they have to change it. Radically. And that means planning for a future which looks nothing like the past. Planning needs to start by looking at trends, and developing future scenarios about what customers need. Regardless of what the business did in the past.
Planning should be about understanding trends and developing future scenarios.
For all businesses the important planning information is not sales, sales per store, product line offerings, cost of goods sold, labor cost, gross margin, rents, cleanliness scores, safety record, location, etc., etc. The important information is in marketplace trends. For Sbarro, what will be dining trends in the future? What kind of restaurant experience do people want not only in 2014, but in 2020? Or should the company move toward delivery? At-home food preparation?
Success only happens when we understand trends and build our business to deliver what people want in the future. The world moves very fast these days. Technologies, styles, fashions, tastes, regulations, prices, capabilities and behaviors all change very quickly. Tomorrow is far less likely to look like today than to look, in important ways, remarkably different.
Plan for the future, not from the past.
To succeed in today’s fast changing environment requires we plan for the future, not from the past. We have to understand trends, and create keen vision about what customers will want in the future so we can steer our business in the right direction. Before we even discuss execution we have to make sure we are going to give customers what they want – which will be aligned with trends.
Otherwise, you can have the best run operation in the country and still end up like Sbarro.
Connect with me on LinkedIn, Facebook and Twitter.
Links:
Radio Shack is a leader… in irrelevancy… and why that’s important for you
Old assumptions, and the CEO’s bias, is killing Sears
Winners shift with trends, losers don’t – understanding Sears’ decline
The CEO problem and the failure of JCPenney
The RIGHT way to implement planning to thrive in changing markets
How to plan like Virgin, Apple and Google
by Adam Hartung | Mar 4, 2014 | Current Affairs, Disruptions, Leadership
Obamacare is the moniker for the Affordable Care Act. Unfortunately, a lot of people thought the last thing Obamacare would do was make health care more affordable. Yet, early signs are pointing in the direction of a long-term change in America’s cost of providing health services.
The November, 2013 White House report on “Trends in Health Care Cost Growth” provides a plethora of data supporting declining health care costs. Growth in health care cost per capita at 1% in 2011 was the lowest since record keeping began in the 1960s. Health care inflation now seems to be about the same as general inflation, after 5 decades of consistently outpacing other price increases. And Congressional Budget Office (CBO) projections of Medicare/Medicaid cost as a percent of Gross Domestic Product (GDP) have declined substantially since 2010.
Of course, one could easily accuse the White House of being self-serving with this report. But at a February National Association of Corporate Directors Chicago Conference on health care,
all agreed that, indeed, the world has changed as a result of Obamacare. And one short-term outcome is American health care trending toward greater affordability.
How Obamacare accomplished this, however, is not at all obvious.
Abdication: that is the word which best desribed patient health care choices for the last several decades. Patients simply did whatever they were told to do. If a test was administered, or a procedure recommended, or a referral to a specialist given, or a drug prescribed patients simply did what they were told – “as long as the insurance paid.”
The process of health care implementation, how patients were treated, was specified by medical professionals in conjunction with insurance companies and Medicare. Patients had little – or nothing – to do with the decision making process. The service was either offered, and largely free, or it wasn’t offered.
In effect, Americans abdicated health care decision-making to others. The decisions about what would be treated, when and how was almost wholly made without patient involvement. And what would be charged, as well as who would pay, was also made by someone other than the patient. The patient had no involvement in determining if there was any sort of cost/benefit analysis, or the comparing of different care options.
Insurance companies dickered with providers over pricing. Then employers dickered with insurance companies over what would be covered in a plan, what the price would be and what percentage was paid by the insurance company and what would be paid by patients. When a patient needed treatment either the employer’s insurance company paid, after a negotiation on price with the provider, or the insurance company did not. And patients largely consumed whatever care was offered under their plan.
Or, if it was Medicare the same process applied, just substitute for “employer” the words “a government agency.”
Americans had abdicated the decision-making process for health care to a cumbersome process that involved medical professionals, insurance companies and employers. While patients may have acted like health care was free, everyone knew it was not free. But the process of deciding what would be done, pricing and measuring benefits had been abdicated by patients to this process years ago.
Obamacare moves Americans from a world of abdication to a world of accountability. Everyone now has to be insured, so the decision about what coverage each person has, at what level and cost, is now in the hands of the patient. Rather than a single employer option, patients have a veritable smorgasboard of coverage options from which they can select. And this begins the process of making each person accountable for their health care cost.
When people receive treatment, by and large more is now being paid by the patient. And once people had to start paying, they had to be accountable for the cost (higher deductibles and co-pays had already started this process before Obamacare.) When people became accountable for the cost, a lot more questions started to be asked about the price and the benefit. Instead of consuming everything that was available, because there was no cost implication, patient accountability for some of the cost has now forced people to ask questions before committing to treatments.
Higher accountability now has consumers (patients) asking for more choices. And more choices pushes providers to realize that price and delivery make a difference to the patient – who is now a decision-making buyer.
In economic lingo, accountability is changing the health care demand and supply curves. Previously there was no elasticity of demand. Patients had no incentives to reduce demand, as health care was perceived as free. Providers had no incentive to alter supply, because the more they supplied the more they were paid. Both supply and demand went straight up, because there was no pricing element to stand in the way of both increasing geometrically.
But now patients are making decisions which alter demand. Increasingly they determine what procedures to have, based on price and expected outcomes. And supply is now altered based upon provider and price. Patients can shop amongst hospitals and outpatient facilities to determine the cost of minor surgery, for example, and decide which solution they prefer. More services, at different locations and different price points alter the supply curve, and make an impact on the demand curve. We now have elasticity in both demand and supply.
A patient with a mild heart arythmia can decide if they really need an in-house EKG with a cardiologist review, or substitute an EKG detected from a smartphone diagnosed by an EKG tech remotely. With both services offered at very different price points (and a host of options in the middle,) it is possible for the patient to change their demand for something like an EKG – and on to total cost of cardiac care. They may buy more of some care, such as services they find less costly, or providers that are less pricey, and less of another service which is more costly due to the service, the provider or a combination of the two.
And thus accountability starts us down the road to greater affordability.
In distribution terms, the old system was a “wholesale system” which had very expensive suppliers with pricing which was opaque – and often very bizarre. Pricing was impossible to understand. Middlemen in insurance companies hired by employers tried to determine what services should be given to patients, and at what prices for the employers (not the patient) to pay. This wholesale distribution method of health care drove prices up. Neither those creating demand (patients) or those offering the supply (medical providers) had any incentive to use less health care or lower the price. And often it left both the patient and the supplier extremely unhappy with how they were treated by arbitrary middle men more interested in groups than individuals.
But the new system is a retail system. Because the patient no longer abdicates decision making to middle-men, and instead is accountable for the health care they receive and the price they pay. It is creating a far more rational pricing system, and generating new curves that are starting to balance both supply and demand; while simultaneously encouraging the implementation of new options that provide the ability to enhance the service and/or outcome at lower price points.
Obamacare is just beginning its implementation. “The devil is in the details,” and as we saw with the government web site for exchanges there have been many, many glitches. As with anything so encompassing and complex, there are lots of SNAFUs. The market is still far from transparent, and patients are far from educated, much less fully informed, decision makers. There is a lot of confusion amongst providers, suppliers and patients. Regulations are unclear, and not always handled consistently or judiciously.
But, America has made one heck of a start toward containing something which has overhung economic growth since the 1970s. The health care cost trend is toward greater price visibility, smarter consumers, more options and lower health care costs both short- and long-term.
In the 1960s Congress, and the nation, was deeply divided over passing the Civil Rights Act. Its impact would be significant on both the way of life for many people, and the economy. How it would shape America was unclear, and many opposed its passage. Called for by President Kennedy, President Johnson worked hard – and with lots of strong-arming – to obtain its passage after Kennedy’s death.
After a lot of haggling, some Congressional trickery, filibustering and a lot of legal challenges, the Civil Rights Act was passed in 1964 and it ushered in a new wave of economic growth as it freed resources to add to the American economy instead of being held back. It was a game changer for the nation, and 40 years later, it’s hard to imagine an America without the gains made by the Civil Rights Act.
Looking 40 years forward, Obamacare – the ACA – may well be legislation that is seen as an economic game changer. Although its passage was bruising to many in the nation, it changed health care from a system of patient abdication to one of patient accountability, and thereby directed health care toward greater affordability for the country and its citizens.
