Are you driving your managed markets business with the old family station wagon or a new smart car?
You may think the answer is obvious, a smart car of course, because you have strong analytical people with models and scenarios. You build your worst case, best case, most likely cases for governance approval, you sign the contract and off you go- Yet, have you truly advanced those contract analysis over time? Do you know what a SMART analytical car really looks like?
Each decade we are driving a previous decade’s car of the future - that’s called innovation. We leave the advancements to the designers wondering what future cars will bring us- comforts, safety features, conveniences etc. But how many of us would chose to drive a car from a previous decade on a long family vacation today?
In my childhood we took our family vacations in large station wagons- no rear seat belts, no air conditioning- unless you count the crank handle windows, the seats were made of something hot- vinyl I guess, and only AM radio for entertainment. We did have more room in these land yachts to seat 6 people and our luggage and to claim the imaginary line marking our territory from our siblings. Being the youngest, I was usually relegated to the “way-back”- riding facing backward to view where we had been- no idea how much longer the trip would last, if we were lost or when we would arrive at our destination . Sometimes that was the ideal spot to be- away from the "long-arm of the Mom", yet other times, it felt a bit helpless, unheard, and out of the know. I was on the journey as a passenger and certainly not a decision maker, waiting to see how the journey ends.
Does this sound similar to your business today?
- Are you viewing where you have been but unsure what the destination will look like?
- Are you removed from corporate decision making yet still accountable if there is trouble?
- Can you predict scenarios and course correct?
- Are you at the whim of the managed market customer due to your loss of blockbuster influence?
Now fast forward to our summer vacation this year. Would I choose to take the trip in those old station wagons or my new SUV? Would I pass up the SUV safety, conveniences and predictive capabilities- not to mention the passenger entertainment, for a trip down memory lane? Absolutely not! Sure the old car would be less expensive to purchase, but at what “real cost?” My new SUV can predict distance I can travel on my tank of gas; it has numerous warning sensors to let me know I should seek assistance soon, vs. the traditional warning light once the car has passed the danger zone. The new SUV can calculate the best route based upon current traffic patterns to ensure my fastest arrival if that is my goal- so why would I go back to outdated maps, non-linear gas metrics and less safety features ? Why are you making those choices for your business?
Let’s ask some questions and the answers will decide your vehicle of choice.
- What does your dashboard measure? Do you have a dashboard to provide drill down reporting of key business indicators?
- Is it a predictive or retrospective dashboard? I don’t mean predictive- as in- upcoming contract expiration dates, I mean a visual of where the business is headed over the remainder of the year based upon managed markets dynamics.
- Do you know how far your resources will take you? Your budgeted allowances are most like based upon guidelines, historical rates and contracts signed by the end of the budgeting cycle. Are you really a strong business manager if you come in under that budgeted number? How did you REALLY accomplish that- slower sales? Cutting rebates on a few large accounts as a calculated risk? Padding the budget?
- Are your contract considerations balanced with the sales force resources for appropriate field pull through? How are those cross-commercial conversations going?
- IF you allocated your resources differently, what would the outcome be?
- How are you defining and segmenting your business partners? I am confident if you REALLY dug into the formularies and the lives at each offering you may rethink your classifications.
- Can you calculate alternative scenarios? Yes, most everyone can run scenarios but what are the basis or assumptions, are they based upon advanced analytics, “solving for” the answer the gains the approval or gut feel?
- Do you ever re-evaluate the approved deals to understand what business dynamics were most influential?
- Are you consolidating all the available data at your disposal to make more accurate models?
- Are you able to replicate?
- Are you considering all the possible inputs to chart the best path or course correct?
There is nothing wrong with not answering a resounding “NO” to that list of questions. The only problem is if you have the exact same answers next year! You should be planning now to upgrade your vehicle for the future.
Rick Sherman offers advice in his article on moving your organization in the right direction to build Advanced Analytics. "Using predictive analytics tools and setting up an analytics program"