Online Pillar 1: #Health

When my iPhone upgraded to iOS8, and up popped a new screen icon called “Health”, was there any further proof needed of the importance of this market to Apple’s app store?

Last week, I launched a series of blogs on the Three Pillars of the Online Economy. This week, I take a look at the Health sector.

There are 10,000’s of health and fitness apps available – digital magazines, monitoring apps, relaxation tools, brain games, diet planners, exercise diaries….

It’s probably the fastest growing category for apps (outside games and social media), so no wonder Apple sees value in integration, as well as making it easier for developers to bring new apps to market.

The health sector is a natural leader in innovation – from pharmaceutical research, to e-health management. But the health industry is not so vertically integrated that it is invulnerable to market disruption – neither in its supply chain, nor in its traditional business models.

For a start, despite our lifelong need for health services, as consumers we do not rely on a single provider. We may have continuous or recurring relationships with a specific doctor, clinic, hospital or health insurer – but by and large, barriers to switching are low, and in fact we often need to change our providers at various stages of our lives.

The discontinuity of our health provider relationships, and the fragmented service delivery are key reasons for the development of digital health record management systems. Notwithstanding privacy issues, the ability to consolidate our individual health records in a single online profile makes enormous sense:

  • continuity of patient information
  • remote and/or shared access to individual records
  • trend analysis across aggregated data
  • strategic planning for service design and delivery
  • public health monitoring and awareness

An area where the health sector is potentially vulnerable is circumvention of the stringent regulations that normally create a barrier to market entry. None of the health and fitness apps I have seen in the iTunes Store carry any sort of health warning or regulatory notice, and most of them have a 4+ rating. OK, so these apps don’t actually administer drugs or direct treatment, but pharmaceuticals and other therapeutic goods usually face significant regulatory hurdles before they can be released to the general public. So, maybe regulators need to take a look at this issue to ensure consumers are better informed before they cause themselves harm.

The increase in wearable devices linked to smart phones and mobile networks offers huge benefits for the medical industry – from web-based diagnostic tools to remote-controlled administration of treatment; from early warning monitors for stroke victims, to better delivery of pharmaceutical information to patients. As we know, prevention is better than cure, and I wouldn’t be surprised if health insurers start to offer discounts to older customers who use a wearable device linked to a monitoring service for things like heart rate, body temperature, glucose levels or dehydration. While some people may balk at this “Big Brother” intervention (well, Nanny State interference), the benefits would undoubtedly accrue to everyone via cheaper medical insurance, more targeted health resources and streamlined service delivery.

In recent months I have come across numerous local startups in Melbourne within the health sector – from improved co-ordination of patient information between hospital staff, to matching carer skills to customer needs; from an epilepsy monitoring tool to remote-controlled prosthetics. This just proves the point that innovation in the industry is both leveraging off and contributing to developments in the wider online economy.

Next week: Online Pillar 2: #Finance

The “Three Pillars” Driving the #Online Economy

Games and social media apps may currently be generating the most downloads and revenue, but the real innovation in the online economy comes from the “Three Pillars”: Health, Finance and Education.

What these pillars have in common are:

  • clearly defined market verticals
  • well-established business models
  • life-long customer engagement
  • highly regulated operating environments

They are also industries that are continuously innovating, which makes them interesting bellwethers for what might emerge in other sectors of the economy.

However, they do not display closely integrated vertical markets, and despite the regulatory barriers to entry they are vulnerable to disruptive technologies and new business models.

I’m reminded of the proverb “early to bed, early to rise, makes a man healthy, wealthy and wise” – such that we cannot afford to ignore what is going on in these industries, and nor can we fail to understand the implications for each of them based on what is going on elsewhere.

From mobile payment systems to wearable fitness devices, from Apple’s new “Health” app to mass open online courses, from peer-to-peer lending to shared health alerts, these sectors are responsible for (and responding to) significant changes in the online economy, and over the next few weeks I’ll be offering some personal observations on the trends, threats, lessons and observations for each of the three pillars.

I encourage readers to contribute to the debate via this blog….

Next week: Online Pillar 1: #Health

Stripe’s John Collison: “Better to be #disruptive than incumbent”

In a Melbourne fireside chat with Paul Bassat (hosted by NAB and Startup Victoria) Stripe‘s co-founder and President, John Collison offered the insight that “it’s better to be disruptive than incumbent”.

Incumbency comes with all the baggage of legacy data, semi-redundant systems, siloed business operations, and customers with long memories.

Whereas, a nimble and agile startup like Stripe can cut out inefficient and lazy business processes – especially in areas like online and mobile payment systems. And in doing so, a disruptive service can make us think, “how did we ever manage before this was invented?”

Collison was careful, though, to point out that Stripe is working with the banks, not against them, in case anyone thought his company has designs on becoming a fully fledged financial institution. “We simply want to make the payments business more efficient.”

Stripe’s approach is to leverage engineering skills and solutions “to fix first world and middle class problems”. Precisely so – why would you want to undermine the system (payments and transfers between banks and their customers) that gives rise to your very existence?

Collison also reflected that never before has it been possible for such a small number of people to create such enormous value, very quickly – citing the fact that WhatsApp had a mere 55 employees when it was acquired by Facebook earlier this year for $19bn. (Stripe itself, founded in 2010, had about 100 employees when it was valued at $1.75bn around the same time.)

While WhatsApp does not yet generate revenue, its valuation as a disruptive IM platform is largely based on a notional value per user, and what that may represent in terms of data from customer analytics or premium pricing for add-on services.

But you don’t even need to be a startup business to disrupt an existing market, as the music industry continues to discover to its cost – you simply need to be part of the demographic that is used to “free” stuff, has no real concept or appreciation for IP, refuses to pay for anything on the internet, and develops brand loyalty based on likes, shares and number of views. Even Stripe would be out of business if everyone switched to peer-to-peer money transfers without wanting to pay commissions or transaction fees.

 

 

 

 

Why #collaboration is not simply “working together”

Along with productivity, innovation and employee engagement, collaboration is fast becoming the new mantra for businesses seeking growth and/or competitor advantage. But while collaboration can take many forms, the mere act of “working together” does not of itself lead to sustainable collaborative outcomes.

The theme for last week’s inaugural class of Melbourne’s Slow Business School was “How to collaborate effectively with other businesses”. Hosted by Carolyn Tate and facilitated by Richard Meredith, the class did not arrive at any prescriptive processes or techniques for collaboration. But, as one student wryly observed, our discussions took the form of a dance without choreography, which is perhaps the highest form of collaboration. However, we did identify a few core attributes without which successful collaboration would be unlikely, if not impossible:

  • Shared values among the players
  • Defined roles
  • Common purpose or vision
  • Mutual trust between all participants
  • Voluntary (i.e., parties choose to be here)
  • Equitability (e.g., recognition of each contribution)

I would also add that from my experience, collaboration does not happen unless there are opportunities for the participants to be co-located at least some of the time.

Which leads me to those activities that are NOT collaborations:

  • A routine or regular project (“BAU”)
  • Outsourcing
  • Commissioning
  • Remote teamwork
  • Shared services
  • Trading transactions

For example, if I commission an architect to design a house, even if I am intimately involved in all the detailed decisions about materials, specifications and aesthetic choices, it is not a collaboration – it’s a transaction between client and professional. However, if I was a heating engineer, and I used my knowledge and experience to work with my architect to come up with some new energy-saving solutions (that could be used in future projects) that would be a collaborative outcome.

Collaboration certainly cannot happen if organisations operate within silos, but nor does it come about by happenstance – there has to be a deliberate and conscious decision to collaborate, even if at the outset there is no specific product or solution in mind other than a desire to collaborate (“Let’s see where the dance takes us”).

One aspect of this approach is “co-creation”, where companies embed themselves in their client’s world to identify what problems they can work on to solve together. In this way, collaboration leads to the outcome. Clearly, to be effective, co-creation would be backed by some formal product development or service design techniques, agreed ground rules and even a game plan – whether that is a lean canvas business model methodology, an iterative prototyping process, or a defined supply chain framework.

In any collaboration, one party may try to force the pace, but if this is not reciprocated, the mutuality will be lost – it becomes just another transaction (or a series of mis-timed steps). The best partnerships and joint ventures are founded on the commonalities of purpose, process and participation. Further, a successful venture will know when it has run its course – even if this means having those “difficult conversations”, which the class felt were also a vital feature of the best collaborations.

By strange coincidence, the same day Slow Business School was in session, Deloitte Access Economics published a research report commissioned by Google Australia. It concluded that greater collaboration by Australian companies could be worth $46bn to the local economy, based on increased productivity and reduced costs/wastage. Although the report reads more as an OD approach to collaboration (linked to the productivity, employee engagement and innovation mantras) it nevertheless offers some empirical evidence that companies who get it right will see benefits across a range of KPIs. If nothing else, employees who are given more opportunity to collaborate will display greater job satisfaction (this is part of the philosophy behind etaskr, about which I have written before).

For me, there are a few interesting data points in the Deloitte report:

  1. While technology has been important in enabling increased collaboration, the right workplace culture, management structure and team members are seen as paramount.
  2. Although “shared electronic resources” were seen as the single most important tool for effective collaboration, “common areas for staff to socialise” was not far behind, and “more meeting rooms” scored higher than “open plan office”, while having more technology solutions (collaboration software, video conferencing facilities and social media) all rated lower.
  3. Finally, just over a third of respondents reported that “collaboration helps them work faster” (and nearly a fifth said “their work would be impossible without collaboration”), but nearly a quarter felt that collaboration meant their work took longer.

So, a paradoxical interpretation of the report could be:

  • fewer open plan offices (but more meeting rooms);
  • more technology (but not just productivity tools); and
  • more teamwork (but not at the expense of getting my own work done).

A final thought: If we think that the prerequisite for collaboration is the “willingness to co-operate”, then this can get murky, as participants will only be prepared to operate at the level of trading favours (and only because they’ve been told they have to play nicely) rather than entering into the venture with enthusiasm and without ulterior motives.