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®
Boston
London
The Battle for Healthcare Information A War Game
St. Mary’s Hall, Rm 110
Georgetown UniversityJuly 16, 2009
2| © April 3, 2009 | The Battle for Healthcare Information
War games are a process to examine the near term
A war game is a structured strategic exercise to help you anticipate competitive moves before your rivals make them.
1-3 year horizon…you know the players but may not understand their strategies!
3| © April 3, 2009 | The Battle for Healthcare Information
Why this event…Why it works?
Why this event?
War games are typically private, closed-door events run by Fuld & Company for clients that need to make critical, often high-stakes decisions. This public war game allows us to show you our approach and demonstrate how and why a war game is a very effective vehicle for executives who have to make critical decisions
Why it works?
It “stress tests” strategic reality
4| © April 3, 2009 | The Battle for Healthcare Information
Pay for What Pay for What WorksWorks
A “Stress Test”? There are over 100 billion reasons why!
Healthcare expense hyper growth now pervasive
The quality of care being delivered today is increasingly recognized as suboptimal
In order for technology to succeed here, we need a learning healthcare system
– A system in which evidence emerges as a natural by-product of the care delivered
– Delivering the right care, to the right person, at the right time, for the right price
5| © April 3, 2009 | The Battle for Healthcare Information
A Brave New World Of Future PartnersUltimately, it’s about Co-opetition, not Zero Sum!
Pharma and Biotech
Providers
Payers
Technology Providers
Diagnostic/Device
Patient
Government Agencies
6| © April 3, 2009 | The Battle for Healthcare Information
We Have Come A Long Way Since 1949…
“As a time saver, a pneumatic tube system will be included” …for the purpose of distributing histories of patients and other information that might be needed, as well as a means of communication between departments in the teaching institutions. – Dr. Ernest William Bertner, January 30, 1949, first President of Texas Medical Center
“Our recovery plan will invest in electronic health records and new technology that will reduce errors, bring down costs, ensure privacy and save lives…So let there be no doubt: health care reform cannot wait, it must not wait and it will not wait another year."- Prepared text of President Obama’s address to Congress, February 24, 2009
7| © April 3, 2009 | The Battle for Healthcare Information
Four Nationally Ranked Business Schools Competed
The Schools The Facilitator The Judges
“Students from Harvard Business School and MIT's Sloan School of
Management were recently invited to play a "war game.” The organizer, Fuld & Company….In the real world, the stakes are far
higher, but the basic analysis may prove correct…”
8| © April 3, 2009 | The Battle for Healthcare Information
Industry Analysis in your Briefing Book
Understand the overall industry picture
Let the industry picture lead you to understand the competitors’ likely actions
Use your understanding to help your company make better decisions
INDUSTRY
INDUSTRY
FORCES
TARGET’S
ACTIONS
9| © April 3, 2009 | The Battle for Healthcare Information
Gaining An Industry Overview: The Five Forces
Jockeying for position among current competition
10| © April 3, 2009 | The Battle for Healthcare Information
Porter’s Five Forces Model
What makes one industry more profitable than another? – Why is the market for drug therapies more profitable than the market for truck
transport services?
– Why is a technology based product like the desktop PC such low profit business?
Within an industry, why are some companies are more profitable than others?
– Amgen had a higher rate of return than Wyeth
– Only Dell made money selling PCs until 2006; since then Dell hasn’t but HP does
And what is the “healthcare information industry??” – Who are the competitors, suppliers, customers, potential new entrants, and
substitutes?
11| © April 3, 2009 | The Battle for Healthcare Information
Differing strategies separate participants in the same industry
Differentiate Be Low Cost
Focus (e.g., geographically or on a market segment)
12| © April 3, 2009 | The Battle for Healthcare Information
Porter Four Corners Analysis – First Look
Future Strategy
• What will the company’s future strategy be?
• Product
• Place
• Price
• Position
DriversAt all levels of
management and in multiple dimensions
Current StrategyHow the business is currently competing
AssumptionsHeld about itself and
about the industry
CapabilitiesStrengths and
weaknesses; core competencies
13| © April 3, 2009 | The Battle for Healthcare Information
Assumptions & Blind Spots
All companies have assumptions, some explicit, some hidden from view.– About the competitive arena -- competitors, customers, suppliers, regulators,
technology
Corporate myths…– About the company’s own strengths, the validity of its practices, its traditions
Corporate taboos…– Regarding assumptions that are supported at the top
They built strategies partly on the basis of their assumptions
14| © April 3, 2009 | The Battle for Healthcare Information
An example...
In the ‘60s, Hoffman-LaRoche built itself on the success of Valium. The company had 3 explicit strategic assumptions:
• A drug that isn’t going to be a blockbuster isn’t worth our attention
• All new products must come from our own labs
• There’s nothing to be learning by hiring executives from other drug companies
What conditions made these assumptions right for the time, and why did those conditions change? How did Roche respond?
15| © April 3, 2009 | The Battle for Healthcare Information
Porter Four Corners Analysis
Future Strategy
• What will the company’s future strategy be?
• Product
• Place
• Price
• Position
DriversAt all levels of
management and in multiple dimensions
Current StrategyHow the business is currently competing
AssumptionsHeld about itself and
about the industry
CapabilitiesStrengths and
weaknesses; core competencies
16| © April 3, 2009 | The Battle for Healthcare Information
Interviews w/ client &
externalisources
Prior to Session
Three to five weeks
Two Day Session (Typical)
Teambreakouts(Usually 4CornersAnalysis)
Intro bysponsor &
Fuldfacilitator
Summary,decisions &
follow-upassignments
TeamBreakoutSessions
(Responseto the
scenario)
Teambreakouts(Output isusually the
team'sstrategy
Scenariopresented
by thefacilitator
Teampresentations
& critiques
Teampresentations
& critiques
Teampresentations
& critiques
TeamBreakoutSessions
(Responseto the
scenario)
Teampresentations
& critiques
Teamassign-ments
Post-Session Action
Briefing Bookfor particpants
Summary &recommend-
ations from Fuld
Follow-upreview with
client
Scenariopresented
by thefacilitator
War Game Format
17| © April 3, 2009 | The Battle for Healthcare Information
Rules for Round 1
Each team will work on its own. You may email questions to myself or Dr. Alemi for clarification.
The first task for each team is to build a strategy for the company it represents. Start with the company’s drivers, assumptions, current strategy and capabilities. The output should be a Four Corners analysis of the firm, concluding with a 2010-2011 strategy in the market for the healthcare information.
Once you complete the Four Corners analysis, you should be able to answer the following questions:
‒ What will your company’s future strategy be? ‒ What makes you think you can implement it?‒ What do you think the responses of the other players will be?
You will be presenting your analysis to the other teams and the judging panel via a YouTube video, and each of them will have an opportunity to question
your analysis, so be prepared to defend it.
18| © April 3, 2009 | The Battle for Healthcare Information
Judging Criteria
You will be judged by:
Insight– How well do you understand the dynamics of the business and the company you
represent?
Accuracy– How well does your proposed future strategy reflect the realities of the company’s
drivers, current strategy, resources and assumptions?
Creativity– What intellectual sparks have you generated in creating your company’s future
strategy, and in defending your conclusions?
Foresight– How well have you done at thoughtfully looking into the future of the on-line search
business?
19| © April 3, 2009 | The Battle for Healthcare Information
Rules for Round 2: Disruptive Scenario
The facilitators will announce a scenario – “Gore Wins Physics Nobel for Inventing Internet, Sues Google for Royalties” -- and we will provide some realistic details.
Your team should focus on what its own strategy will be in response to the scenario we present.
Teams are free to negotiate a deal with each other within the constraints of anti-trust rules. You can’t agree to divide up markets or fix prices, but you could agree to acquire or be acquired, or to partner or license your products. Remember that the time is limited, so you can’t spend too much time negotiating, even if you think there’s something to negotiate about.
Your team’s output should be a modified market strategy responsive to the change reflected in the scenario.
Consider the likely actions of the other players and be prepared to explain what you think they will do in response to your team’s strategy. Be prepared to defend the responses you have crafted.
21| © April 3, 2009 | The Battle for Healthcare Information
Some of the Action in April…
Microsoft tries to make a deal with Kaiser.
This happened for real a month later…
With the same result.
22| © April 3, 2009 | The Battle for Healthcare Information
And The Winner Is… ?
?At the end of the game, we will determine the winner based on the best all around strategy:
• Kim Slocum – former corporate strategist at AstraZeneca and incoming HIMSS officer
Brett Davis – IBM Senior Executive in Life Sciences
Wayne Rosenkrans – former corporate strategist at AstraZeneca, Chairman of the Personalized Medicine Coalition, Distinguished Fellow at MIT