Formulating a Growth Strategy for the Aging-In Population

- A Market Research Study Presented To CABA -- A Market Research Study Presented To CABA -

By Sandy Bates, Strategyn Inc.

November 19, 2010

Background: CABA and Strategyn Inc.

CABA works to strengthen the Connected Home sector through innovative technology-driven research projects. CABA is proposing a market research study “Formulating a Growth Strategy for the Aging-In Population ” research project.

Strategyn is a global leader in innovation management and a pioneer in “Outcome-Driven Innovation” in the healthcare sector. Strategyn will be contracted to do the research for this study, and the final deliverable will belong to the CABA Steering Committee.

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Introduction

The Situation

Baby Boomers are increasingly approaching retirement age. By 2030, 71 million Americans will be over age 65, according to the US Census.

Currently, 90% of elderly Americans prefer to age in their homes in a healthy environment.

Home health care, much of it for the elderly, is one of the fastest-growing segments in the country’s fastest-growing health care industry.

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Following CABA’s May 2007 “Senior Living” research study, CABA have requested a holistic opportunity assessment of the senior living market with respect to the connected home and the “Aging-In” population. Such a program would enable CABA members to understand where value creation is most desired among this aging population, creating insight for areas of innovative product and service development.

What is the Goal?The identification of a new market space of innovations that help seniors remain longer in their home as long as possible.

To meet this goal, we will identify what aspects of the aging seniors’ home environment needs improvement for them to be feel comfortable and safe.

Areas to explore include Navigating through the home Interfacing with the home Safety within the home Informing others (caregivers) of health/

well-being issues; get assistance when needed

Understand how the decision to stay living at home independently is made, how adult children influence that decision, and how the home environment influences whether the senior can continue living at home.

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The Center for Social Innovation

The Center for Social Innovation brings together a proven methodology and a platform for collaboration to understand and develop solutions to the world’s most pressing social and economic challenges. 

© Tandem Strategies, Inc. 2009

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Approach Validated in Academia …

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… And Business

Health Care

Kimberly Clark

Johnson & Johnson

Guidant

Medtronic

Harvard Kennedy School of Government Healthcare Study

California Health Care Foundation

Coloplast

Becton Dickenson

B.Braun

AMO

Deltec

Dentsply

Hollister

Financial Services

Morgan Stanley

Met Life

State Farm

AIG Financial Services

AXA

Washington Mutual

H&R Block

Toronto Dominion Bank

Assurant

PershingTechnology

Microsoft RIM

Hewlett-Packard Nortel Networks

IBM Reynolds

Motorola Ceridian

Intuit Plantronics

Attenex

Vtech

Manufacturing

3M Rohm & Haas

Ecolab MeadWestvaco

John Deere Lexmark

Bosch

Ingersoll Rand

Neenah Paper

Line 6

Consumer Products

Colgate

Unilever

Chiquita

Hallmark

Hill’s Pet Nutrition

Cargill

Simplot

Mead Johnson Nutritionals

Government

CIA

NFPA

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I Innovation is the process of devising a product or service concept that satisfies the

customer’s unmet needs.

Innovation Stalls for Several Reasons – 1. No Definition

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There is no agreement on what a need is so…

Delighters

Specifications

WANTSrequirements

BENEFITS

Solutions

desired outcomes

Exciters

must havesWISHES

IDEASexpectations

latentneeds

2. Wrong Inputs

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Generate ideas

Infer customer needs

Filter out bad ideas

Fine tune good ideas

Ideas-First80% - 90% Failure Rates

Generateideas

Obtain the customer’s voice

Uncover customer “needs”

Determine priorities

TraditionalNeeds-First

70% - 80% Failure Rates

3. Wrong Order

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2y + yz3 x zy3 + yz3 x zy3 - x2y3z6 + 2x2 + 2y + yz3 x zy3 - x2y3z6 +

2X + Y = 3 and X - Y = 4

x2y3z6 + 2x2 + 2y + yz3 x zy3 - x2y3z6 + 2y = The Optimal Solution

1. Companies must first uncover ALL the customers’ needs - ALL

2. Next, they must determine which are unmet

3. Lastly, they must devise solutions that specifically address the unmet needs

Revolutionary Needs-First Approach

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Open an artery

Diagnose a health

issue

Prepare / File taxes

Deliver drug therapy

“When customers find that they need to get a job done, they ‘hire’ products or

services to do the job.”

Clayton Christensen and colleagues

“From the customer’s perspective, it is the job that is

the stable, long-term focal point around which value creation

should be centered.”

Anthony W. Ulwick & Lance A. Bettencourt

Paradigm Shift: Make the Job the Unit of Analysis

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Making The Job the Unit of Analysis

Jobs define the actions for which a solution may be hired ; goals to be achieved; problems to be resolved

Current products are merely point-in-time solutions that enable customers to get jobs done

Customers migrate to products that get the job done best – they are “loyal” to getting the job done

The goal of innovation therefore is NOT to build a better widget. It is to devise ways to help customers get a job or jobs done better.

Job: close a surgical wound

4000 BC+ 1000 BC+ 30 AD+ 1908+ 1980+

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2y + yz3 x zy3 + yz3 x zy3 - x2y3z6 + 2x2 + 2y + yz3 x zy3 - x2y3z6 +

2X + Y = 3 and X - Y = 4

x2y3z6 + 2x2 + 2y + yz3 x zy3 - x2y3z6 + 2y = The Optimal Solution

Needs Are Constant, Solutions Are Variable

Desired Outcomes on Selling GoodsSatisfaction

Cash Credit PayPal

Minimize the time it takes the buyer to complete a payment transaction

4 6 6

Minimize the time it takes to receive payment 8 6 8

Increase the likelihood that the buyer has an available means of payment

4 6 8

Minimize the likelihood of losing money due to accepting a fraudulent payment

6 4 7

Cumulative Satisfaction 55% 55% 70%

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And Its Related Job Map – 172 Desired Outcomes

The “Job” of Completing a Surgical Procedure

Outcomes

Minimize the frequency with which a verbal order must be repeated

Minimize the frequency with which blood in the wound obscures the surgical site

Minimize the risk of surgical site infection due to bacteria getting inside a wound

Minimize the risk of complications to a patient due to anesthesia

Minimize the likelihood that instrumentation cords contaminate the sterile field

Assess the patient

Prep the patient

Confirm OR prep

Perform the procedure

Monitor patient vitals

Resolve complications

Conclude the

procedure

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The Job of Obtaining Health Care

Define Locate Prepare

Execute

MonitorConclude

Modify

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The Opportunity AlgorithmS

atis

fact

ion

Importance

Opp >15Extreme

Opportunity

Opp >10Solid Opportunity

Opp >12High Opportunity

Under-ServedAppropriately Served

LimitedOpportunity

1

2

3

4

5

6

7

8

9

10

1 2 3 4 5 6 7 8 9 10

Table Stakes

Over-Served

Opportunity = Importance + max (Importance – Satisfaction, 0)

Ripe for Low-end

Disruption

Potential for Low-end

Disruption

See Turn Customer Input Into Innovation, HBR, January 2002

It is possible to discover hidden opportunity in an existing market, locate blue oceans and potential disruptions.

ValueCreation

Opportunities

Low-end Disruption

Opportunities

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What process will we use?

Outcome-Driven Innovation® Process

Select a Market

1

ODI is a strategy and innovation process built around the theory that people buy products and services to get jobs done

ODI links value creation activities to customer-defined metrics; it guides the creation of winning strategies and breakthrough concepts

ODI’s metric-based inputs drive strategic fit and alignment across the organization

What Customer’s Want, McGraw Hill, 2005

2Understa

ndCustomer

Needs

Identify Areas of Opportuni

ty

3Formulat

e a Growth

Strategy

4 5

Enact the Growth

Strategy

Addressunmetneeds

Position current products

License needed IP

Acquire needed products

Create new concepts

Invent new technology

Address consumption jobs

Improve product portfolio

Optimize business model

Ensureprofit-ability

21

Define the Market of Focus

Identify Areas of

Opportunity

Select a Market

Formulate a Growth Strategy

1

Understand

Customer Needs

A market is a group of job executors and the

common job or jobs they are trying to get done.

Giving Customers a Fair Hearing, Sloan Management Review, Spring 2008

Define Markets & Objectives

Market Ecosystem

Select a Market

Evaluate Markets

• Revenue potential• Strategic alignment• Level of opportunity • Ability to create a

solution• Ability to sustain

position• Risk of market entry

20+ criteria• Current

• Adjacent• New

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Building Contractors – new home and

retro fit

Market Ecosystem – Aging Adults

Government Agencies that support the

elderly

CaregiversFamily, paid caregivers,

friends, etc.

Job Executor Job(s)

Aging Adults General Health and WellnessFood (eating, cooking, etc.)Exercise & FitnessNavigating through the homeInterface with the homeMedical SupportCommunicationsEntertainment

Caregivers Ensure aging adult is maintaining their healthEnsure aging adult has assistance when needed Care for the aging adult

Building Contractors Determine the best design for aging adults

Government Agencies

Determine when an aging adult can no longer live on their own

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Aging Adults

Understand Customer Needs

Identify Areas of

Opportunity

Select a Market

Formulate a Growth Strategy

2

Understand

Customer Needs

ConceptDefinition

ConsumptionChain Jobs

• Purchase• Receive• Install• Set-up• Learn to Use• Interface• Transport• Store• Maintain• Obtain support• Upgrade• Replace• Dispose

DesignDefinition

• Outcome 41

• Outcome 42

• Outcome 43

• Outcome 44

• Outcome 45

• Outcome 1

• Outcome 2

• Outcome 3

• Outcome 4

• Outcome 5

50 – 150 outcomes (needs) per job

Companies must know the jobs customers want to get done and the metrics they use to measure their successful execution.

The Customer-Centered Innovation Map, HBR, May 2008

Define Locate Prepare

Job Map

Core Functional Job

Confirm

Conclude Modify Monitor Execute

Related Jobs Emotional Jobs

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Develop a plan to achieve the goal

Execute the plan for achieving the

goal

Overcome obstacles to

achieving the goal

Determine what actions to take to achieve the goal

Determine whether the plan is achieving the desired results

Conclude the plan

Determine the goal that is

desired

Determine the feasibility of the

desired goal

The Job of Achieving a Healthcare Goal (Patients)

Change the plan as needed

Overcome obstacles to achieving the health goal1. Minimize the likelihood of failing to execute the plan because of physical limitations, e.g., injury, sickness, etc.2. Minimize the likelihood of failing to execute the plan because of fatigue, e.g., skipping a workout, too tired to prepare proper food, etc.3. Minimize the likelihood of failing to execute the plan because of time pressure, e.g., job responsibilities, being busy with children, etc.4. Minimize the likelihood of failing to execute the plan because of travel, e.g., unavailability of healthy foods, exercise equipment, disruption of

routine, etc.5. Minimize the likelihood of being unaware of resources that can help attain the goal, e.g., sources of help or information, backups, etc.6. Minimize the likelihood of losing motivation to continue working toward attaining the goal7. Minimize likelihood of engaging in activities that are detrimental to attaining the goal, i.e., reverting to old behaviors

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Identify Opportunities

Identify Areas of

Opportunity

Select a Market

Formulate a Growth Strategy

3

Understand

Customer Needs

An opportunity is an under-or over-served job

or outcome.

Companies are able to discover segments of

opportunity

Sat

isfa

ctio

n

1

2

3

4

5

6

7

8

9

10

1 2 3 4 5 6 7 8 9 10

Over-served

Under-served

Opportunity = Importance + max(Importance–Satisfaction, 0)

Importance

Appropriately served

Qualified job executors rate the importance and satisfaction of each job or outcome in a survey.

Opportunity-Based Segmentation

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What is the Opportunity Algorithm?

OUTCOME IMP SAT OPP

Minimize the time it takes for the plant to come out of the ground

9.0 3.0 15.0

Increase the percent of plants that emerge at the same time

8.5 3.5 13.5

Increase the percent of needed nutrients that are absorbed by the plant

8.0 5.0 11.0

Minimize the time it takes the corn to turn green, e.g., produce chlorophyll

7.5 6.5 8.5

• If 90% of the respondents rate an outcome a 4 or 5 for importance, the Importance value entered into the algorithm is a 9.0

• If 30% of the respondents rate an item a 4 or a 5 for satisfaction, the Satisfaction value entered into the algorithm is a 3.0

Opportunity = Importance + max (Importance – Satisfaction, 0)

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Opportunity Landscape for Patients - Jobs

ZOOM AREA

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Zoom Area (10.0 or higher)

2.0

2.2

2.4

2.6

2.8

3.0

3.2

3.4

6.0 6.2 6.4 6.6 6.8 7.0 7.2 7.4 7.6 7.8 8.0Importance Score

Sati

sfa

cti

on

Score

Assess the potential for a health problem Prevent a health problemDetect a health problem Correct a physical conditionTreat an injury Treat an illnessTreat a life-threatening disease

Detect a life-threatening illness at the earliest possible stage

Treat an infectious disease

Determine if potentially harmful toxins are present in the body

Determine if a genetically transmitted condition has been passed down to you

Identify potential problem before it becomes serious

Recognize sypmptoms of illness

Determine potential for developing a disease

Remove potenitally dangerous growths

Obtain an assessment of the body's physical condition

Obtain assessment of mouth

Set a broken bone

Treat an injured joint

Treat pain

Correct eyesight

Reduce high blood pressure

Correct hearing problems

Stich a deep cut

Treat a viral infection

Detect the presenced of an STD

Maintain ideal level of energy

Ensure condition does not worsen

Detect infectious disease

Treat kidney disease

Diagnose the cause of an illness

Detect chronic disease

Determine if previous condition has reoccured

Prevent illness from causing more damage

Treat a bacterial infection

Prevent an avoidable disease

Treat dental problems

Treat liver disease

Treat heart disease

Treat cancer

Opportunity >= 10

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Segment Descriptions – High Opportunity Segments

This segment has extreme opportunity scores driven by high importance. They find the issue of healthcare very important and not well satisfied across the board. They are concerned with accuracy of diagnosis, getting back to their life as quickly as possible, and making sure they are not being taken advantage of by the system.

Segment 3: Healthy Body

This segment has a higher propensity to use the healthcare system. They are concerned with the basic needs of treating pain and illness and are also concerned with prevention of illness and determining if the body is healthy (has nutrients needed, free from toxins, etc.). They are over-served on pregnancy and mental health jobs.

This segment has a higher degree of chronic conditions with an emphasis on depression. Most of its unique areas of opportunity are around emotional issues and addictive behavioral health issues. They are very concerned about affordability of the healthcare services they receive and that the treatment is effective.

Segment 2: Healthy Mind

Segment 4: Diagnosticians

12%

21%

10%

This segment is very much focused on healthy pregnancies and healthy relationships. The only demographic difference in this group is age with a higher representation of younger workers (18-24). They are concerned with getting the right treatment for their family, being able to afford necessary tests, and having sick children seen quickly.

Segment 6: Future Families

27%

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Target Areas for Strategic Growth

Identify Areas of Opportunity

Select a Market

Formulate a Growth Strategy

4

UnderstandCustomer Needs

2

Related-marketGrowth

Add a set of features to the core platform to help customers get a related job or jobs done.

2

Markets evolve across six

growth paths. The

opportunities that exist

predict how growth will

occur.

During the final results

session, we will walk the

participants through this

model and how to apply the

data to their innovation

initiatives.

Current Job Executor New Job Executor

Co

re J

ob

(s)

+ R

elat

ed J

ob

s

Core Platform New Value Delivery Platform

A New Perspective on Strategy, Whitepaper, Strategyn, May 2009

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What can YOU DO with the data?

Select a Market

1 2UnderstandCustomer

Needs

Identify Areas of

Opportunity

3 5

Enact the Growth Strategy

Formulate a Growth Strategy

4

Position current products

Create new concepts

Invent new technology

License needed IPAcquire needed products

Improve product portfolio

Address consumption jobsOptimize business model

Addressunmetneeds

Ensureprofit-ability

If current products address the jobs or outcomes,

then they should be repositioned and new

messaging should be developed

Projects in the development pipeline that address

the top opportunities should be prioritized high

Existing technologies, IP, and M&A opportunities

should be prioritized

New ideas should be developed for those

remaining opportunities

ShortTerm

LongTerm

32

Virtual Lab for Concept Testing, Evaluation, and Prioritization

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Program Outline

Detailed Project Description

Objective The purpose of this study is to examine and determine potential

connected home product, service and business opportunities based on needs and expectations of the senior consumer market to support aging in place.

• Several core opportunity platforms to explore with consumers will be established based on the final set of sponsoring member companies and their collective interests such as:– Health and Wellness– Food (eating, cooking, etc.)– Exercise & Fitness– Universal Design– Medical Support– Communications– Entertainment

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Formulating the Growth Strategy

To identify a potential new market space by helping seniors remain longer in their home, specific objectives under consideration include:

Objective 1 - Jobs within the home that affect the aging adult as they move about the home and take care of basic necessities including cooking, communications, medical conditions and hygiene (90% time allocation)

Objective 2 - Other jobs of interest including entertainment, wellness, exercise, etc. (10% time allocation)

Given objectives breadth - Innovation Strategy methodology used to assess multiple market opportunities; allowing for broad coverage, identifying opportunities with greatest potential for new market growth.

Objective 1 – a representative sample of respondents in targeted population, with varying degrees of current health

Objective 2 - extensions to interviews to obtain information for profiling questions.

To uncover jobs to accomplish – qualitative interviews with diverse set of respondents to identify how they engage in these activities and how they measure value in conducting these activities.

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The Target Demographic

Aging adults ranging in age from 55 – 80+ Secondary audience is caregivers of this age group (both adult children and

paid caregivers). This audience will be appended to the study if we receive over 13 participating organizations.

Diversity among the population to include Geography – US & Canada, as well as a good distribution within these

countries Health – from very healthy to those with chronic health conditions to those in

poor health who need care today Activity levels – from very active seniors to more sedentary Family network – both size and involvement of the network in the senior’s life Attitudes toward, and use of, technology Type of home they are currently living in (will want those that own their

home) Ethnicity, gender and other basic demographics Others defined by the participating organizations

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The Process

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Business Objectives Strategyn Actions

Understand the following jobs: Interface with the home Transition within the home Take care of personal needs in the

home, e.g., showering, dressing, cooking, eating, etc.

Ensure safety in the home

Qualitative Research. Using on-site interviews, 1:1 interviews and focus groups, we will uncover jobs that specifically define what respondents are trying to accomplish. The interviews will focus on all areas of the home, different rooms, different types of homes, etc.

Understand how opportunity for value creation differs for different sub-groups (i.e., age, health status, marital status, number of people in the dwelling, type of dwelling, etc.). Uncover opportunity segments through job-based opportunity algorithm.

Quantitative Research: Obtain importance and satisfaction jobs identified by area

Large representative sample of the target population Detailed analysis of emotional needs of target group as they relate to functional jobs to be accomplished

Identify key targets of opportunity for CABA for short term innovation as well as long range strategic planning

Data from quantitative phase to provide exploration of opportunities to develop innovations across multi-dimensions

Short and long term innovations, that may include new technologies and platforms Opportunities for market disruption, etc.

Summary of Jobs to Study

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Foundational Research

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Audience 55-65 year olds 65+ Total

Standard sample 200 200 400

Homeowners with physical impairments

100 100 200

Total 300 300 600

Quantitative Sampling:

The quantitative survey instrument to a representative sample of homeowners. A tentative sample design follows (this is for illustration purposes and will be developed during the strategy and framing session):

Qualitative Sampling: Uncovering Customer Needs

Once the framing and strategy is finalized, the data collection process begins. Our objective is to understand in detail the fourjobs that are targeted. In order to best meet the objectives, we recommend conducting ethnographic interviews through 2 hourIn-home visits with at least 7 homeowners to uncover the jobs and outcomes pertaining to ‘interfacing with the home’ . DuringThese visits we will…

* Capture the outcomes on all four stated jobs defined in the scope* Understand the context in which the jobs become more difficult or more complicated

The primary objective of this phase of the project is to capture all of the outcome statements. We will not be attempting to gainan understanding of importance or satisfaction of the jobs and the outcomes during this phase. This will take place during thequantitative phase of the project.

What are the Benefits of the Study?

Identify new market opportunities and new platform creation

Provide inputs necessary for study participant ideation processes - ensuring execution against statistically identified customer needs

Provide quantifiable analysis of where market is under- and over-served, including segments within the population

Provide statistical validity to how study participants can/should connect with target audience on an emotional level - assisting with product design, messaging, marketing and sales

Participating companies will have input into the survey design, a strategy session with guidance on how to use the data, and first insights into this rich area of new market potential. They will also receive discounted options for strategic workshops using this data. 41

Proposed Study Work Plan: Deliverables and Schedule

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Deliverables:

The jobs that homeowners want to get done as they attempt to live in their home throughout their later years A prioritized list of opportunities for value creation and new market expansion Identification of job-based segments within the homeowner population Targeted opportunities to become inputs into the ideation process

Schedule:

Timeline details will be finalized during the initial planning session. However, we anticipate that the Targeting session can be held within 2-2.5 months of the kickoff session. Therefore, if the project is accepted by the end of November, we can have the project completed by the January/February timeframe.

Project Activity Estimated Time

Kickoff and Project Development Late November/Early December with Steering Committee

Qualitative work including ethnography, phone interviews, netting of final results

4 weeks: November/December

Fielding of Quantitative study (includes programming of survey, fielding, data validation and processing)

2 weeks: December/January

Analysis and segmentation; development of results presentation 2 weeks: January

Strategic Opportunity Session End of January, first weeks of February

Questions and Answers

• NOTE: This CABA program will be executed with the partner organizations through Step 4. Each organization can select whether they would like to engage with Strategyn for any of the Step 5 workshops.

• Step 5 workshops will be available at a discounted price for CABA members including:– Ideation– Portfolio optimization– Messaging and Value Proposition development– Merger and Acquisition evaluation

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CABA Aging-In Population Research Study: Contact Information

John HallCABA Research Director

hall@caba.orgPhone: 613.686.1814 x227

Ken GallingerCABA Marketing Director

gallinger@caba.orgPhone: 613.686.1814 x229

CABA1173 Cyrville Road, Suite 210

Ottawa, OntarioK1J 7S6

Phone: 613.686.1814Fax: 613.744.7833

George GrimesCABA Business Development Manager

grimes@caba.orgPhone: 613.686.1814 x226