Enlightened Conflict

Health care in 2017 from a business perspective

March 22nd, 2017

take the extra time to do things right the first time

 

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If you don’t have time to do it right, when will you have time to do it over?

 

—-

John Wooden

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American healthcare is getting quite tiring. Shit … I have written about it in 2009 and even recently wrote about it <Healthscare > as recently as January 4th 2017.

it is complicated complex not simple Life world 

All you have to do is turn on the tv or maybe go to some politics driven website and you will see gobs of articles & pundits yapping about the upcoming vote on repealing the Affordable Healthcare Act <Obamacare>.

 

Suffice it to say the new plan is not being particularly well embraced by its own party as they have aspiring to the finish line vote tomorrow.

 

To me this whole discussion and action plan shows the lack of business leadership knowledge which exists in politics and government. And, yes, that includes the President <who should know better if he was truly a business person>.

 

Let me address some key issues from a business perspective.

 

 

Time.

 

30 days.

That’s about the amount of time this repeal plan of action has been discussed <just ignore the last 7 years which they should have been thinking about it … or even the additional month or so if you wanted to begin on inauguration slow down take time do rightday>.

 

30 days for something like this is insane.

 

Okay. It is just stupid.

 

This is unlike how the Affordable Care Act <ACA> was implemented, which – just to remind everyone — was debated for almost an entire year in both houses of Congress with 79 hearings in the House alone and a number of amendments incorporated in the process … and hospitals, associations and insurers were all brought in.

 

But you know what?

 

Any business person with half a brain would tell you trying to build a plan of action which would turn a company 180 degrees around <or at least something that would change maybe 20% of the entire revenue stream> and gain alignment is going to take more than 30 days.

 

Any business person with half a brain would tell you pushing through this kind of change without alignment, education and some aspects of agreement is not only foolish but deadly.

 

Any business person with half a brain would take a step back and say “lets take the time we need to get this right.”

 

Promises delivered.

 

I have noted before business leaders only have to earn this lesson once … a bad promise delivered is never remembered as a promise delivered … just  promise i something bad delivered.

 

Leaders get paid to make good decisions not deliver bad promises. I have made many ‘promises’ <more often ‘plans of action’ than promises> and yet still stood up in front of people and sucked it up and said “I did not know this then, I know this now, and we will not do the plan I said … but rather here is where we go from here” when I had to.

Why? Every business leader knows honesty wins more often than wasted energy.

 

Just doing something because you said you would do it is … well … stupid business.

 

Any business person with half a brain is very careful making promises but exponentially more careful about the promises you choose to fulfill <because one is just words and the other is action>.

 

 

Phased plans.

 

Speaker Ryan has said not to worry — there will be a “second” and “third” phase that will fix everything.

 

Uh oh.

Future plans. Need I remind everyone that the Affordable Healthcare Plan was a plan intended to adapt <have other ‘phases’> to the market and make adjustments to accommodate what happened when the plan actually hit the market?

Everyone should be reminded of this.

 

December 2009 I wrote my first thoughts on the affordable healthcare act and the thoughts remain exactly the way I believe …

 

Sure.

The way it’s conceived – all the weird aspects they had to build in upfront to try and make the system work from the get go,  the complex subsidy system that rocket scientists cannot even explain, odd benefit levels, an unwieldy sign up system, just to name a few, absolutely suck.

But, if we see the program as fluid <which any sane business would do> it will evolve until we settles into better solutions and better affect. As I said back in 2009 … the initial plan ain’t gonna be perfect <any business person worth a shit could have told them that>.

perfection progress

 

Obamacare would most likely be humming along quite nicely if Congress had made the necessary adjustments in real time <like any business person with half a brain would have>. Instead phase 2, 3 … or … well … any phase … never occurred as congress haggled over the plan itself.

 

All I can tell you is that if this American Healthcare Frankenstein of a plan is actually implemented everyone, Republicans & Democrats, better decide this time “in for a penny in for a pound.” That is where the Affordable Healthcare Act stumbled … not everyone invested.

 

All I can tell you is that any business person with half a brain would be hesitant to offer a phased plan to an organization that has a history of getting stuck in phase one.

 

Look.

 

I certainly know that if you are a 100% free market healthcare believer that tweaking the current plan doesn’t have a lot of appeal to you. But we have a plan, flaws and all, that has a strong foundation which creates the potential for something better than what was <healthcare going into 2008 was shit>.

 

time to do it right do it overI certainly know that the ACA needs to be tweaked.

 

I certainly know that the ACA should have been tweaked years ago.

 

I certainly know that the ACA could be fixed fairly quickly and efficiently.

 

And I certainly know that any new plan will not be perfect and will also need tweaking.

 

But what I absolutely now is that the current plan is not good and any business person with half a brain would stop the insanity, step up to some microphone and outline a reason why giving the American people the best alternative takes time.

 

Slow down.

Stop.

 

Get this right … because this is NOT about keeping your job or eve keeping your promises … this is about people’s live and their healthcare.

 

 

budget shopping and shoppers

December 22nd, 2016

 want need value

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“The odds of going to the store for a loaf of bread and coming out with only a loaf of bread are three billion to one.”

 

Erma Bombeck

 

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“I knew there was evil in the world.

Death and taxes were all necessary evils.

So was shopping.”

 

Lisa Shearin

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“Explain the value and justify the cost – People don’t mind paying; they just don’t like to overpay.”

 

Chris Murray

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So.

 

This is about budget shopping. Not lowest prices … but budget shopping … as in ‘watching how much you spend when you shop’ type shopping.

 

......... prices & budgets .......

……… prices & budgets …….

Budget shopping – dollar stores, deal shopping, excessive coupon cutting – hit its stride during the recession. While it always played a role in everyday shopping it went main stream during that time … well … because people were forced to change their budget shopping behavior.

 

And back during the worst of the worst periods of the recession there was not only real business to be had in the discount & budget retail world … but gobs of people started offering futuristic pondering with regard to what it would mean long term to the world of shopping after the recession.

 

Shit.

Even I wrote about it.

 

At the time I disagreed with many of the pundits who claimed “the shopping world will never be the same and that the forced budgeting behavior by people will change how people shop in terms of buying cheaper & less expensive <two different things> moving forward.”

 

And I was partially right and partially wrong.

 

As is I stated back in 2010 when discussing the have and the have nots that there was a huge swath of America who were not really affected. Let’s say maybe 50%. Yeah. I just typed 50%. While we talk about all the wealth going to the top 1% <which is true> the majority of the country faced little true impact from the recession. Most of the impact on them was worry … not real financial stress.

And then there were the 45% ‘have nots.’ They got screwed. And they are still getting screwed.

 

But, in general, unless you got financially screwed … and stayed financially screwed … i believed most people would get out of the ‘buy cheaper mode’ as quickly as tit was financially viable to do so <as in … return to their past behavior>. Suffice it to say … there were a bunch of psychological reasons I stated as rationale which I will not bore you with today.

 

This changed the way many households shopped for shit … in today’s world the “buzzword” of the day is shopper behavior. 

 

With that in mind let me discuss “aspects of consumer behavior” for a minute.

And by ‘aspects’ I simply mean the differences between consumer attitudes … and actual shopper behavior.

 

What I mean by this is that managing what a person thinks <that’s the attitude if-do-stimulus-responseside of the equation> and what a person actually does in store <this is the shopping, behavior, side of the equation> can be significantly different. In fact … it usually IS significantly different.

 

In recognizing this, if you care about behavior management, you actually get one step closer to understanding how to create shopper satisfaction <and loyalty … the holy grail> if you are actually selling shit.

 

To be clear … if there is misalignment between the thinking <perceptions & attitudes> and the actual doing/shopping outcome, ultimately, there is going to be shopper friction.

For example … if I perceive I am getting a great bargain by going to some store and then consistently find out it wasn’t a great deal … that creates some mental friction.

 

By the way … shopper friction is not good.

 

That said I will use budget grocery shoppers, and some research, as a case in point with regard to shopper friction <or frustration> almost every single shopping-cart-iconsbudget shopper encounters. .

 

The obvious beginning point: the budget grocery shopper attitudes are focused on value and maximizing their budget <and maximizing their shop visit/experience>.

 

But.

 

In reality … as shoppers … their behavior shows they actually don’t save money in store.

 

Uh oh.

 

Misalignment.

 

Friction.

 

It starts innocently.

 

Attitudinally, the fact is that budget shoppers try really hard to save money. In fact, they often go to some fairly absurd lengths as they try harder than ever.

 

Attitudinally, they emotionally care about shopping more than ever <so there is a functional and emotional aspect to the consumer before they even enter the store to shop>.

 

But the unfortunate truth about their trying?

 

Research, facts , show they actually don’t save money and in many cases are doing worse shopping than f they didn’t try so hard <note: there are functional and emotional repercussions to this also>.

 

I say this because grocery stores need to pay attention and understand the budget shopper situation <and frustration>.

 

First … because there are a lot of budget shoppers out there.

 

Second … because many budget shoppers get frustrated when they don’t save money <and wanted to>.frustrated image

 

And these frustrated shoppers translate into a ‘less money spent’ shop event … as well as an underlying dissatisfaction with the store.

All this despite the fact the store may have done everything right – clean store, wide aisles, incredibly low prices, etc.

 

Now.

 

Let’s be careful when we discuss budget shoppers.

 

Not all budget shoppers are truly low income, albeit, it is a fact is that about one in seven American households’ lives in poverty.

 

Another one in six can afford only basic necessities, such as housing, food, and health care.

 

And almost 6 in 10 say they have had to make significant life changes because of the recession <although ‘significant’ is a broad term>.

 

This all becomes even more important when we discuss the psychological aspects of this attitude/behavior scenario because this means for many people we are talking living ‘basics’ now. And when we do that … well … we are moving into what Maslow calls “basic biological & psychological needs.”

And that Maslow psychological profile is possibly even more important a distinction than the true functional “spending within budget” aspect because any shopping frustration is exacerbated by the emotional feeling it is affecting the person’s basic biological needs.

 

<note: that is bad for a store when that happens>

 

Regardless.

 

These economics facts suggest that, at minimum, nearly one in three U.S. households pretty much carefully plan its budgets and spend accordingly.

 

i dont care stuck inHere is the next problem.

 

Budget allocation and spending behavior models often implicitly assume that shoppers with budgets are knowledgeable about the total price of their shopping baskets as they shop. However, because in store shopping behavior actually reflects estimating of the prices of their shopping baskets it mitigates the relationship between budget allocation and actual in-store spending.

 

Uhm.

 

What I just said, in plain English, is that most of us suck at estimating the total cost as we place individual items in our basket by the time we check out we are over budget <and no one puts shit back once in a checkout>.

 

So let me try how to explain how the average shopper estimates their total basket price because inaccurate estimating has implications on:

 

  • Real consumer welfare: the shopper is maximizing neither time nor budget <suggesting the consumer is not meeting basic Maslow hierarchy need>.

 

 

  • Consumer perceptions: the consumer perception afterwards is twofold:

 

(1) somehow I wasn’t smart enough to maximize my budget <or> I wasn’t smart enough to implement the budget plan I had in place <therefore attacking self esteem/self actualization>, and

 

(2) the store made me look & feel stupid <consumer & shopper dissatisfaction>

 

 

  • Retail performance: the store didn’t maximize the transaction opportunity

 

A study was conducted by Georgia Institute of Technology to uncover understanding how shoppers on predetermined budgets might estimate the total price of their shopping baskets and whether, when, and how they keep track of in-store spending. The study had three objectives:

 

–              to determine whether and when budget shoppers keep track of how much they spend while shopping

 

–              to understand how they estimate the total price of their shopping baskets

 

–              to examine the implications of estimation biases for consumer welfare and retail performance.

 

Methodology:

The research was conducted in the context of grocery shopping, for which people shop multiple times per month and often spend 15%–20% of their income on ten or more items per trip.

 

The research, a field study and two laboratory studies, concluded four key generalizations about budget shoppers in grocery stores:occams razor question

 

  1. They predominantly use mental computation strategies to track their in-store spending

 

  1. They adapt their mental computation strategy to the dominant range of price endings of items in their shopping baskets

 

 

  1. Those who try to calculate the exact total price of their basket are less accurate than those who estimate the approximate price

 

  1. Motivated shoppers are less accurate than less motivated shoppers <because they tend to calculate instead of estimate the total basket price>.

 

The key fact grocery retailers need to understand is that budget shoppers are failing at what they are setting out to do.

 

Yeah.

 

Let me say that again.

 

Most shoppers setting out with a motivated intent and attitude to save money and shop on a budget … do not do so. They are failing at what they are setting out to do.

 

This failure creates a domino effect of dissatisfaction <personal as well as some blame on the retailer>.

 

The next conclusion from the research to note is that shoppers who decisions eisenhower more knowledge less consequences teaffectsoverestimate the total basket price most likely spend less than they budgeted for––that is, they do not maximize their own utility under the budget constraint.

 

Furthermore, they might reallocate the “saved” money to a different <mental> account, which could entail a financial loss for the retailer.

 

Next.

 

The study noted that the shoppers who underestimate estimated calculations, i.e., those who underestimate the total basket price, are more likely to spend more than their grocery budget.

 

This means they unintentionally reallocate more money to the “grocery budget account.” This reallocation in turn may trigger a chain of budget and spending decisions that could cause shoppers significant financial distress.

 

Importantly is that a second field study demonstrated that shoppers who underestimate the total price of their basket are more likely to overspend, leading to negative store satisfaction.

 

Where to go from here?
The easiest thought for Grocery Retailers is to begin educating shoppers about computational estimation strategies which may enable them to become more informed shoppers. In other words … turn wild guesses into more educated ones.

 

More difficult, but the path with the highest ultimate return, is to not just educate but actually facilitate an estimation strategy in store almost to the point of “calculation” rather than “estimation.”

 

There are some clear benefits of exploring an answer to all these shopper issues:

 

Consumer Welfare: Real consumer welfare should improve, because shoppers can maximize their utility given their budget while minimizing the likelihood of spending more than they can afford.  This is true functional value to a shopper.

 

Consumer Perception: This is where functional and psychological meet on several levels <and Maslow hierarchy plays a role in what is important>:

 

  1. A budget consumer attitudinally has had his or her behavior match expectations. Attitude and actual behavior is aligned.

 

  1. With alignment the shopper feels smarter translating into a higher self esteem <because they have “self actualized” a perception>

 

 

  1. Consumer self actualization is typically shared with the shopping environment, i.e., I find higher value in the experience because they were able to deliver upon what I desired attitudinally.

shopping-red-cart

In the end.

 

If you work on a solution … if you align the shopping perceptions to match the shopping reality there is a heightened sense of satisfaction.

 

This would suggest that if someone could actually do it and someone wanted to do it … an every second lowest price store could be quite successful. Yeah. A store with every second lowest prices <which is just a funny way to say lowest price store>.

 

And, no, WalMart is not that.

 

Why the idea I just shared and not everyday low price? Well. if you think about it, it seems crazy that stores have every day low price claims.

 

Does that mean you have to worry that every day prices change?

 

Or does it mean that on average during the day if you are really lucky you can find the lowest prices?

And, frankly, you don’t shop every day.

 

Someone shops in the minutes you have in your hectic day.

So if someone could offer lowest prices every minute you decide to come into a store … well … it becomes the simplest way to save money on the stuff you like and buy every week. It’s the smartest way to shop.

 

Anyway.

psychology of risk shopping stuff

Shopper behavior analysis is not anything new. We looked at it in the 80’s when I was at JWT.

We just called it ‘the consumer buying system’ and analyzed all aspects of perceptions, attitudes and shopping behavior. I have even seen a JWT in-house advertisement from the 1930’s that basically outlined managing consumer attitudes and matching them with in store shopping behavior. I say all of that not to suggest studying shopping behavior isn’t important.  In fact I say it to suggest it is.  People have been studying it for years and shouldn’t ignore it if they are in the marketing business.

 

And it is maybe even more important these days as stores think about how to satisfy the budget shopper as well as the budget shopper inside almost every shopper that walks through their door.

 

The retail business is multi faceted.  It is about understanding what people think and what motivates them outside of the store as well as what they think and motivates them once they are inside the store.

 

Here is what I know about managing a shopper experience and budget shopping. Ignore the ‘attitude to outcome’ alignment at your own peril.

Enlightened Conflict