The NHS can do more to help SME HealthTech

The overall theme of the UK e-health conference (3 – 4 May 2017) was the use of data, IT and tech to transform health and care. It was great to see the energy and activity going on in this space and, undeniably, there is more emphasis and interest in health-tech in the NHS than ever before.
I attended sessions from the perspective of entrepreneurial health-tech, looking for clarity on where and how the NHS is expecting and encouraging the use of innovative new tech. There was a lot that was positive and pleasing, but I always seem to come away from events like this reminded that the NHS is unlike any other business I know and whilst the gulf between the private sector and the NHS is narrowing, there remain significant attitudinal and cultural impediments to collaboration.
For instance, I really like the ambitions of the NHS Test Beds (https://www.england.nhs.uk/ourwork/…) project, particularly as it is trying to help innovation get “into” the NHS. This is a two-year programme that kicked off in March 2016. We heard from the coordinators that all the projects have taken longer to get started than expected, citing delays caused by contract negotiations, “cultural challenges of working together”, information governance and staffing issues. This makes my heart sink. How can SME tech business work in a situation of over twelve months relative inactivity?  This, taken with the height of the evidence bar is set by NHS commissioners, skews everything in favour of larger companies who have a depth of resources to survive the process of trying to work with the NHS to get to the prize of actually doing so.
So my feedback to the NHS Test Bed team is please review and learn not only from the healthcare outcomes of this project but also from the process itself. What can you do to lessen the red tape? What can you do to capture and share the logistical and structural learnings so mistakes aren’t repeated? What insights can you share that can be fed back into the tech development loop so that we are ever designing a better user experience? How can you make the process of trying to work with the NHS and social care less time-consuming? And finally, what can you do to change the prevailing attitude that companies in the private sector can easily deliver to the NHS exacting standards? Small UK health tech companies are not awash with cash and if you don’t help them with things like Information Governance, then the paperwork will just grind innovation to a halt.
I recognise the need to change attitude and culture cuts both ways, and I acknowledge how disrespectful it can be to have a naive health tech business approach the NHS saying “this is what the NHS needs’ without having a genuine depth of understanding. So, in my view, if everyone involved in this sector worked a bit more on being flexible and understanding with each other (dare I say, be just slightly less up ourselves?) then we might get things done a bit more quickly. For health tech businesses the best way to do this is to engage directly with the NHS and there are many access points these days, from the Academic Science Networks (http://www.ahsnnetwork.com/) to the Innovation Connect programme (https://www.england.nhs.uk/ourwork/…) and the NHS accelerators (http://digitalhealth.london/acceler…).
My grateful thanks to the organisers and sponsors of UK e-health week (http://ukehealthweek.com) as the sessions I attended were very informative.
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The Greatness of Price

How good are you at pricing?  How often do you think about how you are pricing your goods and services?  Probably not often enough and certainly not as often as is best practice.  If you haven’t noticed, pricing has got a whole lot more sophisticated and moved on immeasurably from the relative simplicity of train fares costing more at peak times.

Just to get you thinking about price, let’s start with senior citizen discounts.  Mull them over for a second and before long I’ll wager you’ll query whether such discounts based solely on age should apply to all, especially when you consider the median income of UK pensioners at £394 per week is now higher than the median income of the rest of the population at £385 per week (October 2015, Institute for Fiscal Studies ).  This is an example of generalised price discrimination that, on reflection, seems a little “unfair”.

Consumers perception of “fairness” in pricing is hugely important.  We are turned off companies if we perceive the price we have paid is unfair, for example, apparently, the price you pay for app purchases from a Safari browser can be higher than the price paid for the same app purchases from a Firefox browser.  Now it doesn’t take a genius to work out what generalised assumption is behind this and I find that pretty annoying, even if it is true.

If I am paying a different price for the same product I want that price difference to be justified, I want to feel it is fair and, better yet, I’d like to feel it is to my advantage.  On that last point, there are some creative geniuses out there doing some extraordinary good pricing promotions that customers love.  Enjoy the simplicity of the transparent and fair pricing achieved by New Zealand Airlines auctions for upgrades New Zealand Upgrades and see how Starbucks ’snooze button’ app Starbucks snooze resonates.  Intriguingly, the Starbucks idea wasn’t actually made by or taken up by Starbucks but, regardless, I love it.

What I don’t want to feel is taken advantage of.  Did you know that Mattel’s “Barbie I can be” apparently costs a different amount depending on which career Barbie you choose?  They are tapping into parent aspiration because we’d prefer to buy Vet Barbie than Hairdresser Barbie for our daughters so we are prepared to pay more for her.  Well, yes, but really?  Similarly, let’s talk Pink Tax and whilst I’ve never really complained about paying more for clothes and toiletries, now that it has been pointed out to me that sometimes I pay more for exactly the same thing, let’s use the example that it generally costs more to dry clean a woman’s blouse than a man’s shirt, I am incensed.

So should prices perfectly mirror our willingness to pay for something? This is where we are going with technology, towards ever more personalised pricing.  Well, I do want this, but only sort of, because there is a very fine line between understanding how much I am willing to pay for something and how much I would like to pay for it.  Psychologically, I love getting what I perceive to be a bargain; I feel a little sense of joy and I get a bounce in my step.  But here’s the thing, I think best practice pricing in the future will know this about me as academics like Marco Bertini are researching the human psychology of pricing in such depth that it is entirely possible my preference for getting a bargain will feature in my personalised pricing profile. I’m reminded of dog training here (keep with me!) as you’ll get a dog to come back to you if occasionally you provide a huge treat, unpredictably, when they do so.

Winston Churchill said, “the price of greatness is responsibility” which led me to my title because if I change the words a little I get “with great prices comes responsibility”.  The data is there to analyse the heck out of individuals purchasing decisions but the winners will be those companies that add a dose of psychology to the mix when they price.  None of us like being second-guessed all the time, so please companies surprise and delight me with your creativity in pricing and be responsible with my data because if you annoy me, I won’t be buying unless, of course, you’ve deceived me, but that’s a whole other story.

I am indebted to Tim Ham from Pearson Ham for providing the inspiration for this article.  foxtrot-0

Are you an effective NonExec Director?

Do you have what it takes to manage a CEO like Camila Batmanghelidjh?4282

The article in today’s Guardian,”Camila’s Kids Company: The Inside Story review – both damning and vindicatory” by Sam Wollaston  accurately summarises my feelings on watching the fascinating BBC programme last evening about Camila Batmanghelidjh and Kids Company.  It was a extraordinary exposé and very revealing – if you are interested in running businesses do watch it.

I am left reflecting on how important it is that Trustees, Non-Executive Directors and Board Governors really, truly scrutinise the operational decisions of management and how difficult it can be to do this with a charismatic, single minded CEO who, no doubt in Camila’s case, brushed off probing questions and deliberately kept information away from the Board.

It strikes me that to get it right, the Board needs to be not just seen as additive but actually is additive to the company.  In addition, they must overtly demonstrate they have the same common interest as management, namely delivering the mission of the business and safeguarding the interests of the stakeholders.  This makes sure the relationship with Board Directors is positive and supportive so that CEOs and managers are confident about bringing bad news to the Board table – Board Directors are not parents to tell the management off which is how I think Camila saw it.

It also intrigues me that she tried to hide behind the audits and because they were ‘clean’ everything was therefore fine.  Given what we now know this not only reveals her own inadequate financial understanding but begs the question why didn’t her Finance Director explain it to her.  Interestingly the TV programme doesn’t show any of the finance professionals in the business – they must have been there but obviously they were so way down the ranks of importance in Camila’s mind they didn’t merit featuring on the documentary.  I think CEOs not seeing (or demoting) the value of the finance function is always a bad sign and the Board should have treated this as a warning and investigated it.

And since when are we expecting moral judgements from our auditors? Auditors make sure money is properly accounted for, which is entirely different than passing judgement on how its used, unless, of course, it has been used illegally.  It was the job of the Board to query the brown paper envelope payments to individuals which would have been documented in the accounts as ‘food vouchers’ and similarly the Trustees needed to decide if splendid interior of the “White House” home (paid for by Kids Company for psychotherapy) was appropriate, as the accountants would have signed off ‘costs of refurbishment’.   This also speaks to having Trustees who are qualified to do the role.  The financial mismanagement at Kids Company is now well documented – unrestricted reserves in the 2013 accounts of less than £500k when benchmarks suggest this should have been nearer £4m – and yes, in this case I would have expected the auditors to alert the Board that the reserves were too small, so were the Trustees sufficiently financially literate?

The list of the Trustees of Kids Company looks good, indeed it looks impressive.  Actually this list was quite hard to find; Alan Yentob is referred to all the time in the media but I had to dig into the Fourth Report from the House of Commons Committee to find the list of the other Trustees in Annex A.   One can only surmise that these, on the face of it, well qualified business individuals just didn’t take the time to get close enough to the business; that were they just ‘stuffed shirts’.

The lesson to CEOs is there’s no value in having stuffed shirts around your Board table: you need to get over any delusions of grandeur you have that you don’t need oversight because you do.   Board Directors or Trustees should be selected on the basis that they will both do their job well and work with the management team effectively.  In my mind, there is no doubt Kids Company could have been saved if the Trustees had done their job properly.

David Bowie: the Great Innovator. Should businesses follow his example?

Looking back at David Bowie’s career I’m struck by his astonishing ability to be constantly and consistently ahead of trends.   It isn’t always clear if he was the cause of certain trends or just an early adopter thereof, but what we do know is he made genres of music, used technologies and wore fashions before others did.

To many his outlandish characters from the early 1970s with their ambiguous gender and flamboyant fashion symbolise these gifts he had as an innovator. Yet there is much more to it than Ziggy Stardust – just watch Bowie performing Young Americans in 1974 and he looks like a ‘80s New Romantic ten years before his time. He evolved again in 1976, bringing the sound of synthesisers and electronic music to his fans years before this became mainstream. No one better personifies innovation than Bowie as a technical pioneer, musical experimenter and visionary.

In business we seek innovation to drive value and growth so is Bowie a role model to emulate? There are similarly business heroes who have earned the title “visionary” for their innovative genius – Steve Jobs, Bill Gates, Mark Zuckerberg to name a few – all whom have invented a product we had no idea we needed and now we can’t live without. But for every successful trend-setting invention there are zillions of wannabes: entrepreneurs and manufacturers creating gizmos that fail, retailers gambling on and losing out to fashions, developers designing tech that never gets adopted. Crudely, finding life on Mars might be simpler than it is to actually create a product or business innovation that changes the world.

As an example of how easy it is to not get it quite right, in the mid 1990s Motorola visited my Business School and conducted focus groups seeking views on their prototype for an integrated mobile phone, pager and electronic organiser. Looking back, they were innovating in the right place, the pager became text messaging and our phones now seamlessly integrate with diaries and address books. But we now know it was styling as well as functionality that truly would revolutionise the mobile phone industry. The prototype we saw looked very similar to the black plastic phones of the day.   To be truly trend-setting Motorola needed to think more radically which, of course, is was what Apple were doing. Additionally a focus group with Business School graduates was probably a mistake as, I am embarrassed to say now, we didn’t get the concept and were very dismissive of it, which shows just how tricky it is to product test when your idea is ahead of your consumers.

If the risks of getting innovation wrong are so high what does this mean strategically for businesses? Well, continuing the Bowie analogy there were many bands and singers who became successful by picking up on Bowie’s ideas, copying them and then varying and improving upon them. Luckily, in this information age, gaining understanding and knowledge of the trends impacting your business has never been easier. Setting time aside for some business reading is a quick win. A little more effort is required to grow a work culture that cleverly uses business data and data analytics to make good decisions. Start by first asking the right questions to identify customers, markets and influencers; then regularly and systematically collect these data, analyse them and look for trends. Combine this with regular reviews of competitors and a sprinkling of innovative thinking and you’ve a good recipe for success.

One final point is, of course, that it’s very blinkered to give all the credit for his success to Bowie’s visionary genius. He recognised the need to work with other people and he sought out and collaborated with those who had expertise in specific musical genres and technology. In the same way, businesses who seek the expertise of sector gurus and who hire talented individuals to expand the company’s knowledge capital do so to their advantage.

It’s true that constant reinvention and innovation in a Bowie-esque way could deliver stratospheric returns (indeed you could be saying hello to Major Tom) but it’s a hugely high-risk. A different strategy, especially for small to mid-sized businesses – those who might not want to bet the ranch – is to be just one-step behind the pioneer and learn from them. As Bowie said, “I believe that I often bring out the best in somebody’s talents”.