Doctors Paid to Make You Sick

The 800,000 physicians in the US comprise a large and intensely managed partner program for the drug companies.  We are about to find out how intensely managed as the Affordable Health Care Act (AHCA aka Obamacare) now requires the drug companies to disclose how much they pay your doctor to prescribe drugs to you.  It should not be a surprise that the drug companies pay doctors quite a bit, and those payments change doctor behavior.  So it should be no surprise to find that some people may be diagnosed with ailments they don’t actually have -- so the doctor can prescribe the pills and get the money.

Sales managers know that salespeople are “coin operated”.  Better performance from salespeople is purchased with commission plans that compensate for more sales, more upsells, more referrals, more attached sales, more anything.  Since our business is technology sales, and specifically channel partner programs, we think a lot about how to properly incent our client’s partners to sell more.  We have seen this produce intended (improved sales) and unintended (systemic cheating) outcomes.  Broadly speaking, generalized incentives are better than highly specific incentives when it comes to getting a constructive result.  Sure if you have to move one product by the end of the quarter and you don’t care about the long term effects – a specific incentive will do the job.  But if you want customers satisfied and loyal for the long term, working with partners to grow their business for the long term is better than quick hits.

Over incenting salespeople in technology might result in a consumer or company with an overly large hard disk or a bigger video card or a router with enough capacity for 10 years of growth.  Over incenting doctors might result in a generation of kids on Ritalin, parents on anti depressants, and in the worst case, deaths.  Here is more reading on the subject should you be interested:

• On The Media:  Great overview segment from yesterday’s show.
• ProPublica:  Building a database of the payments to doctors.
• NY Times:  Article on the subject
• 2009 Report to Congress on Physicians’ financial relationships
• NY Review of Books:  The Epidemic of Mental Illness
• Medicine.Net:  10 most prescribed drugs
• IMS Institute for Healthcare and Informatics:  The Use of Medicines in the United States

Golden Opportunity for Microsoft

Microsoft recently reported that the Defense Department repels 250,000 attacks on its networks – every hour.  I suspect that Microsoft has more experience with hostilities in cyberspace than any other company.  I do not know of a published list of the biggest targets for hackers, but the US Government has got to be close to the top of the list, financial institutions are probably next, big companies like GE and P&G and GM have got to be up there too.  Literally every enterprise customer of Microsoft spends a great deal of time and money dealing with these attacks.  I also do not know how much of their budget is actually paid to Microsoft, but with the cloud offerings MSFT is now selling to big enterprises – the number must be growing.

It does seem like Microsoft badly wants to be a consumer focused company.  There is a security need at the consumer level too.  Our citizens may not have the designs of weapons, or the controls to the predator drones behind their personal firewalls, but knowing that half of all credit cards have been compromised by cyber attacks is enough to make the point that consumers have things to protect too.  Once again, Microsoft has more technical expertise and experience data on the consumer attacks than any other company. 

But… Does anyone really want to talk about security?  It does sound a lot like that annual call from the insurance agent who wants to talk about how to increase, well, his commission. 

The changes that Google made last week to further personalize search could be the opening that Microsoft needs to get the conversation going.  Google is increasingly showing you just you want to see – even if some of what you get in your search results comes from things you own – like pictures on Picasa web.  Desktop search never worked for Google or for Microsoft, but as more content migrates to the cloud, we can expect to see our personal, not public, items mixed in with public search results.  We cannot expect Google to be so foolish as to put Gmail into the personal search results, but Google+ posts are sometimes public and sometimes personal.  If these latest changes are meant to push Facebook and Twitter to make their content available for searching, and Google is successful, the line will go too far towards the personal end and consumers will be more than a little upset when their private Facebook posts are next to Wikipedia entries in the search results.

Microsoft could be the safe place to get search of private emails, documents, and photos.  I have Copernic Desktop Search installed on my Windows 7 machine and it is amazingly good.  And I am quite sure that neither Google or Microsoft or anyone else is building an index of my stuff on their servers.  I would trust Microsoft to do this work and the only reason I have a non-Microsoft product doing this is because even after hours of trying, I could never get the desktop search index to work on Windows 7.

My dream, and I suspect the dream of many other consumers, would be to have a company I trust, deploy a capable private search tool, and do it in a way that protects me from the outside (desktop search and security) and then take it to the next level – making all of my private stuff available across all of my devices, all while maintaining my security.

Tracking Every Pitch

There were many great parts to the book and movie Moneyball.  If you have not either read it or seen it – you should.  In addition to the great storytelling by Michael Lewis, the main theme resonates in our business and just about everywhere:  we now have the capability to track everything.  This may not seem like a big jump from the prior method of measurement by sampling, but it is a big big deal.  Sampling is the Nielsen ratings: where a small population of representative viewers track their TV habits and the results are applied to the total population.  The tracking everything equivalent is having every single set top box send in data for every single viewer.  The story in Moneyball helps to demonstrate the difference.  To know from sampling that a pitcher behind in the count is 25% more likely to throw a fast ball than anything else – could help you.  If you know from measuring everything that this particular pitcher is more likely to throw a fastball on the next pitch because you have a complete database of every pitch he has thrown in the past 5 seasons – well, that is different.

For the past decade, businesses have been making this same transition.  From sampling data about their customers to tracking everything.  The leaders in this revolution will win.  The businesses that understand this will jump very far ahead of their competitors.  The businesses that do not understand this will say that a statistically significant sample is the same as a complete database and will not go to the effort to track everything.  They will lose.  Some businesses, like the grocery stores, are tracking our every purchase, but I just don’t think they know what they have in the data.  Here is my post from last year on that topic. 

Governments will be in a unique position to capitalize on the data they collect.  A dramatic example of that is happening right here in the Seattle area with the tolls starting on the 520 bridge.  I can go online and see a record of every time my car has gone across the bridge.  Imagine the possibilities here!  Not only could parents or insurance companies learn about driving patterns, but some super smart PHD is going to figure out how to match up drivers for ride sharing – by evaluating the driving patters in the data.  Or I could sign up for a service that sends my family a text when my car passes the tolling camera – that calculates what time I will be home based on the other traffic data.

In our marketing services business, we started tracking every single interaction about five years ago.  Before that, the proprietary closed databases in many of our systems aggregated data – because storage space in the database was more valuable than individual activity records.  Sounds hard to believe given the current environment, but these old databases actually wrote over themselves every night – just to save hard disk space.  As a result we have pretty good predictive data on what will happen if we email an email address, or call a phone number, based on our past experience.  Using that experience data, we direct resources to the highest value activities first.  It is a game changing practice. 

Privacy experts say that this kind of customer data collection is an invasion and should be made illegal.  There definitely are steps that should be taken to protect the consumer and protect the data.  Increasingly however, customers are demanding that the businesses that serve them know their stuff.  Today there are many simple requests that I want in this area.  I want Amazon to tell me if I am buying a book for the second time.  I want the credit card department at my bank to realize that I already have a credit card and to stop calling me with new credit card offers.  I want Starbucks to know my order before I order it.  I want Delta airlines to know what seats l have sat in.  This is just the beginning.

Free HP OfficeJet Pro L7580 – slightly used, may not work

I have had this printer for a few years and it has worked pretty well.  Some time ago I stopped using the scanner because it was quite slow and I could not stand to have the bloated HP software on my pc.  Nevertheless, the machine has continued to print with only the driver installed on my PC – so it has been good enough.

Today however the device reached the end of its time with me.  Despite the fact that I use it quite regularly and replace ink cartridges a few times a year, today the printer informed me that my ink cartridges had expired.  Clearly this is a ploy to sell more ink cartridges.  The printer gave me the option to print anyway, but I had to agree that it would void my warranty.  So it is either an attempt by HP to sell more ink, or lower its warranty exposure, or both.  Either way, as a customer I really don’t like being treated this way.  I went ahead and pushed OK, but the printer still would not connect back to my PC.

I do have a second printer in the house, an Epson, that all of the sudden I like a lot more than the HP.  So the HP is out.  I probably won’t buy another HP product.  I will definitely never call HP to tell them.  Customer lost for life. 

It happens that today a friend asked me what type of computer to buy.  I did not recommend HP.  I also related this story, probably another customer lost – maybe also for life.

Increasingly customers expect the products they buy to work.  If a replacement can be had for a few hundred dollars it just does not make sense to spend the time and effort required to get support and repair it.  If HP is monitoring complaint calls, or unresolved support incidents as a way to measure its customer satisfaction, I will not show up on any of those measures.  Silently and precipitously however, the company is losing customers.  Some may never return.

The first US based person to put their shipping information in the comments section of this blog post will get the printer.  I will pay the shipping to anywhere in the US.  I would also gladly send it back to HP – so if you are listening HP – just let me know.

Be Insanely Great -- or Go Home

Steve Jobs was widely considered one of the best salespeople ever.  Who else could have sold the music industry on iTunes?  However, he also recognized the downside of too much dependence on salespeople: Here he describes it to Walter Isaacson:

…The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The company starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company. John Akers at IBM was a smart, eloquent, fantastic salesperson, but he didn’t know anything about product. The same thing happened at Xerox. When the sales guys run the company, the product guys don’t matter so much, and a lot of them just turn off.

Google also does salespeople differently. Here is a great post from Charlie Warner describing the differences.    Like Apple, Google seems to recognize that salespeople are important, but all companies have to work to ensure that the salespeople do not steal all of the oxygen at the company.

Salesforce.com spends half of its revenue on sales and marketing.  They also spend very little on R&D.  Here is a post I did comparing sales to R&D spending at the leading technology firms.

I think all customers are in one of two states.  They either believe that the product or service they are getting is unbelievably great, or they believe there must be something better out there.  Every company should employ this measure of customer satisfaction.  The danger is to think that the customer is happy because they are still paying the invoice.  There are many customers who do not complain, but are still looking for an insanely great solution.  When they find it, they will not go to their current vendor and say:  do you want to compete to keep my business?  They just leave.  

Products must be insanely great to compete in the marketplace. 

China Buys the New York Times

Even though I am a conservative at heart, my favorite newspaper is the New York Times.  They have always been the one newspaper that is actually trying to do a good job – until now. 

I recently converted my digital only subscription to digital plus Sunday delivery and I have been surprised to see twice in the last month that the China Daily has purchased two page advertising spreads in the Sunday edition (these advertisements do not appear in the digital editions).  China followers are quick to dismiss this a as a cheap trick, but those who are less likely to realize the extent the Chinese government (who prints the China Daily) will go to deceive its readers will not. I am surprised that there has not been more of an outcry from the protectors of Journalism.  Is this old news or something?  Here is the only article I could find.

Just as Goldman Sachs will likely be successful with its new philanthropy campaign, the Chinese government will likely win over many readers with its New York Times partnership.  Until now I had hoped there would be customers who the New York Times would actually not take money from.  We should all brace ourselves for what comes next, because if the precarious state of the newspaper industry has brought us this, next we will get something even worse.

If there is a newspaper with a “Chinese wall” (ha ha) between advertising sales and editorial decision making, it should be the New York Times.  Recently, this article appeared.  I wonder what kind of phone calls it generated. 

Michael Lewis recently pointed out in Boomerang that Germans by their nature believe in order and process and cannot escape the idea that everyone else does too.  When Moody’s said that the bonds were AAA – the Germans actually believed it.  When they turned out to be toxic junk – the Germans were actually surprised.

The Chinese believe that their paper is full of lies, and when they find out that Americans actually believe what is printed in their paper – they will be surprised.  The Chinese also believe that when you pay someone money, they do what you ask them to do.  So when the China Daily calls up the New York times and asks that they no longer print negative articles about China – they will actually be surprised when the New York Times says they will not.

Well, I am still a subscriber.  But I will be getting my China news somewhere else.  Anyone have any suggestions?  Al Jezerra English?

Update:  Post from the Nieman Lab at Harvard on the subject.

Book Review: Boomerang by Michael Lewis

Michael Lewis is one of my favorite authors. His magic is the ability to rapidly become an insider on a subject, without losing the perspective of an outsider.  He is an Earthling that sees the world through the eyes of a Martian.  Or a bond trader that sees Wall Street through the eyes of main street.  His latest work, Boomerang, takes us on a tour of what he is calling the new third world.  This is great irony capitalizing on the recent fashion of using the term “developing nation” instead of the term “third world”.  It is no longer correct to count the worlds.  Counting or not, we have leap frogged in the backward direction - over the developing nations.  His tour of countries worse off than the third world starts in Iceland, and goes to Ireland, Greece, Spain, Germany, and well, California. 

The recurring theme is examining what people do when told they are in a room full of money and:  “The lights are out, you can do whatever you want to do and no one will ever know.” It’s a great mental picture that takes all of a half second to absorb.  Lewis makes it even more powerful by applying it to nations.  “Americans wanted to own homes far larger than they could afford, and to allow the strong to exploit the weak. Icelanders wanted to stop fishing and become investment bankers, and to allow their alpha males to reveal a theretofore suppressed megalomania. The Germans wanted to be even more German; the Irish wanted to stop being Irish…”

The section on Germany was particularly interesting as Lewis investigated that culture’s fascination with human waste, which made them particularly vulnerable to the toxic waste products being packaged by our people on Wall Street.  It will be a long time before anybody anywhere in the world ever trusts Americans again.  WMD + Abu Ghraib + Goldman Sachs = Americans are liars. Our reputation could not be repaired even if we had the money to do another Marshall Plan.  Looks like we are going to be sewing Canadian flags on our backpacks for many years to come.

There have been many great reviews of the book.  Here are links to a few of them:

NY Times:

The Guardian:  

Forbes: 

Washington Post

Seeking Alpha:  

As I do with many books, I listened to this one on Audible.  It was another great production, this time read by Dylan Baker.

Conditions for Real Change

David Brooks posted an interesting piece this week showing how we are in an unusual situation with both parties losing favor with the voters.

We can see our nation getting more polarized every day, but this is the first time I have thought about how the polarization is hurting both sides.

Here is an interesting poll showing one example of how the people fueling the fire are impacting their constituents:  Fox News viewers less informed than people that consume no news at all.

Add to this the way the the Occupiers are shining a bright light on inequality and the growing number of people that are giving up hope of earning a living, and we could be approaching a time where real change could happen.  I am not talking about the kind of real change that is easy, measured, and pleasant.  

I am talking about the kind of change that Michael Lewis chronicles in his new book Boomerang.  Here is the part about what is happening in Vallejo CA, and could happen to other parts of our country.

Meanwhile those jokers in DC are arguing over who is to blame for the demise of the Supercommittee...brother.

Book Review: Steve Jobs by Walter Isaacson

In 1990 Michael Lewis wrote his now famous book: Liars Poker. His intent was to expose the bad behavior of people on Wall Street and help to bring an end to the steady stream of our best and brightest wasting their abilities in a parasitic business. To his surprise, his book just added fuel to the fire and all of these years later we still lose bright and motivated and capable minds to the pit of greed.

This 571 page book reads like a 200 page book because it is well researched and well written and the subject is familiar to all of us. I read it on my iPad -- a device I did not know I needed until after I got it and that I spend several hours a day with now. In fact, I am writing this review on my iPad.

It will be interesting to see how history views Walter Isaacson's latest master work: Steve Jobs. Of course everyone is talking about it and I have put some links to other reviews below. The common thread in the commentary about the book is to marvel at the fact that even though his own life was shaped by his adoption, Steve Jobs was still able to abandon his own daughter. The barefoot thing, the diet thing, and the personal hygiene thing also seemed to get a fair amount of attention.

To me the biggest question posed by the book is whether Steve Jobs was successful despite his narcissism, or because of it. This is the central question because a great many young entrepreneurs are right now reading the book and getting ready to emulate Steve Jobs. I hope they are learning to operate at the intersection of Liberal Arts and Technology, and to have an uncompromising focus on design and quality. I fear they may be encouraged to put themselves in the absolute center of their universe and make everyone else feel less than adequate. Will this book encourage the next generation to belittle co-workers, send food back at restaurants, and put themselves before their own children?

I have said before that I believe Steve Jobs was the best CEO we have ever seen. There is no question that he created amazing products and a company that will not only survive, but will thrive for years -- just by coasting on the lead he built before is death.
The pain he inflicted on those that loved him was also of epic scale. At the end, he knew he was dying, and even then, he could not connect with his daughters. I hope that legacy is forgotten.

Here are my take aways from the book:

1. Narcissistic Personality Disorder is real and Steve Jobs had it.
2. A passion for simplicity and quality has to start at the top.
3. Leadership makes a big difference.

Here are other reviews of the book:

• NY Times
• New Yorker

I hope that 20 years from now we look back and find many companies built by young people that were inspired by Steve's passion for great products and design. It would be even better if they learned how to do that by building up the people around them.

Great Marketing is Self Propelled

A few of us at the office are participating in the Movember fund raiser to benefit mens health -- specifically Livestrong and the Prostate Cancer Foundation.  Clearly worthy causes, and also just plain fun to participate in.

I am making pretty good progress half way through the month, moreso on the not shaving than on the fund raising:  so if you want to make a contribution, click here!

Participating in this effort has been so fun and easy that it has made me think about the greatest self propelled marketing campaigns of all time.  

Ad Age has a list of the top 100 Advertising Campaigns of all time.  The top 5 are the ones you would expect:

• Volkswagen
• Coca Cola
• Marlboro
• Nike
• McDonalds

Those are great, but hardly self propelled.  Maybe "Just Do It" but even that has some serious investment behind it.

I am reading the Steve Jobs biography now so I can't go without mentioning the "Think Different" campaign he created with Chiat/Day when he came back to the company in 1997.  That has to be on the list.

For me though, there has never been a campaign quite as effective as washing your hands after using the restroom.  Sure it is not as exciting as the 1984 superbowl ad, but think of the beauty of the thing.  

I am no biologist, but of the germs we want to kill when washing our hands I bet only a fraction of them origniate in the restroom.  What makes the campaign so elegant is that everyone has to go multiple times per day, and the sink is right there.  It would be a tall order to launch a campaign to convince people to wash their hands after shaking hands or after coughing or sneezing or touching a door knob.

Anyway, Movember.  Check it out.  It is propelling itself into a great movement -- now with over 800,000 people participating.