acid test

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acid test

• our class recommendations

Sac State MIS 279 Spring 2008
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Acknowledgment

• Steve Scott, VSPs CIO, has been instrumental in
  the development of Practicum in IT Leadership,
  MIS 279.
• The Spring 2008 class is particularly grateful
  for his help and for inviting us to VSP.

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thank you, steve!
angel
brian
vadym
yu-lin
dan
zandy
maureen
kai
lily
maya
leo
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VSP ACID TEST

• Given recent changes in the eye care industry .
  . . , what is VSPs optimal business strategy?
• . . . determine whether VSPs EA program is
  well-aligned with the optimal business strategy.

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Methodology

• Students first took the test individually
• Delphi allowed students to collaborate
  anonymously to identify top items

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Methodology

• 1st Class Discussion Students uncovered the
  optimal strategy and the strategic model and hit
  on the ideas to use Three Paths and the Mayo
  Clinic -- students then worked on their parts
  individually

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Methodology

• 2nd Class Discussion Students put together the
  outline -- students then worked on their parts in
  teams
• 3rd Class DiscussionStudents compiled the group
  work to get a complete first draft still very
  choppy
• Outside of classStudents relied on open source
  development techniques to get a final draft
• 4th Class Discussion students practiced the
  presentation!

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Three Paths to Market Leadership

• Operational Excellence
• Product Leadership
• Customer Intimacy

To succeed companies need to excel at one and be
world-class at the rest.
Source Treacy and Wiersema, Harvard Business
Review, 1993
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What is vsps optimal business strategy?

• Three Paths to Market Leadership
• Operational Excellence
• Product Leadership
• Customer Intimacy

Doctors
yes
yes
Yes!
Source Treacy and Wiersema, Harvard Business
Review, 1993
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What is vsps optimal business strategy?

• Three Paths to Market Leadership
• Operational Excellence
• Product Leadership
• Customer Intimacy

?
Doctors
yes
yes
Yes!
Source Treacy and Wiersema, Harvard Business
Review, 1993
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What is vsps optimal business strategy?

• Three Paths to Market Leadership
• Operational Excellence
• Product Leadership
• Customer Intimacy

?
Doctors
Clients
yes
yes
yes
Yes!
Yes!
Yes!
Source Treacy and Wiersema, Harvard Business
Review, 1993
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What is vsps optimal business strategy?

• Three Paths to Market Leadership
• Operational Excellence
• Product Leadership
• Customer Intimacy

?
?
Doctors
Clients
yes
yes
yes
Yes!
Yes!
Yes!
Source Treacy and Wiersema, Harvard Business
Review, 1993
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What is vsps optimal business strategy?

• Three Paths to Market Leadership
• Operational Excellence
• Product Leadership
• Customer Intimacy

?
?
Doctors
Clients
Members
Yes!
yes
yes
maybe
yes
Yes!
help!
Yes!
Yes!
Source Treacy and Wiersema, Harvard Business
Review, 1993
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What is vsps optimal business strategy?

• Become a member-driven organization

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Our Vision Statement for VSP

• Whereas VSP is expanding into other countries and
  possibly other industries
• Whereas
• customer intimacy, operational excellence, and
  product leadership are three paths to market
  leadership
• the very best organizations excel at two
• no organization has yet to excel at all three
  paths
• We see VSP as the first organization to excel at
  all three paths,
• by the values it holds,
• by the traditions it has, and
• by a renewed commitment to its members.

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VSP ACID TEST

• How does VSP become member-driven?
• What do members value?
• How should VSP develop and market its products
  and services?
• Can IT help VSP
• become a Networked Organization?
• compete on pricing?

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VSP Business Strategy

• Constantly strive to find out what members need

Members
BI
Doctors
VSP
BI
IT
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VSP Business Strategy

• Constantly develop and market new products and
  services

Members
Retail?
Innovation
Doctors
VSP
Innovation
IT
Marketing
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VSP Business Strategy

• Constantly strive to reduce costs and pass the
  savings to members

Members

Doctors
VSP
Competitive Pricing
IT
Marketing
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how does vsp become member-driven?

• what do members value?

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What do members value?

• Fashion, vanity, prestige

Image
Product Leadership

• Product Offerings
• Individual Customization

Variety
Operational Excellence
Convenience

• Fast, Easy, Affordable

Customer Intimacy
We care about you individually
Genuine Concern
Highly Competent Medical Care
Core Value
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Competence

• Intangible quality
• Health care program
• Doctors experience and knowledge
• Overall experience
• Tangible quality
• Frames
• manufactured by VSP
• external companies

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Concern

• Patients seeking health care appreciate the
  individualized concern they get from clinicians
• VSP has the opportunity to work with its doctors
  to create and maintain a positive environment
  where genuine concern for the members well
  being comes first

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Convenience

• Solution must
• Be fast and easy to use
• Offer inexpensive services/products
• Require minimum efforts
• Members want to be able to do as much as possible
  without leaving their home

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Variety

• Offering variety is critical to VSP due to the
  many tastes and requirements of its members

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Image

• VSP must recognize that eyewear has become an
  essential part of todays fashion industry

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how does vsp become member-driven?

• innovation marketing

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innovation marketing
image
variety
web approach
convenience
genuine concern
mayo clinic approach
highly competent medical care
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The Mayo Clinic Approach
Consistency
Competence
Concern
Integrity
Source Berry and Bendapudi, Clueing In
Customers, Harvard Business Review, 2003
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Clueing

• When customers do not understand directly the
  quality of services they are getting, they look
  indirectly for clues

Leonard L. Berry and Neeli Bendapudi, Clueing In
Customers, Harvard Business Review, February
2003
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Clueing

• Clearly identify a simple, consistent message,
  and then manage the evidence the people, the
  buildings, the approach to care . . .

Leonard L. Berry and Neeli Bendapudi, Clueing In
Customers, Harvard Business Review, February
2003
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Clues in People
Care organized around the patients needs not the
doctors schedules
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Clues in Tangibles
Design has the potential to promote healing and
well being
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Clues in Services
Evidence Management is a lot like advertising,
except that it turns a company into a living,
breathing advertisement for itself
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Mayo Clinic Approach
High quality, personalized care evidenced in
people, facilities, and services
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The Mayo Clinic Approach at VSP
Promote excelling doctors
Create consistent design of doctors offices and
outfits
Concentrate on members needs
Maintain high quality
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VSPs Web Approach

• Provide CONVENIENCE to members
• Offer VARIETY
• Promote IMAGE

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Convenience

• Member section incl. updating personal
  information
• Schedule appointments online
• Access eye care history and eye care reminder
• Claim status and processing
• Access to customer service
• Selection of frames

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Variety

• Offer variety through online catalog
• Browse and search by gender, type, color, style,
  feature, or brand
• Choose different lenses
• Catalog provide functions such as
• View images
• Thumbnail/Enlarged
• Zoom In/Out
• Multi-angle
• ? Provide assistance through an questionnaire in
  choosing frames and lenses by identifying
  members personality type and needs

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Image

• Provide trend information
• Show latest fashion using flash elements
• Relate to fashion events

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how can IT help?

• becoming a networked organization

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VSP, a networked organization

• Employ doctors to market VSP to members by
• Advancing Mayo Approach
• Advancing Web Based Approach

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VSP Network Doctors

• What we know about the doctors
• Trained medical professionals, not business
  oriented
• Independent
• Open to new business ideas that won't affect
  their medical practice
• Already use IT to some extent

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Our Approach -- SaaS

• SaaS Software as a Service
• ASP Application Service Provider
• VSP Competency
• Not an IT shop
• Great record of IT Innovation
• Leverage EA
• VSP acts as an ASP by providing SaaS to doctors

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SaaS and Common Business Functions

• Accounting
• Appointment Scheduling
• Customer Relationship Management
• Help Desk
• Human Resources
• Marketing
• Purchasing
• Web Presence

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Saas ERP

• Accounting, Appointment Scheduling, Human
  Resources, Purchasing, and Other Administrative
  Activities
• VSP can be an ASP that provides ERP services to
  private practice via the Internet
• These activities are not a core competency of the
  doctor

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Saas CRM

• Free exchange of information
• From Doctors to VSP
• From Members to VSP
• From VSP to Doctors
• Indirect Routes
• Member to Doctor to VSP
• VSP to Doctor to Member
• VSP to Member to Doctor
• Doctor to Member to VSP
• Information improves the quality of doing business

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SaaS Additional IT Services

• VSP provides doctors with web hosting and design
  services (consistent look and feel) to allow
  doctors Internet exposure
• VSP maintains a help desk to provide 24/7
  assistance to doctors
• VSP provides flexibility to meet the needs of
  individual doctors

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Benefits of SaaS

• Gather Business Intelligence
• Demographic information
• Inventory data
• Member preferences
• Member Feedback
• Doctors have universal access to member
  information
• No matter where a member needs care, the doctor
  will have their information
• Enables competitive pricing strategy

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how can IT help?

• competitive pricing

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Experience Curve
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Benefits of Consistent Cost Reductions

• Convenience
• Reduced Competition

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How Can Cost Be Reduced?

• Serve as primary care provider
• Concentrate a pool of service providers to drive
  down cost
• Foster partnerships with a local public health
  service(s) to promote early good eye care
• E.g. Brand VSP to yesterdays toddlers as they
  grow to become tomorrows members

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How Can Cost Be Reduced?

• Supply chain adaptation
• Outsource for short-term
• Develop in-house SCM for long-term
• Graft SCM into EAs solution
• Price control through bargaining
• General transportation cost rule
• deliver high volume shortest route low
  transportation cost

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How Can Cost Be Reduced?

• Expand online sales
• Peripherals of glasses and contact lenses
• Extend accessories past transitional eye lens
  etc.
• Encourage cooperation from doctors
• Provide incentives to use IT services

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Conclusion

• VSP must become increasingly member-driven by
• Becoming increasingly granular all five paths
• Competing on innovation marketing
• Empowering its doctors
• Continuously reducing costs

• Success at becoming member-driven will
• Create brand awareness
• Avert threats from competitors insurgents
• Increase its dominance over the supply chain
• Lay the foundation to expand into other countries
  and industries

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Questions?
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?

• What did you take away from this presentation?
  What did you like most?
• What can we do to improve?

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