Al Cleinman's Blog

And The Answer Is....

Hand-written sign spotted on employee bulletin board at a Home Depot:

THE RIGHT ANSWER IS "YES."  "NO" REQUIRES MANAGEMENT APPROVAL.

Whomever posted this sign wins the Al Cleinman customer service award.  While I doubt that it's made it into the corporate training manual at Home Depot, the walk of 1000 miles begins with a hand-written poster.  Kudos to the author. 

What hand-written poster do you need to post in your business?  Would your employees even dare to post such a sign?  Why not?

SIGN UP NOW FOR MORE MANAGED CARE...MILLIONS OF LIVES ARE YOURS FOR THE ASKING.

According to an industry release, a new managed vision care company, ExcelVision, is opening its doors and will be soon recruiting providers.  The firm’s claim to fame is that they are opening the doors to all three O’s (now that's interesting) and “hope to reach 20,000 providers by this time next year.”

 

According to the release, after more than a year of planning, ExcelVision is getting underway in the first quarter of this year, and providing its first vision services in early March. “ExcelVision has developed a high-quality, fully insured vision plan with a national footprint, with policy filings in 50 states,” ExcelVision’s chief executive officer, Joe Zambito is quoted as saying “Our distribution partners represent a membership base of more than 11 million lives.”

I have but one question.  WHY THE #$@&% DO WE NEED ANOTHER MANAGED CARE VISION COMPANY?

 

My guess is that the vast majority of prospective providers will agree with me.  And before you begin salivating over the “membership base of 11 million lives” one might translate the wording of the comments as "we have talked with a bunch of associations or unions who might be interested in our services if we can find providers."  This writer doesn't believe for a minute that they've a firm contract for anything.  Having cut my teeth in the managed vision care arena in the mid 1980’s, I understand this language when I see it.

 

The solution? 

 

Stop them cold in their tracks. 

 

Don’t sign up.   

 

These plans are all alike.  They announce that they’ve got all these lives and that becoming a provider is a ticket to all this volume.  Then they sign up providers who are anxious for volume and buy their double-speak.  They then go to the buyers of services (associations, employers, unions, etc.) and sell the provider panel. 

 

No provider panel.  No sale. 

 

Your question is simple.  Will I have a chance at these lives if I don’t sign up.  Given that you’ve got the likes of VSP, EyeMed, Spectera and Davis out pounding the pavement anxious to sell your services at a deep discount, the odds of these lives going unserved are slim and none.  They'll end up with one of the plans you already know...and the devil you know is better then the devil you don't know.  

 

It’s time to take a stand. 

This is NOT 1929 Revisited!

It's easy to get caught up in the doom and gloom promulgated by the press.  While certainly we are operating in unprecidented times, it's important to place things in perspective.  I came across this chart which may help you understand where we really are.  There's no doubt that this mess will be with us for a long time.  And short of a major modification in entitlement programs; a dramatic shrinking of government; and a major overhaul of our tax system, our grandchildren's grandchildren will be inheriting quite a debt.  But we're no where near a depression and those of my readers who move forward with confidence will be rewarded.  

It's times like these that I refer to what's become known a the Stockdale Paradox (Admiral Stockdale was the highest ranking POW of the Vietnam era, incarcerated and tortured for seven years), which is  paraphrased below from Jim Collins, author of Good to Great. 

"On the one hand, stoically accept the brutal facts of reality. On the other hand, maintain an unwavering faith in the endgame, and a commitment to prevail as a great company despite the brutal facts.

In a nutshell...act carefully, but keep the faith and keep on truckin'. 

A Conversation with VSP's Chief Financial Officer...and some observations.

I came across this interview of VSP's CFO.  It's interesting reading and provides some insight into the thinking of your largest customer (for those readers who are private practice optometrists).  Some observations:

a) It's interesting to note that VSP describes themselves as a "provider."  Funny, I thought they were an insurance company.  Not once did the interviewee describe how VSP works with providers.  This supports my theory that VSP believes that they own you.

b) Note the discussion about how important their financial control system is.  Take a lesson from that...invest in yours.  Margins are eroding and those of you who receive timely and accurate financial information will be rewarded.

c) Note the discussion about how their financial control system allowed them to identify unprofitable products and eliminate them. Do you have the same ability?  Further, I wonder if they anayze the profit impact of their products on their providers...doubtful.

d) Note that VSP is seeing huge claim volume, and blame it on folks using their benefits before they lose their job.  This confirms an observation that I communicated last fall.  Eyecare and eyewear will see (and is seeing) strong demand among the independent providers due to Flex Plan spending (at year end) and benefit demand closer to eligibility.  In years past, when consumers had more confidence, they likely didn't use their eyecare benefits immediately as they became eligible. With jobs threatened, this is happening.  The inverse of this is the possibility that demand will deteriorate later this year.

What other lessons can you derive from this post?

VSP’s CFO Discusses Budgeting in Uncertain Times

Steve Player February 12th, 2009

Among the different subjects touched upon in our upcoming Business Finance interview with Patricia Cochran, CFO of Vision Service Plan, we thought Patricia’s comments surrounding budgeting and forecasting may hold special interest to finance professionals at large. Here’s a short excerpt:

Steve Player: Tell me a little bit about what VSP does, for those of our readers who may not know which eye care plan they’re actually using.

Patricia Cochran: VSP stands for Vision Service Plan. We provide eye care as an employee benefit. We’ve been in business a long time — since 1955. We are the largest provider of this service, covering over 55 million people throughout the United States, which means that about one out of every six people has our vision coverage.

We primarily sell it through employers as well as associations. We also have an individual plan so people can buy it directly. We provide eye exams, eyeglasses, and contact lenses if patients need vision correction.

SP: My introduction to VSP was through the company’s activity-based management program. What were you aiming to achieve when you set up activity-based costing, and what role does it play today?

Cochran: In my earlier years working here, I kept hearing from my colleagues in management, “If only we understood our costs!” They wanted to know what it cost to do a particular piece of work, and they couldn’t decipher it through the traditional accounting that we were doing for them. I thought there had to be a way to get that understanding to them. When I first started the activity-based cost program, I thought, “This is something that they will understand, versus natural classification of expense or department reports.”

At this point the management teams in our organization know so much about their costs — they can’t escape! Before it was a mystery; now it’s no longer a mystery. They understand how much it takes to do the work they’re doing, and whether it’s creating value.

Activity-based costing has been very helpful for us. We’ve dropped some products that really weren’t profitable. As much as we wanted to hang on to them, the facts were the facts, and so we dropped them. It’s definitely been a value-add.

SP: Have you made any major changes in planning and budgeting, or do you have a fairly traditional budget?

Cochran: I’d say we’re still doing traditional budgeting. One thing I’ll add, though, is that the budget isn’t static, because we can adapt to various business changes.

We do the budget in a condensed timeframe; we give people about six weeks.

SP: So you’re not a six-months-process type of organization …

Cochran: No, we get that thing done! And then, on an ongoing basis every month, our business leadership team — the four company presidents, the CEO, the CFO, and the VP of HR — gets together, and if there are any changes that need to be made, we talk about those as a group. Do we need to increase an activity? Do we need to make a strategic investment in a business or a product line? The budget isn’t set in stone, and it does evolve during the year, but there are some pretty substantial discussions among the top leadership team before any changes are made.

SP: How far out do you forecast?

Cochran: We do a pretty good job of forecasting for the next two years. We try to do some forecasts out five years, but I’d say those are pretty big guesses.

SP: How does VSP deal with the kind of volatility we’ve seen since the back half of 2008? I assume some of your customers have been laying people off, so they have fewer employees for their health programs to cover. How does that impact you?

Cochran: We’ve been impacted from two standpoints. One, as you mentioned, is that unemployment is not our friend. The second thing is that when people are nervous about losing their jobs, they use their benefits at an extraordinary level. They’re thinking, “I’d better use it today, because who knows whether I’ll have it tomorrow.” So we’ve seen a real spike in utilization. In all the time I’ve been here, I’ve never seen a utilization pattern like this last year.

Our seven-executive budget oversight committee is where we think this through. Obviously, we want to safeguard our employee base; our talent pool is our future. With that as an underlying premise, we looked at our discretionary spending areas — some of which are nice to have, some of which are part of our culture here — and we thought about them in tiers: If we need to start paring back because of shrinking enrollment, what’s our first tier? What are our second and third tiers? So we’re ready to execute if we have to.

Jack be Nimble!

The numbers are in.  While the U.S. eyecare market contracted a bit in 2008, down a "mere" $500 million, the market share of the independent actually increased.  Congratulations!  

But the key question is "why?"  In an environment where chains of all kinds are consuming the independent (clothing, restaurants, technology, etc), why is it that the independent optometrist is succeeding?

In his latest book, Small Giants, author Bo Burlingame celebrates companies that chose to be great instead of big.  It's an interesting and worthwhile read.  And certainly our economy is full of successes in spite of the overall gloom and doom(our firm plans a 20% increase in employment in 2009).  But the question remains, why is it that many private practice optometrists are succeeding while the chains, with their more significant resources and their better access to capital, are having challenges? 

My personal belief is that it distills down to one thing...confidence.  Combined with an overall ever-improving understanding of the business of optometry, I've observed that our clients are becoming more confident...and as a result, more nimble.  Perhaps it's because they're choosing to be "great" instead of "big."  Perhaps it's because they have far more clarity of their destination than in years past.  Perhaps it's because they have better systems; better people; a better support system. 

I liken this situation to a driving experience that we've all had.  Imagine driving down the expressway and, looming out on the road before you is jam, the road is blocked by vehicles moving at a snails pace as far as the eye can see.  Just as you come upon the rear of this sea of vehicles, you spot an exit to the right.  You've literally only moments to make the decision...you quickly ask yourself, "do I get off this highway or do I stay on and hope for clearance on the road ahead?"  What do you do?

In years past, this decision would be difficult...a crap shoot at best.  But, today, we have technology in the form of GPS that makes this decision much easier.  Today, more so than in years gone by, we would choose to jump off the expressway and let our GPS guide us to our destination via a modified route...with confidence.  Isn't technology wonderful!

As leaders, we're all faced with this situation almost daily.  Our job is to look ahead.  How do we react to the jam before us?  Having a crystal clear understanding of your desired destination is like having GPS for your business.  When you combine that clear understanding with a outstanding team and support systems that you can count on, the result is confidence.  And it's through confidence that you can modify your route to your destination; you can be nimble.

Simply said, the bigger players can't seem to move as quick and end up tied up in the jam.  

So, my message is simple.  Leaders provide their teams with clear destination.  They rarely change their goals, but often modify their routes.  If you don't have a clear understanding of your desired destination; confidence in your leadership; people and information systems, figure out how to get it.  It's the secret to being nimble...and being nimble is the key to success in challenging times. 

It's All About The Experience...and the Devil's in the Details!

I pulled the following from a consumer's blog, apparantly written by someone in a major city.  I think you'll find this guy's observations interesting.  When you begin to think that the key to success is what you do in the exam room...think again.  Like any chef knows, good food will never overcome poor service.  As you read this, think about how you might turn this (these) situations into opportunity. Where's the learning from this?

______________________________

I walked into the optometrist office for my 4:00 appointment at 3:45—fifteen minutes early as requested. My company dropped VSP for EyeMed, with the promise that access to LensCrafters was a huge bonus of this “robust” vision plan. I presented myself at the check-in counter and was thoroughly ignored for at least five minutes. The place was packed with customers (many of whom were children), although there was an equal number of cheap-suited “vision care specialists” helping them sort through cheesy-looking Prada and Gucci frames. Finally, someone checked me in, handed me a clipboard and told me to have a seat. I pulled myself up onto a stool that had seen better days, crushed against a woman (with a baby) and began to fill out the form.

As I began filling in the blanks on the form, my enthusiasm for completing it waned as I observed the activity around me. Too many customers, mayhem, babies, and rude ghetto-ish employees. I began thinking that each piece of information I put on the form committed me to future visits to this hell hole, and I was just about to place my signature on it. Direction for my next action became crystal clear when the woman on the stool next to me popped a piece of gum in her mouth, began to it smack it loudly, then pulled out her cell phone and proceeded to “conversate”. That was it. I pulled the form from the clipboard, got up and walked out, and tore up and threw away the form when I reached the nearest trash can outside.

Knowing that I wasn’t quite ready to resume full societal contact after a week with scaled-back human interaction and heightened exposure to stress, I headed home. I felt somehow liberated, victorious. Even though I hadn’t been able to save myself from the bone-crushing thigh of a strange woman, I had the emotional wherewithal to save myself from future visits to that nasty LensCrafters. At least my foresight is 20/20. And honestly, even in toughest and most stressful of times, if nothing else, you have to hang onto your standards.

This post was followed by an interesting comment, full of additional opportunity:

I appreciated your thoughts on your optometrist experience. Yesterday I went to my optometrist who confirmed they accepted the new vision plan we're on. Once I arrived at his office, he told me that while they accept the plan, our company doesn't accept him as a provider and I would have to pay out of pocket for his services. Seems in economizing, our new plan is encouraging us to get our vision services at LensCrafters or Sears. Your experience summed up what that's going to be like going forward.

Getting Rid of BOGO (and other brandkilling promotions).

You've listened to me rant about how discounting is killing our industry's value in the minds of consumers.  Indeed, the vast majority of optical and eyecare advertising is, in a word...BORING!

A friend of mine (who's name I'll not use out of respect for him) shared this interesting piece of eyecare advertising from Thailand.  One thing's for sure, the firm that's using this ad is a long way away from being boring...they're focused on building their brand with thoughtful, memorable advertising.  We can all take a lesson from this one.  Enjoy!

 http://www.youtube.com/watch?v=xwdb0mHVjy4

Leadership is Often Messy...and That's OK!

In his latest book, Tribes, author Seth Godin offers a unique perspective on leadership.  His view is that leadership is an art...something to be practiced.  Indeed, he says (and I paraphrase), "you can look up leadership tactics in a book but the art of leadership is something that has to be practiced."

This makes infinite sense to me.  It's also answers why some professionals struggle so much with leadership.  I often get the feedback that a leadership solution is something you do vs. a process you employ.  Often, our clients feel that leadership is tactical when, indeed, it's much softer than that.  You learn leadership just like you learn most everything else...by practicing.

This concept was driven home to me when a client called me to express his pleasure at the results of a leadership program that we are currently delivering at our Cleinman Performance Network meetings.  Entitled "Lessons in Leadership from Great Films" and delivered by Professor John Clemens, Director of the Hartwick Leadership Institute, this program explores leadership lessons from a unique perspective.  My client called me specifically to tell me that until he experienced this program, he had never felt that he was a leader; he thought that leadership was something that was not for him; and that he'd been struggling with a leadership issue until he learned from our program how he might address it.  He learned that we are all leaders and that we can all lead...in our own way. 

Leadership is like painting a picture.  You never know the outcome of the colors that you slap on the canvas until you do it.  And so what if the color that you obtain doesn't suit your liking.  To correct, you simply step back and adjust.  With oils, you paint over the problem with something new.  With watercolors, you add to the colors to achieve your desired outcome.  And often, the outcome you desire is not the outcome you obtain...often what you obtain is much better then what you envisioned.

Leadership is just like that.  The first time you take a stab at leadership is like laying down your first oil...you just don't know what's going to happen...but you can be pretty confident that whatever happens, you'll be able to adjust.  When you think of leadership as art, and your vision of your desired outcome is clear, those who are following will get behind you and help you make the necessary adjustments as you go forward. 

Lose your fear of leadership through practice.  Establish a desired outcome.  Share it.  Lay down some oil.  Adjust.  Have fun.  Celebrate.