The Essence of Healthcare Marketing Strategy
The essence of strategy : this is how you make a difference in the healthcare market!
A lot is said and written about strategy. Rightly so, because strategy is more important than ever to ensure the organization’s right to exist. Think of the major problems and the sometimes years-long search for a good strategy by healthcare organizations, financial institutions, publishers, department stores, postal companies and media companies. No organization can exist without strategy. But what exactly is strategy and what criteria should a good strategy meet? You can read the answer to this question in this article.
What is strategy?
There are dozens of definitions of strategy in circulation. In a general sense, you can see strategy as the way in which you want to achieve the long-term goals of the organization. That means you have to look ahead and have an idea of where you want to be in five or ten years. The famous ‘dot on the horizon’.
If we look at strategy from a business perspective, the definition of management guru Michael Porter should not be missing: “Strategy is making and executing decisions that give you a unique position in the market and lead to above-average profitability.”
Another commonly used definition is that of Johnson and Scholes: “Strategy is the direction and scope of an organization’s activities over the long term, which provides the organization with competitive advantage through the strategic deployment of resources to meet the needs of a changing environment. the needs of the markets and the expectations of stakeholders.”
A strategy therefore provides purposeful direction and focus for the long term. When it comes to profit, it is no longer just about economic profit, but increasingly also about social, social or ecological profit. So multiple value creation. And as for the long term, it is highly sector dependent and varies from a few months (as with technology companies) to several decades (as with oil companies). Of course, the strategy must also be in line with the mission, vision and core values of the organization.
Success characteristics of a good strategy
In recent decades, all kinds of scientists and management professionals have been looking for the holy grail: what makes companies successful, sometimes for decades? Why does one company go through a long-term growth spurt, while others stand still or slowly disappear?
What makes a good strategy? In all those searches, the following characteristics were often mentioned:
– Inspiring, visionary and humble leadership.
– Having shared values and norms.
– Good understanding of the market, business and economy in which one works.
– Focus on things in which one is good and in which one can excel.
– Strong in discipline and consistent entrepreneurship.
– Strict selection and hiring of the right people.
– Attention to diversity within the organization.
– Willing to take calculated risks.
– Able to influence the environment.
– Innovation oriented.
– Integral and consistent translation of strategy into business model.
– Unique business model.
– Financially conservative and outward looking.
– Perseverance and long breath.
– Able to adapt (fast enough) to the environment.
Sometimes things go wrong because organizations have no real strategy, such as Thuiszorg Midden Gelderland, which no longer exists. Inspiring, visionary and modest leadership was lacking, people were very internally focused and unable to adapt quickly enough to the changing environment.
Different strategy visions
There are various strategy visions and methodologies that can help in drawing up a strategy. Some well-known strategy visions are listed below, with the names of the creator(s) in brackets.
1. Positioning strategy: lowest cost (cost leadership), differentiation (distinctive proposition) or focus (distinctive target group) (Porter).
2. Growth strategy: market penetration, product development, market development or diversification (Ansoff).
3. Value strategy: product leadership (best product), operational excellence (best total cost) or customer intimacy (best total solution) (Treacy & Wiersma).
4. Portfolio Strategy (The Boston Consulting Group, General Electric).
5. Blue Ocean Strategy (Kim & Mauborgne).
6. Resource-based view strategy (Wernervelt).
7. Core competence strategy (Phalad & Hamel).
8. Identity and Values Driven Strategy (Collins).
9. Innovation strategy (Christensen, Prahalad).
10. Business Model Innovation (Oswalder).
11. Exponential strategy (Ismail & van Geest).
What is strategy?
Outside-in, inside-out or transformation?
As this overview shows, you can take different paths to arrive at a good strategy. You can start from three perspectives: (1) the market with its customers and competitors (outside-in; where to compete?), (2) one’s own identity, values, skills, resources and qualities (inside-out; how to compete? ) or (3) digital transformation based on innovation and accelerating technologies (exponential development; compete with what?).
Red or blue oceans
You can choose to: (1) remain active in existing, often highly competitive markets and optimize the portfolio of products and services (the ‘red oceans’), or (2) look for completely new markets where you have the realm all to yourself (the ‘blue oceans’). The latter sounds attractive, but is easier said than done.
To be able to discover a blue ocean, you have to look and think very differently than we are used to doing. Companies such as Cirque du Soleil (cross between circus and theater), Southwest Airlines (first low-cost airline) and Ikea (DIY furniture store for the whole family) have achieved sustainable competitive advantage by being the first to discover their blue ocean. In this respect, Buurtzorg has rediscovered the ‘blue ocean’ of district nursing care.
Choose a unique position in the market
Blue or red ocean, strategy is therefore about achieving the long-term goals of the organization by choosing a unique position in the market. If your positioning is the same as that of the competition, then you don’t have a strong strategy. You then do the same as all those other providers, resulting in fierce competition, price wars, etc. A sharp market positioning answers four important questions: (1) which markets, segments and customers will you serve, (2) in which functional, emotional and social needs will you meet?, (3) with what products and services? and (4) in what distinctive way?
Strategy is about making choices in many areas. What are you going to do, and what are you not going to do (anymore)? This requires sharp choices in what the organization can and wants to do. Because as Michael Porter says: “The essence of strategy is choosing what not to do”. In contrast to the Bijenkorf, V&D did not dare to make a real choice, according to many connoisseurs. V&D was therefore trapped in the busy middle segment (stuck in the middle syndrome) with strong competition from popular formats such as H&M and Hunkemöller and price fighters such as Primark and Action.
We see the same problem in healthcare, where general hospitals and regular providers of care for the elderly, youth care, care for the disabled and mental health care are also more or less ‘stuck in the middle’. They do not have a unique product (but often a broad, cohesive and historically grown portfolio of products and services), do not have the best price and are not distinctive in terms of customer focus.
From static markets to dynamic arenas
The term ‘market’ has become somewhat diffuse in recent years. Companies increasingly play chess on multiple boards and in varying coalitions. Organizations are sometimes competitors and sometimes partners. Is Tesla a car manufacturer or is it aiming for the battery market? Google has become very rich with advertising revenue, but is fanatically involved in self-driving cars and whatnot. And what market is Uber actually in? Supermarket chain Jumbo bridges the gap between retail and catering by acquiring restaurant chain La Place. And Amazon wants to increase the ease of ordering and the turnover per customer with the introduction of its own tablet, smartphone, media player and content. This puts them in the water of parties such as Apple, Google, Netflix, telecom providers and cable companies.
In short, it is no longer about sustainable competitive advantage in defined markets, but about speed of innovation in so-called arenas that, as it were, run through markets. A market has something static, an arena has much more dynamics. Where companies can be each other’s biggest competitor in one area and work closely together in another area. Because organizations do not operate standalone, but are part of platforms, value chains and ecosystems that are constantly changing. This also means choosing a role as platform provider or platform participant, chain partner or chain director or network link or network node (hub).
A good strategy is a realistic strategy
A good strategy is also a viable strategy. It must match the competencies, assets and culture of the organization (strategic fit). Or they must be able to be adjusted in time (strategic stretch). That sometimes goes badly wrong, as supermarket Laurens noticed during the conversion to the new Konmar formula. Everything went wrong that could go wrong resulting in bankruptcy for Laurens and Konmar. When determining their strategy, organizations must be able to bridge the tension between must, want and can. That doesn’t always go well. In the healthcare sector, the Meavita care group did terribly wrong with the (very poorly executed) new strategy, resulting in a sad bankruptcy.
According to management guru Peter Drucker, the cultural aspect is especially important because, as he says: “culture eats strategy for breakfast (and structure for lunch)”. In practice, when making strategic choices, managers mainly look at the organizational feasibility and the chance that the investment will pay off. Managers pay less attention to whether the choice contributes to the distinctive character in the market and to possible future spin-offs. Organizations must give the competitive aspect more weight when making strategic choices. After all, it is about that unique position in the market.
A good strategy is a simple strategy
After all, a good strategy is also a strategy that can be easily told. Something that makes people enthusiastic and that is known and supported by managers, employees and other stakeholders. It then revolves around aspects such as depicting the strategy, clarifying it, showing the benefits, gaining trust, connecting and anchoring it. Connecting leadership and effective internal communication are then crucial. That is often the case. For example, various studies have shown that within large organizations there is hardly any connection between the organizational goals and strategy on the one hand and the knowledge about this among professionals and employees on the work floor on the other. Unknown also makes unloved here. So don’t make it too complicated (even though it might be complex 😉 because “it’s all about simplicity and great leaders are simplifyers”, said former soldier and former politician Colin Powell. Record the chosen strategy in a ‘strategy agenda’ with the most important frameworks and strategic spearheads. This forms the input for the rolling strategy process.
A good strategy is a rolling strategy
Even if you have a unique position in the market, sitting still is not an option. Competitive advantages are increasingly temporary and transient. Although strategy is about achieving the long-term goals of the organization, traditional strategic planning no longer offers a solution. Long-term plans are often obsolete when the ink on the report has dried. But the annual ritual dance with vague policy documents, woolly framework letters and internally oriented annual plans is also no longer enough in many cases. Businesses need to innovate faster and continuously develop new strategic initiatives or they will be overtaken.
For sustainable success, companies must follow a multi-track policy in which they focus on maintaining markets (market farming), expanding markets (market hunting) and creating new markets (market making). In addition to a business portfolio with products and services, organizations also have to deal with an innovation portfolio with experiments in various stages of development.
This requires a different approach with new strategic and operational skills. A continuous process that I call rolling strategy. The essence of rolling strategy comes down to the following: you look far ahead (vision) and reason back to now (current situation). You then determine what you want to achieve (goal) and draw up a concrete action plan based on external and internal signals, with the larger strategic projects for the longer term (the strategic agenda) and with smaller improvement actions for the short term. You repeat this several times a year, so that it becomes a continuous process. The exact details of this rolling strategy process will differ per organization. Rolling strategy and management control go hand in hand. The better the organization is in control, the better it is to respond quickly and responsibly to new circumstances. You could say: a good strategy is a living strategy that is constantly tested and adjusted.
Strategy and agility are both needed
Strategy is more necessary than ever to clarify the ‘dot on the horizon’ (where do we want to go?), determine the right course (how do we get there?) and mobilize the internal organization (what should we do?). An agile organization is then required to be able to respond quickly and effectively to changing circumstances and to adjust the course and internal organization in a timely manner.
According to Michael Porter, it is paradoxical that the continuity of the strategy enables an organization to adapt better to changing circumstances and to innovate better (more specifically). That is why the purposeful and explicit formulation of a strategy is more important than ever in times of change and uncertainty. Remember that good strategies are rarely, if ever, built on a detailed or concrete prediction of the future.
Strategies arise from a particular conception or idea and evolve over time. Success examples such as Toyota, Ikea, Walmart and Zara have spent many years fine-tuning their strategy, business model and value proposition and are still doing so. So agility alone is not enough, it is certainly not a substitute for strategy. Finally, a final piece of advice from Sir Winston Churchill: “No matter how beautiful the strategy, sometimes you should look at the results.”.
If you found this information helpful, please consider sharing it with fellow healthcare professionals or leaving a comment below. Together, let’s elevate healthcare marketing practices and make a positive impact on patient care.