Action and Bol.com are still more relevant to Dutch customers than their foreign challengers Amazon and AliExpress

By | News

“The retail graveyard is full of brands that were once relevant, and the owners or management have let them become irrelevant to their customer. They didn’t move on.” (Andrew Jennings)

Being relevant to your customers should be a key objective for any retailer. Customers have ever increasing expectations and find it much easier to switch between brands and retailers. In order to become or remain relevant, retailers need to exceed customer expectations and secure a place in the daily life of the customer.

Being and staying relevant is more complex than it seems, and many retailers question themselves how they could achieve this in practice. In this article, we will share a few key insights on how to become more relevant to customers, based on our own experiences at retail clients and a recent study amongst Dutch customers.


Consumer relevance

We can broadly distinguish 3 key elements that contribute to the concept of being and staying relevant:

  • Purpose – the retailer’s reason for existence. This is where the company stands for and describes the key message it wants to convey.
  • Customer expectations – the ability of the retailer to fully understand the expectations and needs of their specific target customer
  • Proposition – the actual touch points with customers; encompassing a clear and distinctive set of products and/or services offered

Relevance can be achieved through successfully aligning purpose, customer expectations and proposition. Aligning the purpose and customer expectations requires connecting with your specific target customers on an intrinsic level. This means that customers need to be able to identify themselves with the purpose through shared values and objectives (self-identification).

The purpose should be substantiated by the actual proposition, and both need to match the customer’s expectations. In cases where the three elements are misaligned it is likely that the retailer is either offering products/services customers do not really need or customers are unable to identify themselves with the brand, resulting in less relevance.


 Relevance in practice: the Dutch retail market

To further illustrate the concept of relevance we applied the model to a selection of key (online) retailers, supported with data from our study. We asked 450 Dutch customers why they shop at these retailers and whether they would recommend it to others. Results show that customers reward Action and Bol.com with the highest Net Promotor Score (NPS). Amazon, AliExpress and Blokker are less recommended by the sample group and close the ranks.

NPS NL
The Net Promoter Score (NPS) is a method to measure customer satisfaction and loyalty. The higher the score, the more satisfied and loyal customers are. The NPS is based on the question how likely it is the customer would recommend the brand/retailer to others.

Let’s take a more detailed look at what contributes to these scores:

nps bol.com ’De winkel van ons allemaal’
(Everyone’s store)

Bol.com is the leading online department store in the Netherlands. With an assortment of over 15 million articles and a fast and reliable fulfilment network they uphold their claim to be the ‘store for everyone’. Our study results confirm that customers recognize and value precisely these two aspects: broad assortment and fulfilment, and therefore award Bol.com with a high NPS score.

Bol.com is currently working to expand their fulfilment proposition called ‘Select’ by adding more products and fulfilment options, like same day- or Sunday deliveries. We are interested to learn if and how this will further strengthen their position in the market and whether it will be appreciated by customers and if it will translate into an even higher NPS.


NPS Action ‘Verrassend volledig, verbazend voordelig’

(Surprisingly complete, amazingly cheap)

With over 1150 stores in seven EU countries Action has shown exponential growth over the past few years. Since day one their ambition is to surprise customers with a broad and continuously changing assortment for the lowest possible price.

Results from our study confirm that customers find price and assortment the two most important reasons to shop at Action and award them (together with Bol.com) with the highest NPS.

Action continues to grow in Europe, supported by new distribution centres. In addition, they are looking to expand their assortment with sporting gear, becoming a competitor to the ‘to-beat’ Decathlon in that segment.


NPS Blokker ‘De verrassend slimme huishoudwinkel van Nederland’

(The surprisingly smart household store of the Netherlands)

According to their website: “Blokker has a wide and complete household assortment, with the best pre-set choices in relevant Premium brands and a complete range of smart private labels, surprisingly cheap prices and promotions.”

Over the past years, Blokker has been struggling to reinvent its proposition, and is currently trying to catch up with the competition. Looking at their proposition, one could notice that Blokker is concentrating on both assortment (premium- supplemented with low-end and private labels), low prices and promotions. This could make it difficult for customers to really identify with- and understand Blokker’s purpose; what do they really stand for? Our study confirms the lack of a clear focus as customers did not convincingly recognize any of these elements as typically Blokker.


NPS Amazon “Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.”

 

Amazon, the world’s largest and one of the most innovative retailers is continuously in the news with new offerings, technology and game changing ways of doing business. The success of their ‘Amazon Prime’ proposition is a proven example of being super relevant for their customers in the US.

Despite their enormous assortment (564 million articles available in the USA alone) and competitive prices, Amazon has not yet been able to fully live up to its purpose and relevance in the Netherlands. The lack of a high-performing fulfilment network in the Netherlands – one of the key aspects that make them stand out in other markets –  is contrary to the expectations of the Dutch customer, resulting in a lower NPS.

Amazon has recently launched a Dutch translation for their website, even though fulfilment is still done from other countries, and is building new fulfilment centres close to the Dutch border in Germany. We are following these developments with great interest to learn if and when Amazon will realize it’s purpose in the Netherlands and roll-out their proposition, and how this will affect their NPS.            


Conclusion

Being relevant to customers is key for retailers in today’s marketplace. Successful retailers like Action and Bol.com demonstrate that they are able to align their purpose, customer expectations and proposition, which results in higher NPS scores. Still, there seems to be enough room further improvement as none of these retailers scored above 50 on their NPS.

At IG&H – together with our customers – we deal with these cases on a daily basis. We find it fascinating to study and understand how retail is developing in today’s rapidly changing environment. How does this impact Dutch retailers and are foreign players like Amazon and AliExpress gaining a foothold? We’ll write more about these and other developments in the “IG&H Retail Monitor”, which we are planning to launch by winter 2018.

Feel free to reach out to us if you are interested in discussing your case with us or have any questions.

Joris de Bruin, j.debruin@igh.nl and Evelien Kip, e.kip@igh.nl.

Princess Máxima Center: IG&H’s motivator

By | News

On June 5th, the Princess Máxima Center for Pediatric Oncology officially opened its doors. It was a small miracle, as the past 10 years were marked by a heated debate on its realization. Every person involved in healthcare had and has an opinion about this initiative. IG&H will remain closely involved in this project for the rest of 2018, because it is close to our hearts. In this blog, we would like to explain why.

Lasting improvement of the healthcare system: where to start?

Generally speaking, hospital care in the Netherlands is properly organized. But while performing our daily work, we have also observed that this organization is very ‘dense.’ Different specialisms and facilities as well as public, medical, and business interests are interlinked. Within this context, we constantly need to focus on the question: What will be a lasting improvement of the healthcare system?

Healthcare: more than the best medical treatment

Maneuvering within the interconnectedness of things that are all tied together is very difficult. The Princess Máxima Center has broken through it by demonstrating that concentrated healthcare also becomes better – even when it concerns a complex field such as pediatric oncology. It shows that healthcare goes beyond offering the best medical treatment. Everything and everyone in the center help parents and children to better get through the disease process.

This doesn’t mean that we believe all specialisms should be accommodated in such concentrated centers. Providing good healthcare is extremely complicated, and multidisciplinary general hospitals will always be indispensable. But an initiative such as the Princess Máxima Center really makes a difference. If we don’t continue such projects, we won’t learn anything, and healthcare will reach an irrevocable deadlock at some point. Therefore, we are incredibly happy and proud that the center is now officially open.

Unanimous decision: our personal motives

When our health team came into contact with the Princess Máxima Center, the decision to help realize it was quickly made. We were unanimous that we wanted to use our knowledge and expertise to help young patients receive better care.

This also stems from the fact that each of us understands very well that everyone is a patient, even though many pretend this isn’t true. At some point in life, you will have to deal with illness and healthcare. Being a heart patient and survivor of meningitis myself, for example, I have been a regular at hospitals from a very young age. In these cases, you assume that there’s an expert team which can help you in the best possible way. But you can expect much more at the Princess Máxima Center. Attention is paid to development, exercise, making sense of life, sports, and games. The center offers room for such matters, as well as for a child’s all-important own space and mobility. Children can go outside. Often, you see children and parents talk on a balcony or circling the sports square together in a duo kart. You want every family to have that in such a difficult situation: the opportunity to cope with being a patient, to stay together, to continue to grow and play. Children should be able to be children – anytime, anywhere. The seriousness of the disease requires a special team, pioneering research, and exceptional facilities.

Realizing something like that in a complex field such as hospital care is a major challenge. And at IG&H, we gladly accept challenges with a social interest – especially when we can do so while joining forces with professionals who share our passion. Based on this underlying thought, a child suffering from cancer is, of course, the most powerful motivator. Someone who doesn’twant to run for them must have a heart made of stone.

And when such a challenge comes in the shape of a pioneering patient-oriented center, we believe that the puzzle is complete.

Committed on all layers

From macro to micro level: IG&H is committed to the realization of the Princess Máxima Center on all layers. We consider it an honor that we are allowed to contribute significantly to one of the most topical themes in healthcare. Together with the exceptional people of the Princess Máxima Center, we will do everything to continue to help the center improve care for children with cancer for the rest of the year. That is what makes us tick.

4.8% profit margin increase and data-driven approach for leading logistics provider

By | Clientcases, News

What they wanted
Our client, a leading logistics provider, had an urgent need to increase margin due to a sudden rise in operational costs. The company, which provides logistics services to over 30,000 customers, has a historically dispersed and fragmented commercial setup. Using differentiated approaches to tariffs components, it substantially lacked transparency on how prices were set across a mix of specific services (e.g. delivery and special parcels) provided to its customers. Furthermore, prices had recently been raised, requiring a new approach to increase prices again.

IG&H was asked to:

  • Leverage detailed insight into existing customer-level pricing and setup.
  • Develop a data-driven pricing strategy, starting with an initial campaign where intelligent logic, benchmarking, and margin analyses are used to introduce a more logical and sound argumentation for price increases.

What we did
Our first major step was to create a bottom-up pricing mapping based on the most important service offerings and surcharge components on a customer-by-customer basis. Additionally, we identified operational and contractual KPIs that could provide a basis for customer-specific price increase suggestions and argumentation. Following this, we classified customers to compare product mix and price components like-for-like. Based on previous insights, we developed a logic to intelligently suggest new prices per customer, targeted towards a top-down 5% margin increase.

The second step involved the launch of an interactive comprehensive dashboard for 140 sales professionals. The goal: benefit from the newly gained insights and enable simulations of the proposed price increases. A thorough argumentation for the negotiations was storylined to support the salesforce. This was further elaborated upon during a two-day sales conference, which we also organized to further introduce the negotiation methodology based on pricing evidence and to increase suggestions made by the tool. Furthermore, we ensured that the salesforce received hands-on training and practiced with the tool, providing a solid foundation for implementation in the field.

Our third step consisted of tracking compliance as well as monitoring progress of the entire negotiation process down to the customer and product levels. This provided a foundation for increasing the effectiveness of sales professionals in achieving their goals. Also, it allowed for timely steering on different management levels. Finally, it enabled organic testing of pricing elasticity and implemented logic to refine our proprietary setup in the future.

What we achieved
Within a short, five-week timeframe, we went from collecting pricing-relevant data from various sources to delivering:

  • A 4.8% profit margin increase.
  • Institutionalization of a more sophisticated, data-driven commercial approach to pricing and negotiations.
  • Increased awareness of the power of data science in an inherently complex setting. This was confirmed by a continued engagement in operations. Also, we kept building the in-house capability for this client.

What they said
“IG&H is a very pragmatic and strongly output-oriented consultancy with a strong data science capability. The consultants rapidly understood our requirements and developed an actionable approach, perfectly integrated with our teams and organization, and delivered great results in a very short period of time.”

Book ‘Fit healthcare’ released: author Femke Keijzer’s ‘how,’ ‘what,’ and ‘why’

By | News

In the 16 years that I have been active in the field of healthcare, it increasingly struck me that performance management is not that obvious in this sector. A question I regularly encountered was: Why would you get started with it? I found this so astonishing that I decided to perform research – together with Paulina Snijders, former financial director at the Erasmus MC. We incorporated our findings and recommendations in our book Fit healthcare: the step towards healthy control. In this blog, I’d like to tell you more about it.

Development: why write a book on performance management in healthcare?

Where is the urgency? This was the first question that arose. My hypothesis: it is socially responsible to improve performance management. But usually, this doesn’t rank in the top 3 reasons. Common motives include financial improvement and entrepreneurship (directors or teams with an ambition to improve). Understandable, but also a pity. Because in my opinion, the social issue shouldbe a primary motivation.

Furthermore, a lot is involved in implementing performance management and going through with it. Oftentimes, for example, it is accompanied by a culture change. In practice, going from ambition to realization isn’t always that easy.

Moreover, few has been written on this subject in the past 10 years, while there is a great need for it.

The decision to write our own book about it was quickly made. After all, there are still plenty of opportunities to improve performance management in healthcare, and I would like to contribute my bit.

Approach: from interviews to healthy business operations

In the fall of 2017, I conducted a range of interviews using a structured questionnaire. I talked to directors and supervisory board members, but also to health insurers and scientists. The main question: How do they think hospitals should act?

 

It turned out that many didn’t know exactly how a hospital manages performances and what impact performance management has. So if you ‘press a button,’ such as productivity, it is often unclear where it leads. What I noticed was that people really live in a bubble. Not only health insurers, but also medical specialists sometimes operate in enitrely different worlds. This is incredibly complex for directors.

The Erasmus MC, where I worked on a major process in the field of performance management, played an important role in the development of the book. Former financial director Paulina Snijders provided more case histories. Together, we succeeded in putting the case into words. In addition, we established a theoretical framework for managing healthcare performance as well as for healthy business operations.

Intended outcomes: how will you benefit from the book?

On the one hand, I hope that you will recognize the problems you encounter as an administrator or decision-maker in healthcare. In that case, you can use the recommendations on points you need to tackle. Also, you should realize that it doesn’t have to be complicated: often, it’s a matter of cold feet. The business case is always positive. On the other hand, I would like to say: be astonished and take the message to your organization. I aim to start a debate, so we will jointly get a sense of social responsibility. This can create the space required to act collectively and take the next step towards good, affordable healthcare.

Finally, I hope to provide insight into the interconnection between existing bubbles, the status quo, and the steps to be taken. The book contains a model that provides guidance. When you use this, you will see that performance management really doesn’t have to be that complicated.

Author: who am I and what is my vision?

As an expert in the field of (the transformation of) financial management in healthcare, I consult on complex issues in the areas of funding, control, and performances. I help implement and realize structural changes. With over 16 years of consulting experience within healthcare, I can definitely call myself a sector insider.

After months of intensive work on the book, I can draw one firm conclusion: it is high time for all hospitals, health insurers, and regulators to start working on this subject concretely, and there is no one best-fitting solution that will work for all hospitals. To write the book, I entered into a dialogue with several people. I would like to continue along this line, especially now that the book has been written. Here’s why this is important to me. When I started writing, I’d arrived at a point in my life where it was crucial to me that I could really make a difference as a consultant. I believe that I owe it to the sector to share my knowledge and experience. And hopefully, I will stimulate everyone sufficiently to actively strive for more healthy business operations and performance management.

In my eyes, this message is only logical. What is your vision? Read the book and form your own judgment!

For more information contact: Femke Keijzer,  f.keijzer@igh.nl

Official opening Princess Máxima Center and IG&H’s role

By | News

It’s been a long run, but the Princess Máxima Center for Pediatric Oncology is here. A unique project that resulted in the setup of Europe’s largest specialized children’s hospital. On May 18th, the first children were transferred, and on June 5th, Dutch queen Máxima will officially open the center. IG&H has contributed significantly to the realization of the Princess Máxima Center, a project that is close to our hearts.

Success has many fathers, which also goes for this success. Therefore, we are starting a blog series to discuss all the aspects involved in realizing a dream – together with the special men and women whom we collaborated with.  Today, we look back on the past few months: what had to be done to set up an entirely new hospital and get it running within an eight-month time frame?

From dream to debate

There had been a long-running debate on concentrating special care in the Netherlands. Pediatricians and parents had a dream to combine care and research in one place. This would allow them to take the necessary next step in the fight against childhood cancer. But this dream was met with a range of objections. It ended in a heated debate whose outcome was, to say the least, uncertain for a very long time. This alone is reason enough to call the center’s opening on May 18th a small miracle. Of course, the debate was about the position and distribution of people and resources. At this phase, the pediatric oncologists, who go to all lengths for their patients with undiminished energy and motivation to realize the best in care and research, have been decisive.

From ‘just doing it’ to ‘getting it done’

When the Princess Máxima Center finally got the green light and the business case appeared to be complete, the center entered the realization phase. At the time, there were only a handful of project staff, several drawings, a start budget, and a board. Needless to say, going from a green polder in Utrecht to a top-notch children’s hospital required a lot of work.

At this phase, IG&H was involved in the project. By then, the center was already well underway, as was its construction. As a hospital is always a complex puzzle, everyone in the steadily growing organization had started fleshing out their own piece pragmatically. Together with the center, we initially assessed whether it was on the right track via a transition readiness audit. While performing this audit, we ultimately defined hundreds of requirements: conditions that were critical to guarantee a safe opening. Then, we organized their completion in the form of 11 separate workflows that jointly made up the organization. We needed to assist in turning from pragmatism (‘just doing it’) to a focus on results (‘getting the safe opening done’). Organizing collaboration and setting priorities were essential in this regard. The main question remained unaltered: Is this absolutely crucial to a safe opening on May 18th – and if so, who do we need for this purpose?

The fact that the Princess Máxima Center had already grown into a multi-project organization at the time proved to be a challenge. When several projects are running alongside each other, it is no longer self-evident that you ‘quickly’ align things with each other. Subprojects may diverge in terms of content and timing. Therefore, it was very important to fill the gaps and promote collaboration. IG&H worked to achieve this goal as well as joint coordination and decision-making. Focus was also placed on following up milestones. In addition, we paid great attention to partial deliveries of the 11 workflows.

Coordination without a location

The combination of organizing, coordinating, and supporting the organization took place without a physical meeting point. After all, the building was still in scaffolding, which meant that those involved were divided over locations in Zeist and Utrecht. Additionally, the Princess Máxima Center is the central hub in a national network of general and academic hospitals. It was not possible to drop by and consult with each other face to face, so much was done through digital channels and by phone. We acted as a connecting factor between all these internal and external players.

This took quite some getting used to, as the center had started out with a small group of people who knew each other very well. The growth of the project involved more and more people, which increased pressure. We worked to continue to understand, follow, and help each other. In an energy-laden process that bears such importance, you need to stay close to each other despite the lack of a single location.

Doing what you need to do

Moving shoulder to shoulder in the workflows means that everyone goes to all lengths to get things done. Not only does this require genuine commitment, it also demands that you take responsibility and take on all tasks that need to be completed. In other words, we had to go to the limit. Over the past eight months, IG&H’s people have regularly put their shoulders to the wheel in the most literal sense of the word: we put on gloves, carried boxes, and drove across the country to organize training courses as well as information transfers. Our motto, ‘Hands-on where required,’ has allowed us to contribute to the Princess Máxima Center’s major milestones: transferring the first children from the Wilhelmina children’s hospital on May 18th, transferring the patients and child oncologists from the University Medical Care Centers Utrecht on June 1st, and the official opening on June 5th.

What specific challenges did we encounter? What approach did we adopt to meet the seemingly impossible timelines? We will discuss these and other topics in our next blogs, allowing the special people with whom we proudly collaborate to share their views and experiences. Will you go on this journey with us?

Best Workplaces 2018: first-time participant IG&H ranks 5th!

By | News

What is a Best Workplace, why is IG&H in the top 5, and what does this mean for our clients? Read more about IG&H’s approach.

Best Workplaces 2018: first-time participant IG&H ranks 5th!
IG&H ranked 5th on the list of Best Workplaces 2018 in the Netherlands, and it’s something we’re very proud of. Not only because it means that we attract and retain top talent, but also because it positively affects our collaboration with clients. After all, a good, stimulating working environment fosters committed employees who go the extra mile. With the help of our outstanding teams, organizations can secure their future and excel within their respective fields.

What is a Best Workplace?
Every year, Great Place to Work® Netherlands performs an empirical study, based on which it composes a list of the highest scoring organizations. But what does it mean to be a Best Workplace? “The organizations on the list of Best Workplaces have developed working environments in which trust, pride, and fun are central,” says René Brouwers, director of Great Place to Work® Netherlands. “They also fulfill an exemplary role with regard to other organizations.” Because of the strict criteria, it is quite difficult for organizations to rank on the list: “It’s a result that you can be proud of!”

What are the details of the study?
Great Place to Work® Netherlands adopts a thorough approach. Employees of participating organizations share their opinion on five values: credibility, respect, honesty, pride, and camaraderie. These values are linked to performances. René explains, “We can back this up with thirty years of research, because that is how long we have been using this method. Our research is the only one that not only asks for employees’ opinions, but that also weighs the employers’ policies.” The strength of the research lies in this combination, as it allows organizations to gain insight into the effectiveness of their policies. Therefore, the outcomes of the empirical research are applicable in practice – a major advantage, because it enables participating organizations to further optimize their policies. This is beneficial for employees and clients alike.

The fact that IG&H was the highest ranking first-time participant, immediately placing in the top 5, is an important milestone. “This confirms the strong culture that we and our clients experience,” says Jan van Hasenbroek, managing partner at IG&H. “Of course, I’m particularly proud of all the people who enable our organization to be a great place to work day after day.”

Playing together to win: the quintessential IG&H employee
We believe that outstanding performances start with excellent teams: people with different skills and views who work closely together. Therefore, we hire talents based on IQ and EQ. They can effectively help organizations achieve their goals.

As we understand that top talents also have certain demands, we offer them a constructive working environment. There is a lot of room for development in the form of training courses and coaching. This allows our employees to grow in the best possible way, which benefits their personal development as well as the services we provide to clients.

Energy, passion, courage, and enthusiasm are connecting factors. Additionally, we share a common leading thought, both externally and internally. Neither with our clients nor with each other do we have an ‘us-and-them’ relationship. ‘Together’ is our keyword, ‘playing to win’ is our motto. No wonder that our firm abounds in ambition and competitiveness. For example, we engage in many sports and team activities internally. And when working with our clients, we are not satisfied until we’ve achieved successes (which, by the way, we also celebrate together). However, at IG&H, one person’s endeavors are not at the expense of another person’s aspirations. We find it important to offer enough room for every talent. In addition, transparency and trust play a major role – both within the organization and in our relationships with clients. This is reflected in our open company culture, among other things.

Make Strategy Work: IG&H’s approach
IG&H’s employees share a passion for transformation. We help leading organizations in the financial services, health, and retail sectors. Our starting point: it’s all about the end customer. Based on this idea, we set organizations in motion. Authenticity, craftsmanship, and courage are central in this regard. These qualities also reign supreme within our organization.

Our approach is as authentic as it is unique. When working on a project, we take into account its content, process, and people. Because we believe that these three elements are inextricably linked. Time and again, our working method, Make Strategy Work, turns out to be the key to a lasting improvement. That’s what our employees aim for, as it’s the only way to truly help your organization!

Want more information?
Would you like to know more about IG&H or do you think we can help you? Please don’t hesitate to contact us. We’d be happy to discuss your opportunities.

OutSystems and IG&H conclude a strategic partnership

By | News

We signed a strategic partner agreement with OutSystems, supplier of the go-to Low-Code platform for application development. We will deploy OutSystems’ Low-Code platform to design our clients’ digital transformation. At the same time, the partnership allows OutSystems to obtain knowledge of the sectors in which we operate: the financial sector, retail, and health care.

Consultancy in digital transformation
IG&H provides large organizations with advice and guidance on the implementation of their digital agenda in the execution of their strategy. From now on, we will use OutSystems’ Low-Code platform when it comes to technology. With OutSystems, we have a solution to replace existing legacy systems and develop additional functionalities with a short time to market. Upon a thorough market inventory – during which all known application development platforms were reviewed – we opted for OutSystems. Like our own office, OutSystems is located in the Utrecht-based Papendorp business park.

Mark Boerekamp, our Partner Digital Technology, explains why OutSystems was chosen as a partner: “OutSystems is the most advanced Low-Code platform of our time, and it is highly regarded by analysts. The platform perfectly matches the sector’s desire to realize technically high-quality solutions that meet the customer’s wishes and expectations faster. Therefore, we are confident that together with OutSystems, we can provide existing and new clients with even better guidance on their digital transformation.”

Low-Code application development
With OutSystems’ Low-Code platform, the development of applications shifts from coding to modeling. Modeling provides visual insight into application development, allowing the business to contribute to the entire development and management cycle of business, mobile, and web applications. This increases the speed of application development and thus the speed of innovation.

Aernoudt Bottemanne, Alliance & Channel Director at OutSystems: “Companies have a growing need for tailor-made solutions to quickly seize market opportunities. This includes companies in the sectors that IG&H operates in: the financial sector, retail, and health care. IG&H is known to be a sector insider and is very good at boardroom advisory. Thanks to this consultancy firm’s sector-specific knowledge, we have gained a true knowledge partner through our partnership. As a result, we can make even better contributions to the innovative capacity of companies within these sectors.”

Want to realize technically high-quality solutions that meet your customer’s wishes and expectations? We are happy to explore the opportunities with you. Please contact us for more information.

Part 3: Blue Ocean Medical Center

By | News

Blue Ocean Medical Center

Part three in the series of our famed fictional hospital as it tries on alternatives to the status quo in healthcare. Let it continue to inspire you to think and act a bit differently and engage with me to find a greater truth. For the extended introduction and parts one and two (‘Hospital without a Home’ and ‘Cells instead of Structures’), please follow this link. Still to come in the weeks ahead: When Prediction meets Precision, Evidence Based Only Please and the Ultimate Medical Mall.

 

Introduction

The mirrored-window facade of Blue Ocean Medical Center, or Blue Ocean Med, only just catches the watery October sun as it sinks below the city skyline. Situated between the edge of a mid-size city and the Atlantic Ocean, Blue Ocean Med is a hub for regional healthcare. The hospital aims to serve the regional community on all relevant aspects of specialist care, offering all regular diagnostics and surgical interventions as well as prevention programs, radiotherapy, e-health and research and development. A truly wonderful organization and a wholly unremarkable general hospital. It is actually almost identical in organization, size and offering to both of the two nearest general hospitals. These also deliver, in about equal measure:

  1. Extensive high-tech facilities
  2. A comprehensive care offering
  3. Fee-for-service
  4. E-health
  5. Qualified and caring personnel
  6. R&D and cutting edge medicine

Blue Ocean Med, like all general hospitals, is struggling with issues of quality, cost and profile. In order to stand out, they know they must make some fundamental changes. But how? What can they do differently with real impact? Can they afford to? And how can they do this without doing the exact same things everybody else is doing?

BOM Three : A Shareholders’ Hospital

How on earth did Blue Ocean Medical Center end up in a fee-for-service environment? Even more importantly: how the hell are they going to get out?! Leaving yet another fruitless bout of negotiating with insurers and local government, the CEO of our seaside general hospital is fuming. How are innovation and ready access to affordable high quality care going to come about when all involved are primarily interested in price times quantity? How was it ever a good idea to start saving cost by putting incentives in place to produce more and more? Key-in ‘fee-for-service’ on your I-pad and this is what you’ll find (Wikipedia):‘ Fee-for-service (FFS) occurs if health care providers receive a fee for each service such as an office visit, test or procedure. It creates a potential financial conflict of interest with patients, as it incentivizes overutilization and treatments with an inappropriately excessive volume or cost.‘ Dead right. And because most patients are insured and do not directly feel the cost there is very limited push back to the production itch. This raises the question if ready access to affordable healthcare can be attained by a market model based on FFS. There are both ethical and practical reasons for Blue Ocean Med to start looking for alternatives.

Affordable solidarity

Let’s get ethical first. A regular marketplace functions under three conditions (among others):

1: customers able to make a choice

2: the availability of choice

3: some form of price-elasticity

First –and let’s be honest- most customers (patients like you and me) don’t know the first thing about medicine. One simply doesn’t bridge the gap of many years of medical training, specialization and experience with a Google search.  No matter what the websites and app-builders tell us. So what do we base decisions on? Then there is the fact that when we are patients, we are by definition not in the best shape to make great decisions. The very definition of illness revolves around the lack of control one has over one’s life (Huber). Second: even if we are able to tell the difference between healthcare providers and their proposed services -and admittedly in some cases we are- there ought to be some excess of supply versus demand to yield freedom of choice. There is no such thing. The demand for affordable high quality care is limitless. Ready access to it is not. Try and get spinal surgery for your daughter or your parent into a nursing home and find out. Of course there is self-medication, low complexity care and foreign or private options. But these are either impracticable or unaffordable. Third is price-elasticity. In a market supply and demand vary with price, right? Supply goes up, price goes down. That sort of thing. Now, how does that translate to a situation when we are so seriously ill that we need the services of a general hospital? We don’t have that live-saving stent placed this month because prices are way up? On the other end of the spectrum; there is no limit to what parents will do or pay for the health and security of their child. So price in many cases is actually quite meaningless. It is a failed attempt at controlling cost. Healthcare is fundamentally about solidarity. A market is not. That’s all about supply and demand which inevitably leads to contradicting interests and contention.

Aligning incentives

Popular hybrids are pay-for-performance or value-based healthcare schemes. The proposed ideas are excellent. But they will not achieve the promised breakthrough because the theories do not depart from the fundamental market paradigm. They basically propose checks and balances to a fee-for-service market by adding performance and outcome measures. Years ago, when the CEO of Blue Ocean Med visited healthcare systems in Barcelona Spain, he happened upon a particularly interesting story. It was about the transformation of the former Barcelona Hilton into a general hospital in the late 1970’s. This in itself was a fun and highly practical move. Really remarkable was the finance scheme the hospital adopted. Patients and professionals were actually joint shareholders of the thing. Based on this share and an annual fee, patients received any medical treatment from the hospital or one of its partners. Truly basic medical services were provided by the government. The annual fee of the hospital depended on the financial results of each year. In this set-up connection between patients and the hospital increases and incentives are fully aligned toward keeping everyone healthy at the lowest cost.

Outcome or effort?

This set-up sounds very much like the vertically integrated managed care consortia of today like Kaiser Permanente, only much much smaller in scale. These bigger consortia report impressive cost savings of over 40% (!). In Blue Ocean Med’s case, it is just the local hospital and their regional partners, so the cost savings will be less. But after adopting the shareholder structure, Blue Ocean Med found that when patients have greater access to their physicians and physicians have more time to spend with patients, utilization of services such as imaging and testing decline. With mutual alignment toward sustaining affordable health instead of efficiently delivering/receiving fixed-fee procedures, an environment is created where doing the right things right, first time, every time now reigns supreme. This alignment and sense of shared ownership even helped positioning patients and their families on more level playing field with Blue Ocean Med’s professionals. And all of this could be implemented right away. No more moronic negotiations, no more perverse incentives, no more failed attempts to let a market do a doctor’s job. With the shareholder structure, competition with other hospitals for this Blue Ocean Med is limited to competing for the best patient outcomes at lowest cost instead of delivering the most clinical procedures at the lowest price.

ROBO ADVISORS: ‘BUBBLE’ OR ‘BREAKTHROUGH’?

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With the individualization of the pension market, the need for many Dutch residents to take action regarding their retirement income is becoming more and more urgent. As pensions sector-insiders at IG&H we see many parties taking on this ‘retail pensions’ challenge. For instance by giving the costumer personal insight in their future earnings. One of the ways to do so is by robo-advice.

 In a series of blog posts about robo-advice, we will investigate this phenomenon, we will discuss supply and demand and we’ll give you our view on this market. Although robo-advice can be used for different goals, in these blogs we will focus on the financial advice about income after retirement.

Episode 1 – Is the market ready for robo-advice and what determines the quality of the advice?
An increasing number of financial service providers are committing themselves to robo-advice. From start-ups to retail banks and insurers. Anyone who is still questioning the rise of robo-advice, only has to look at the actual search trends in Google (see figure 1). Currently, the focus of this development seems to lay on investment advice. In the United States alone, the estimate is that by 2020 2200 billion in assets will be managed through robo-advisors; that is over 5% of the total invested capital in the US. All in all, robo-advice seems to be ‘the next big thing’ in the financial sector; but is it really? And what will be the benchmark for comparing the robo-advisors?


Figure 1: popularity of search term ‘robo advisor’ on a scale of 0 to 100 for the last five years (Source: Google Trends)

Robo-advice on the rise
The growing international interest in robo-advice stems from developments in four areas: consumer, provider, technology and regulations.
First of all, there is the costumer need. Because of the increasing individualization, e.g. through gradual dismantling of the welfare state, consumers are more and more on their own with regard to their financial security. With this responsibility come complex choices, and the customer will need help.  In a world where the smartphone is used for nearly everything, digital and easily accessible support for tough financial choices is a necessity. Many consumers find the traditional financial advisor too expensive after all.

Secondly, financial service providers themselves are looking for new ways to generate value for their customers and – not least – for themselves. They are part of a mature, low-interest market where it is ever more difficult to distinguish themselves from competitors because of increasing transparency. Margin erosion poses a serious threat. In the struggle to bind customers and to lower acquisition costs, many financial service providers are discovering the possibilities of forward integration, towards digital financial advice.

Thirdly, technological developments, for instance in the fields of artificial intelligence, predictive analytics and the decreasing costs of computing power, have accelerated. This lets financial service providers develop valuable digital applications sooner and better. Furthermore, a number of ‘off the shelf’ robo-advice technologies have entered the market, such as WealthObjects, Advizr, Schantz en Pefin, putting the realization of robo-advice services within reach for many financials.

Finally, new legislation is giving an impulse to the availability of consumer data. Under PSD 2, providers are required to share the customer data when asked to do so by this customer. This means that the completeness of the data on which the advice is based will increase, further increasing the value of the advice itself. This is an extra trigger for many financial service providers to jump on the band wagon.

Three factors determine the quality of the advice
Robo-advice offers potential for different financial issues, for example mortgage advice, investment advice or integrated financial advice (financial planning). What these different types of robo-advice have in common is their intended purpose; helping customers solve a complex financial question. How do I make sure I have enough income after retirement? Which mortgage suits my personal situation the best? Etcetera. However, the added value of many current ‘robo’ advisory solutions in the market is still limited. Based on different questions, they give the consumer an overview of and insight in their financial situation, but usually do not give advice. Moreover: what actually constitutes high-quality robo-advice?

As far as we are concerned, there is only one benchmark for quality, and that is the customer value of the actual advice. This customer value is influenced by three factors:

  • Ease: how much effort (e.g. time, money, thinking) does it take the customer to get his or her advice?
  • Personalization: to what extent does the digital advice fit the unique personal situation of the customer?
  • Direction: Is the advice unambiguous, specific and clear about what action the user should take next

These three factors should be seen as the legs of a stool; when one of the three is not on level, the stool is crooked and will serve its purpose. This level is influenced by properties of the tooling that is used, such as the interaction design, the (data) input for the advice, the business rules and the used technology. Furthermore, there are a few preconditions for success that strongly depend on the provider; the trust that the public has in the provider, the reach and user volume that the provider can generate and the consumer data that the provider can tap into. If a provider does not score well on these preconditions, its tooling will never fully gain traction, no matter how good it is. After all, a stool will still not be very comfortable, if it is has three strong legs set on an uneven floor.

The practice proves difficult
The pros and cons are a daily struggle for our customers. How do I create accessible, easy-to-use tooling, that still gives thorough advice? Do we choose ready-to-use business rule technology, or do we investigate the possibilities of AI? And how do we make sure that the tooling we create now is also future-proof? These considerations are often further complicated by a complex legal framework, that is still strongly founded on human forms of advice. Just recently this was supported by the Dutch Authority of Financial Markets (AFM): digital advisory tooling should not get too much room to grow, because they are hardly ever truly objective and comprehensive  in their advice, which can be harmful to costumers.

To investigate this claim further, we will dedicate the next blog post to the lessons that we learned about robo-advice tooling and we will review the current market offering on the basis of the three-legged stool. Until that time, we are curious to hear from you, which parties you think excel when it comes to ease of use, personalization and direction? Who do you believe are the current winners of the robo-advice market, and why?

If you sen one of us an email, you will receive the next blog post straight into your e-mail box.

Julia Nowee, Consultant Financial Services
Frank Rutgers, Director Financial Services
Bas van Donselaar, Managing Consultant Financial Services

This is a blog post by IG&H in the topic ‘retail pension’. Intensive specialisation in the bankinginsurancepensionshealthcare and retail sectors is what makes IG&H a genuine sector insider. We regularly apply knowledge and concepts from one sector to another. And this is precisely where our strength lies. Specifically for the pension sector, we help our customers with strategy, design and implementation in the area of ​​retail pension, distribution and PenTech. Contact us for questions, or look for more information here on this website. 

Mark Boerekamp: new Digital Technology Partner at IG&H

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As of November 1, Mark Boerekamp has joined IG&H Consulting & Interim as a partner. Boerekamp will focus on further expanding our firm’s digital practice. 

Previously, Boerekamp (47) was a COO in APG’s board of administrators, a position he held for over 5 years. Prior to that, he worked for Accenture for twelve years, where he was responsible for the financial sector, among other things. Boerekamp studied Agricultural Economics in Wageningen. Subsequently, he passed the ‘doctoraal’ examination in Business Economics and completed the post-graduate program in Registered Accountancy at the Tilburg University.

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Mark Boerekamp: “At IG&H, I can combine my passion for innovation, new technologies, and digital issues with my entrepreneurship dream. The balance between ambition, attention to people, deep-seated client relationships, and the quality of people and services comprises my reason for choosing IG&H in particular. I look forward to reinforcing and expanding IG&H’s position and further supporting our clients in the challenges posed by this day and age, together with my new co-workers.

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Jan van Hasenbroek, managing partner at IG&H, says, “We are very pleased to welcome Mark to our firm. Our vision is that business and technology should be dealt with in an integrated manner to instantly make corporate strategies viable for achieving tangible results. Given his broad knowledge and his powerful personality, Mark is the go-to person who can realize the connections and acceleration required.”