Thursday, December 8, 2011

Just Because We Can Doesn't Mean We Should

In a blog editorial in the most recent issue of Harvard Business Review (HBR), co-founder of Fast Company Magazine, Bill Taylor, reminds us that "just because you can doesn't mean you should."

Taylor cites the recent public relations snafu by Bank of America when it announced, then later withdrew amongst well publicized customer outcry, a $5 fee to use it debit cards.

BofA executives reasoned that changing accounts was too much of a hassle and that eventually customers would just accept the fee.

As Taylor points out, this fractured logic, in the sole name of corporate profits and for no other purpose, was deficient. He cites the conclusion of the New York Times as a clear statement of his case, "The revenue the bank expected to raise from the debit fee was not worth the damage to its reputation."

Taylor goes on to discuss what he calls "one of the most subversive articles ever published" in HBR: "Companies and the Customers Who Hate Them."

The article, Taylor explains, was written by a couple of very big business people and a Harvard Business School professor, and concludes, "One of the most influential propositions in marketing, is that customer satisfaction begets loyalty, and loyalty begets profits. Why, then, do so many companies infuriate their customers by binding them with contracts, bleeding them with fees, confounding them with fine print, and otherwise penalizing them for their business? Because, unfortunately, it pays. Companies have found that confused and ill-informed customers, who often end up making poor purchasing decisions, can be highly profitable indeed."

I read that paragraph and immediately thought of workers' compensation - a system that infuriates its customers (workers and their employers) with binding contracts (networks and policies), confounding fine print (the micro-social regulation built into our systems) and penalizing them for their business (workers with needless disability; employers with needlessly inflated experience modification factors).

Yes, keeping our customers confused and ill-informed pays. They make poor purchasing decisions (e.g. surgery for regional low back pain where there is no other clinically significant indications) which creates outsized profits for everyone along the buffet line.

Taylor quotes the earlier HBR article, "Businesses that prey on customers are perpetually vulnerable to their pent-up hostility. Sometimes all it takes to drive mass defection is the appearance of a customer-friendly competitor."

I wrote earlier that Oklahoma may start a national trend with the pending experiment of a Texas-based non-subscription offering. My interest is whether this is a model that will provide discernable, increased, value to our customers and whether by doing so we will see defection from our current centenarian system to a more customer friendly competitor.

"Hopefully, as we put the finishing touches on a lousy year, we can all learn to distinguish between economic value and human values, between what we can do and what we should do," Taylor concludes. "Those distinctions might produce fewer customers who hate us, and lots more who love us."

We all know that change is in the air. Because of the enormity of our industry, and its age, such change doesn't come quickly, but surely we are in for different times.

The Oklahoma experiment will face tremendous lobbying obstacles, no doubt, because those whose mind set is based on the "because we can" sentimentality make no distinction in the provision of value versus extraction of short term profits.

Taylor counsels, "Real leadership is about embracing the 'values proposition' — doing the right thing at all times, and figuring out how to build a great business around that unwavering promise."

I know I'm preaching to the choir in this blog - those of you who read this are already on board in providing value to our customers. Your mission: to extol the philosophy of value to others and remind them that just because we can doesn't mean we should.workers compensation, work comp, injured worker 

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