This week I am in San Diego to attend and provide a closing keynote to the Employee Health Care Conference, a program of the Conference Board and Coopers and Towers Watson. In February we presented the same event in New York.
My topic is 21st Century Health Care. While health care reform was up in the air when we met in New York, now it is in place. More appropriately called Health Insurance Reform, the bill just approved by the U.S. Congress for the first time establishes the concepts for a system that attempts to cover everyone. Thus, the U.S. joins the industrialized world. But the reforms are more about insurance than health care, and the changes that are coming and need to come in health care itself are what I will address. Most of the conference focuses on innovations in health benefits and employee health programs in the business world.
You can follow the conference on Twitter at #ehcc10
Recently I had the chance to sit down with Kate Vitasek, author of the new book, Vested Outsourcing, with Mike Ledyard and Karl Manrodt. Outsourcing is a controversial but fundamental business activity – as Kate notes Peter Drucker used to say “Do what you do best and outsource the rest,” and the idea of finding people who can do something better, faster and cheaper than you goes all the way back to Adam Smith and beyond.
In recent history outsourcing has become conflated with off-shoring. Having some other company do your IT work, your PR work, your janitorial work, and so on, does not mean, necessarily, sending that work out of the community or overseas. Though of course, in practice it often does just that. I support policies that would limit off-shoring and certainly would not reward it. And, in general I believe that the future well-being of the economy depends on building more local capacity within a global economy.
Leaving the issue of off-shoring aside, however, there is a great deal to learn from Kate and the concept of Vested Outsourcing. The goal is to make outsourcing a win-win-win proposition when practiced. That is, if done right outsourcing a particular function should lead to cost savings for the company outsourcing, higher margins for the company that gets the work, and better service for the customer. That is the goal of Vested Outsourcing, and this is accomplished by implementing five basic rules explained in the book.
1. Focus on outcomes, not transactions.
2. Focus on the WHAT, not the HOW.
3. Agree on clearly defined and measurable outcomes.
4. Optimize pricing model incentives for cost/service trade-offs.
5. Governance structure provides insight, not merely oversight.
These rules add up to a constructive, mutually beneficial relationship between the companies involved. The research done by Kate and her colleagues at the University of Tennessee demonstrates that outsourcing following these rules lead to such a relationship.
My take on all this is that some outsourcing is inevitable and optimal and, given that, it ought to be done well.
Now and then it is nice, as a futurist, to see that something you forecast and expected is coming to fruition, especially when what you said ran counter to a lot of common wisdom. Two economic announcements today confirm what I was saying about Microsoft in the middle of last year, and about the U.S. economy in, for example, my Outloook 2010.
First, it seemed clear to me that even as Microsoft stock was sluggish over the past year, they had three initiatives poised to return them to growth and increased profitability. These initiatives include touch computing, gesture based interactivity, and of course Windows 7. It was obvious that Windows shops around the world that had skipped over Windows Vista would very likely shift to Windows 7 as it proved itself. They cannot wait any longer. With the results that Microsoft reported today, we can see this happening, and the 2010 story will be bigger. I’ve heard insiders at a very large multinational, still operating with XP, say that the plan is to shift to Windows 7 beginning in the second half of 2010. Huge.
As for the U.S. economy, in my speech to the 125th anniversary of a Chamber of Commerce in November 2009 I turned some heads by saying that GDP growth in the 4th quarter would surprise people by coming in around 6%, and that this would bode well, eventually, for growth in employment in 2010. So far so good as 4th quarter GDP growth was the best in six years.
Not literally, obviously, but in my sense of future possibilities. When Colliers and other magazines in the 1950’s featured the Von Braun space station on their covers – the great wheel in space that became an iconic image – this locked in for me a life-long interest in space exploration. For a short time in the 1960’s I imagined being an astronaut until it was clear I was too tall for that, not to mention the rigor of qualifying. Later, as explained in the story of Futurist.com my original futurist mentor came from the Apollo program.
So, you might understand why I get frustrated with the agonizingly slow expansion into space. Now my colleague, Brenda Cooper, advises me that when looked at in galactic time, progressing from the Wright Brothers to missions to planets and human missions in orbit and for a while to the moon, all in 107 years, is pretty impressive and probably about fast enough. True.
Still, when I read that over and over again this and other nations are unsure, at the national government level, how much to invest I wonder how we can miss seeing the opportunity, or even the necessity of becoming a space-faring civilization (according to Stephen Hawking). There will never be lack of earth-bound problems to distract us, but at the same time there is never a lack of the relatively small amounts of money required to, for example, send people to Mars or even to begin terraforming.
My hope is that we see the space imperative more clearly in years to come.
Glen Hiemstra is a futurist speaker, consultant, blogger, internet video host and founder of Futurist.com. To arrange for a speech contact Futurist.com.