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Tuesday, June 30, 2009

When health care reform stops getting nice and starts getting real

Usually when I tell people that I work in health insurance, their eyes can't glaze over fast enough. However, that's been changing. People now actually want to find out what I think of health care or they ask me what it's like to work at "ground zero." It's like I went from the Puck from the Real World of health care to a more likeable character like Al Bundy from Married with Children. The slight rise in popularity is probably because everyone is getting ready to fight about health care. Even Obama is starting to wade into the mix with his calls for stakeholders to put up or shut up today.

Health care stakholders are living in interesting times. Reform could go in any direction as nothing is certain. Employer health insurance could lose its tax exemption. There are underdog re-emerging such as Senator Wyden and Bennet's approach which would end employer sponsored health care and have plans compete with a standard benefit package.

Even the mantra of "Medicare Part E for Everyone" is being replaced with "Medicaid for Everyone". The Kaiser Family Foundation points out that Medicaid is the logical next step for the 2/3 of the uninsured who are within 200% of the Federal Poverty Level. Medicaid has the history of providing managed health care for low income citizens. On the other hand, Medicare is a fee for service fragmented model that is focused on the elderly and has no infrastructure to offer any services other than signing a check.

Health Care Stakeholders have stopped poking each with stakes in the rush to make concessions to stave off the complete reengineering of their business models. Insurance companies are offering to stop denying coverage or looking at pre existing conditions. Drug companies will offer 50% discounts to seniors who fall in the doughnut hole. Physicians are starting to pay attention and realize that they can either be the change that they see in the world or be short-changed (in their eyes). The Obama administration is starting to look like some pretty good cat herders. However, they have some ideas like the Public Plan that still could turn this into a cat fight.

I recently had a good on-line debate (probably need to join the website to get to the link) with another blogger about health care reform. Of course, we didn't change each other's opinions but it helped my crystalize my thinking which in usual bullet pointed format is as follows:

  • There will still be a 3rd party: The above-linked debate was fueled by a 2001 Hoover Institute piece advocating that we do away with private and government insurance and have providers and patients negotiate away. An easy model to evaluate this approach is dental insurance. Only about half of the US has dental insurance and those that have dental insurance typically only get $1500 worth of services covered. Therefore, dentists and patients often discuss price as part of the treatment. Results are not good. Dental costs rise slightly above inflation (3%-4%) and dental practice is often described as "drill, fill, and bill." Consumers are negotiating with wolves. Insurance companies and the government have the best data to truly evaluate provider practices and thus still need to be the 3rd party.

  • Hard to focus with so much noise: The reason that health care is so expensive is because of law suits! No, it's insurance administration costs! No, it's hospital construction! This is the noise which causes us to lose focus on the core issues of health care costs which is a system perfectly designed to encourage a Hummer-esque utilization of care for those who will pay. Law suits, insurance administration, hospital construction are all factors which do contribute to costs. However, they are not the core driver but rather a per cent here an there. For example with law suits, Oregon has no malpractice caps and low health care costs. Texas has strict malpractice caps and high health care costs. If malpractice was such a large driver, there wouldn't be that discrepency. Another example is that insurance administrative costs are 15% of the health care dollar and generally increase with inflation. Medical costs are 85% of the health care dollar and increase at a higher rate than inflation.

  • I'd like to buy two health insurances please: Price controls has a likely future in health care. Wyden and Emanuel's plan include one price for a unit of health insurnance and call for the insurance companies to keep all provider payments under that cost of one unit of health care including administration and profit. This system also uses the government's considerable skill and experience in determining the price of health care. The free market has not reduced health care costs and there is little evidence that consumerism will. I see no other alternative other than price controls under which every stakholder will live. Future successful innovation will focus on cost effectiveness to help everyone live underneath that limit.

  • If we think that we've seen managed care. . . we ain't seen nothing yet. That's why I have begun to realize that Medicaid for All is probably the true model. Lower costs, strict formularies, and tight managed care are the ingredients of a health care system that will need to live within a budget. Rationing health care is not just a European solution. The reason we haven't heard the rallying cry of Medicaid for All is because of Medicaid's reputation- er I mean branding (got to use the 2009 vocabulary) issue as insurance for low income Americans. However, it's probably the most viable insurance model under a health care budget that truly budgets. While there is talk that everyone would have the same insurance that Congress currently has, there is not enough taxes to pay that level of insurance.

  • Whither employer insurance? There have been calls for the end of receiving health insurance from your employer. While employer-based insurance is a dated model, employers that have mastered health care costs do have a competitive advantage. Ultimately, with a Medicaid-esque public insurance model, I do see that employers may offer buy-up or supplement insurance to attract workers. That would truly be a benefit and I could see that as an appropriate role.

Tuesday, June 23, 2009

Health Care Reform: Side Show from the serious issues

I have been very disappointed that so much of the health care debate is focused on the Public Plan Option. This is where the government would create it's own health plan that everyone would be eligible for (also dubbed Medicare Part E for everyone) which would compete with private plans. The Public Plan debate has become the side show of congressional hearing that this American Life described in a recent episode. It's like the picture of a midget sitting on JP Morgan's lap.

While some feel that the Public Plan is a crucial part of health care reform to keep the insurance companies honest, I feel it is a side show because:
1. It has been defended as not a negative as in "why shouldn't it be an option". It can only be defended that way because no one knows what it is and what its positive attributes are (other than an opportunity to give the middle finger to the current health care system).
2. No one knows how much the Public Plan will pay providers. If it pays too little than those who purchase the plan will have the same troubles finding a doctor as those with traditional Medicare.
3. No one knows how it will be structured. Will it have to follow state regulations and mandates like other insurance companies? What are the expected monthly premiums? What department will be in charge?
4. The government has no experience in health insurance other than actuarial or setting prices. Every insurance function from claims payment when Medicare was started in the 1960's to today's Medicare Advantage has been outsourced to private insurance companies. Therefore, why does the government want to start a new insurance company that will contribute nothing to care coordination, medical home models, or any of the ideas that have been identified as crucial to making our health care system more efficient?

Instead, the Obama Administration and Congress could spend its time debating solutions to real problems in our health care system such as:

1. What can we do with physician reimbursement so more physicians enter primary care which has been identified as the best value in health care? Only 30% of today's physicians are in primary care which is understandable because a primary care physician earns half as much as a specialists.
1a. How can we start paying physicians based on outcomes rather than volume of services? What system will allow us to pay primary care physicians more for preventing a patient from needing back surgery as opposed to paying the specialists more for performing the back surgery and other interventions?
2. Why do hospital services cost 50% more in Southern Oregon than they do in Portland, OR? Why do they cost twice as much in McAllen, TX than they do in El Paso, TX? How do we change that variation and focus on high cost areas while preserving the practice of lower cost areas? Currently, Medicare does not treat all citizens equally as seniors in Florida get more dollars of care than seniors in New Mexico.
3. Our current system of health care rationing is to provide all the innovative care possible to those who can pay. We are clearly dissatisfied with it. What rationing system should we adopt? Rationing care is an issue for every health care system, not just the Europeans.

If we resolve these issues, we will have a much more effective health care system than we ever would with a Public Plan. Opposition to the Public Plan is not just from insurance companies. Providers are concerned they will get 20%-30% pay cuts and drug companies are concerned their products won't be covered. Even insurance agents are against it since they won't get a commission for selling the plan (that's an example of the Public Plan's administrative savings. They don't plan on paying agent commissions which can be about 15% of a private plans' administrative costs).

Research that supports the Public Plan describes how the bulk of the savings will come from paying providers less. There is also the big assumption that the Public Plan will have lower administrative costs and thus force private insurance plans to lower their costs. Administratively the government will not spend any money on managing a network nor pay any state assessment fees for high risk pools so it has a built in cost advantage (in addition to not paying broker commissions). Private insurance companies can't replicate this.

However, since the government is a start-up insurance company with no experience, I would challenge the notion that they really will have lower administrative costs in areas where they compete with private plans. I have previously posted that Oregon insurance plans have an average administrative cost of 10%. Administrative costs of 31.7% that have been quoted from the Lewin report are just the individual line of business. Administrative costs for all lines of business (large employers and small employers) are typically 15%.

Finally, I've heard of a compromise proposal that there will be a 5 year grace period to clean up private insurance. Given that the entire health care industry is mobilizing against this idea, this may be the most politically expedient way for the Obama administration to step back.

Then we can start talking about real health care issues and leave the side show at the circus.

For more of my rants and raves about the Public Plan look here.

Saturday, June 20, 2009

Facebook and Linked In Cage Match: In the end there can be only one

A few days ago I went on a mini-spree updating my Linked In profile. No, I am not changing jobs. I make that disclaimer because one of my colleagues has a theory that before people switch jobs they send Linked In invites to their soon to be former colleagues. He thinks that you can predict job switches by spikes in Linked In activity.

I try to keep my Linked In network within the same order of magnitude as my Facebook network. I've been contacted by head hunters via Linked In and have both received and asked research questions around health care so I get enough value from it to warrant the maintenance.

From my invite spree, I learned that:
1. A lot of people that I linked with had less than 10 contacts.
2. Their profiles only contained their name and current job.
3. One person took the time to email me back that she no longer accepts Linked In invites because she sees so little value in it. Writing this email took longer than just clicking "Accept" so obviously she felt strongly.

Why does Facebook continue to grow exponentially, while Linked In's growth is stunted? On the other hand, why did Linked In become profitable in 2006 while Facebook is still looking for a revenue model? Contrary to my blog post title, there is not really cage match between the two and I just always like to use the famous line from Highlander. Linked In focuses on the professional segment while Facebook focuses on anyone who hasn't picked myspace.com or is still with Friendster.

While some question the value of Linked In, I find it to be a good source for finding contacts at other companies for research questions. Recently, I was looking for someone who worked in provider networking or claims administration at Aetna, Cigna, United, or large national insurance plans. My research question was about how they handled claims from non-US providers. Via Linked In, I found numerous people who worked at those companies. In order to contact them, I would have to upgrade my account (since they were not direct connections) for $25-$45 per month. Answers to my question would have been worth a month's subscription but I wound up using my Wharton health care alumni directory instead (and buying a year's membership). As a result of that experience, I founded Linked In's subscription fees to be well worth it and I can see how the business model works.

I tried looking for contacts at the same large national insurance plans on Facebook. While searching, I found some Facebook groups for those companies. However, those groups are not interactive at all. I also found that there are a surprising number of people who's first name is Aetna. Overall, I did not find any contacts and Facebook was no help. As a result of that experience, I realized that Facebook doesn't really help with work but will continue to be a great place to play. However, I probably wouldn't pay anything for the ability to write silly status updates, hear about high school friend's travel schedules, find out the twin celebrities of college friends, or read twitter posts that look like they are written in binary. Facebook's revenue model still looks like it will have to based on advertising and not subscription fees.

After that, I decided that Linked In still has a niche and role in my social media world. I uploaded a picture to my profile. But back to the driving source behind my musings about Linked In, can anyone who works in health insurance tell me how they handle claims from non-US providers? If someone responds to this blog post, that would make me a complete social media evangelist.

Tuesday, June 16, 2009

Ethics Lessons in Unusual Places: the Bear Sterns Collapse

I just finished William Cohan's "House of Cards" about the implosion of Bear Sterns. It was a very enjoyable finance drama that reinforced my belief that my classmates who work in financial services on Wall Street were crazy. However, I also read the book with the frame of ethics and business after my post about the MBA Oath. Given the discussion about ethics in the MBA program and the role of an oath due to no harm, I thought there would be many lessons in this book. There were lessons but not the ones that I had thought I would learn. There was not a lot of outright flaunting of ethical guidelines. Instead it was a tale of very principled men with strong codes of conducts navigating a very grey world. The lesson that I learned were more about how that even characters in a "Tale of Hubris and Wretched Excess" made decisions with what they deemed to be the greater good in mind. I never thought that I would write this, but there is a strong sense of ethics on Wall Street.

The Good
Two CEO's, JP Morgan's Jame Dimon and Bear Stern's Jimmy Cayne showed clear Kohlbergian moral reasoning at a stage 5 by asking "What makes for a good society?". Some could put them at stage 6 the highest level depending on interpretation. When the government approached Dimon about purchasing Bear Sterns, his thought process showed weighing the good of the country, good of the financial systems, and good of the shareholders. There was even empathy and concern for Bear Sterns in the mix.

One could argue that Cayne was more expediant in his reasoning. His lowest level was in the decision to not participate in the rescue of Long-Term Capital Management. He did not look at the greater good of the community but the greater good of Bear Sterns. I would argue that Bear Sterns was his community and Cayne was aware of the implications of his refusal to participate and did try to warn the group. This was his low point but otherwise, Cayne was very clear about his principles of how Bear Sterns should be run and how it should be fair. When Bear Sterns was being sold for $2/share, Cayne did show how he thought of the impact of shareholders, bondholders, and employees. Ultimately, he did support the sale since it was the right thing to do even though others were suggesting more nuclear options.

While Cayne was not a shining example of morality, you do realize that he is not a burning example of lack of it. Additionally, a 5 year old on a sugar rush has greater attention to detail and he was Machiavellian in his quest for power. However, he had his own definition of who was part of the greater good and very principled about how to support it.

The Bad:
Ralph Cioffi and Matthew Tannin were the only ones that provided a clear, easy example of lapse of ethics. They mispresented the risk level and subprime exposure of the Bear Sterns hedge funds to investors. The mispresentation was so blatent that a Bear Sterns employee was able to note the contradiction in subprime exposure on 2 different investor communications. This clear demonstration of lack of ethics was not common in the book at all. Cioffi was known to have such poor attention to detail that he couldn't follow basic compliance guidelines for completing a trade. He was a classic Randy Moss type player or talented athlete who immense talent was only closely followed by their inablity to follow basic rules. However, both extremes are rare.

The Ugly:

The biggest surprise to me is the moral quandry that exists in the financial world. There were 2 specific examples that are Solomn-esque in terms of their complexity.

1. Goldman Sachs valued mortgage-backed securities that made up a large part of the Bear Sterns' hedge fund's porfolio at 50% the price that everyone else did. This caused the value of the assets to drop since everyone is required to use the average valuation price. The drop was one of the big drivers that led to the hedge funds melt down. Goldman knew the consequence of what their pricing and also had exposure just like everyone else. However, they felt that their prices were truly accurate and to not publish them would also be unethical. Pricing what someone believes to be accurate can torpedo the entire financial sector today. This is an issue of Talmudic proportions.

2. If a bank does not project an image of financial strength, they risk a run on the bank and their demise. This is what happened to Bear Sterns, Lehman, and others. One could argue that overstating one's position is necessary to prevent a bank from being positioned 6 feet under in the future. Therefore, there are equally compelling reasons to be truthful about a bank's financial status and to overstate.

After realizing how bankers face these challenging ethical issues everyday, I was no longer surprised about the strong sense of ethics and principles that some of the executives in the book exhibited. The Cioffi's and Tannin's don't last long enough in the business with these daily ethical challenges.

I had expected to read stories of strip club-fueled orgies on borrowed dollars or "Barbarians at the Gates" effort to squeeze out every last dollar from a deal as a measure of one's worth. Instead I sympathized with Bear Sterns as a company that thought that they were doing the right thing and was bewildered by their demise. Their greatest sins did not appear to be of the flesh or of ethics but of not planning well for the future. They ran their business one deal at a time. While this opportunitistic culture gave them the flexibility to be nimble with deals, their lack of a plan for the future left them vulnerable to the whims of the market.

Monday, June 15, 2009

Cooperatives in Health Care: Breaking Bread or just making a mess?

Bob Laszewski had a recent post about forming health plan cooperatives as an alternative to both private insurance plans and Obama's Public Plan. State employee plans have been cited as an example of public entities that can create their own health plans for their workers. However, I don't see that parallel. When I think of a cooperative, I think of food stores or REI where everyone is a shareholder and has ownership. They pay for that ownership by either volunteering or with REI buying cool new outdoor equipment and are rewarded with dividends or other membership privileges. The state insurance plans are basically the same as any employer insurance plan in structure. The only difference is the mission where state will promote new and innovative designs, like Oregon's state plan, and prioritize quality and care as much as costs.

The cooperative model does interest me as I came a food cooperative veteran at my undergrad through 2 housing co-ops that the university supported. For $100/month, cooking once per week, and one house chore such as food shopping or cleaning the fridge, I enjoyed a huge kitchen, organic food, bulk food purchases, and home-cooked meals. This was a fraction of the costs of the school cafeteria and I also learned how to cook.

The 2 cooperatives were very different in culture and success. The first one that I was a part of was younger, messier, chores didn't get done, there was some freeloading, and some conflict. The 2nd one was older and ran quite smoothly. Chores were done and the when they weren't done, the co-op leadership made sure they were. Picture Rahm Emanuel with a beard, tie dye shirt, and soft voice asking you why the fridge wasn't getting cleaned.

However, both cooperatives had excellent parties. Ask me about the naked parties at the second one. This experience led me to thinking about the ingredients of a successful health plan cooperative.
  • There would have to be a culture of accountability and stewardship. Just because it has a different mission than a private business, it is not exempt from good management. The 2nd cooperative taught me that managers can be very effective even if they were overalls and are usually barefoot.
  • It has to be focused on the business goals and not get distracted. At the 2nd coop, a member introduced a proposal to support union advocacy groups by donating food and allowing them to use our kitchen to make baked goods for fund raising. We debated about whether we should use our resources to support the social good before deciding that our mission was to provide a cooperative living environment. We were not going to promote social causes. Likewise a health plan cooperative would need to be focused on providing health insurance and benefits. Any role in health policy or reform would be as a health plan and not a policy group. Focus would be on its insured members not solving the issue of the uninsured. Many hospital-sponsored health plans failed because they focused on being a health plan that providers liked rather than being a health plan that the market would support.
  • The cooperative membership has to be engaged and focused. When food is involved, it's easy to get someone's attention. However, engagement with health plans is trickier. It would very powerful if members really felt more accountable for their behavior and health decisions. If the cooperative membership knew that they would receive money back if their health care costs were below target, perhaps they would be more inspired to improve their health. There could be peer pressure to reduce "freeloading" or someone not doing their part to improve their health.
The 3rd bullet point has the greatest potential and power with a health plan cooperative. Otherwise, it's just a variation of an organizational design. Being a non-profit is not a business strategy, just a tax structure and different way to incorporate an organization. My non-profit health plan acts very much like a for profit with its business planning. The first 2 bullet points really indicate that even a housing cooperative predominantly filled with hippies, socialists, and those who believe clothing really is optional needs good management to run effectively. The power of engaged membership is what would differentiate a health plan cooperative from other plans.

Tuesday, June 9, 2009

SCIP Simulation Session: War Gaming

I had previously blogged about a Society of Competitive Intelligence (SCIP) session where we learned about Mark Chussil's war gaming simulation work. I attended a session where Mark led us through a 4 hour war gaming simulation around the auto industry. There were no preemptive strikes or blood shed and no excel spreadsheets or power point slides were harmed in this exercise.

Instead about 30 of us from Seattle and Portland formed teams of 5 different car companies and decided what we would do with 3 different lines of cars (SUV's, sedans, and hybrids were the only cars in this simulation to make it simple). We decided upon a price for each car line, marketing budget, production, and expected profitability. We had 2 rounds to make these decisions and presented to a panel of consumers and investors who were the more "judgemental" participants.

It was impressive that our teams could make all these decisions in 45 minutes since we were meeting each other for the first time. We digested about 4 pages of data tables, made decisions, created a marketing pitch and remembered each other's names in that short time period.

In the first round, we made all our decisions based on market share and accounting data that was on the spreadsheets. In the intro, Mark had cautioned us that spreadsheet data tells us about past history and will only help us forecast if the future is the same as the past. We also need to understand the industry, macro-trends, what competitors will do, and what our customers think of us. For the first round, we had to make decisions without knowing what our competitors would do or what customers thought of us.

My team was Ford and we felt that we were stable enough financially to discount our vehicles. We were the only team that did and when the investors pressed us on our ability to remain profitable with the discounts, I told them that we would make it up on volume. The joke actually went over so I decided not to elaborate but was later told that I got penalized for not answering the question seriously. That was a good lesson for public speaking.

As soon as our competitor heard about our discounts, we were slammed for trying to buy customers during their presentations. So we learned that discounts will be used against you besides the risk of igniting a price war. My other lesson was that it is really difficult to present to customers and investors at the same time. They are both looking for very different information and it forced us to have a very consistent story.

We got our results back from the first round and they were dismal. All of us lost money and sales except for Toyota (which is kind of what happened in the auto industry in 2008). Our initial reaction was to question the data, claim that we still had the right strategy, and that there wasn't anything that we could differently. We blamed every external force that we could think of and would have gotten around to blaming the government, OPEC, and Canada if Mark hadn't told us that we had 30 minutes to make decisions for the 2nd round. For a moment, I felt the pain of the car companies.

In the second round, were were able to refine our approach based on competitor response. As you can imagine, knowing the competitive landscape made a big difference. Here's a summary of what also happened and different approaches that we had:
  • Trying too hard to be cool: In the simulation, the sedan segment was 50% of the market and flat, SUV was 25% of the market and shrinking 2% and the hybrid line was 25% and growing 2%. We all fled the SUV segment except GM which did well by sticking to its knitting. Everyone dived into the hybrid line and ignored the sedan segment. I pushed my group to spend resources on this segment since it was half the market. However, everyone was enamored by the cool hybrid line even though it's market size and 2% growth didn't really warrant the attention. I feel like we tend to overcommit to the the trendy segment even though it may never acheive the market size of traditional segments.
  • Message consistency: GM pushed their SUV line in the first round and completely switched to the hybrids in the 2nd round. They explained that everyone knows about their SUV's and it's time to focus on the hybrids. However, the consumers found the complete switch to show a lack of focus. I personally agreed with GM's approach and thought that the SUV's was part of their DNA. However, promoting a dramatically different product line from one year to the next makes a company look like it's riding trends and it's hard to build credibility. I did find the GM approach better than the Hyundai team who marketing campaign of "Hard name to pronounce but easy to love" complete with different pronunciation options. Why would you want to confuse people about how to really pronounce the name of your company?
  • No one knows what will really happen in the future: An auto industry insider was also at the simulation and answered questions. We asked her about some general future questions and what happened with some past strategies like the Chrysler-Daimler merger. She agreed that it was really hard to understand all of the dynamics to the industry and what we read in the paper or saw explained industry trends as well as anything. For example, high US gas prices resulted in hybrids being as popular as acid wash jeans in the 80's. Low gas prices resulted in hybrids being as popular as acid wash jean in the 90's. The auto industry is complex enough that even industry insiders had the same questions that we did.

I had to leave before finding out if there were any results from the 2nd round and to see if anyone improved their position dramatically. It was pretty impressive to note the difference in quality of analysis when you operate in a competitive vaccuum compared to taking competitor decisions into account. That does need to be balanced with understanding your own company and not just making the same decisions that your competitor did a few months ago. I haved worked at a previous company where I feel like we outsourced our strategic planning to our competitors.

Ultimately the competitor information and just as importantly industry trends are another piece of data that we throw into our strategic planning soup. The best skills that I've developed at my current job are a willingness to be generous with assumptions to build scenarios and not worry if they have a p value of less than 5%. Sometimes, I lick my thumb and hold it up in the air to show one level of confidence to my teammates and sometimes I mimic smoking a joint to show another level of confidence. However, clear paths have emerged from just having the scenarios modeled out on a power point slide.

Friday, June 5, 2009

MBA Oath: Solemnly Swear to or Just Swear at?

I opened up my issue of the Economist to find an article on "A Hippocratic Oath for Management". A group of 2nd year Harvard Business Students started a campaign for MBA's to sign an oath to "create value responsibly and ethically" or basically not be stereotypical MBA's. MBA's have done harm in the business world and this is a pledge to do no more harm and prevent others from doing harm.

When I first read about the oath on the student's website, I had some of the reactions that one would expect. I stuck my finger in my mouth in mock vomit motion and rolled my eyes. I took my laptop and pantomimed wiping my posterior with it. I raised my leg in mock- OK you get the idea. This is what the Economist so elegantly described as "You may snigger." When read in a British accent, how could I compete with the phrase?

Now that I've gotten that out of my system, I am ready to give some serious thought to this project. Like many others, I am not surprised that this started at Harvard Business School (HBS). HBS has always been known as an incredible place to pursue an MBA in non-profit management due to resources such as the HBS Social Enterprise Initiative. There are non-profit management concentrations, summer internship fellowships, and post-graduation leadership fellowships to work at non-profits. With students who are attracted to those resources and HBS's dedication, I would expect HBS to have more students open to social responsibility and the oath.

Getting back to the oath, my favorite response vehicle is always a bullet pointed good, the bad, and the ugly.
The Good:
  • The MBA Oath website is slick and shows thought and dedication. Blogs, twitter feeds, and Facebook profile are all set up. Websites have been described as a company's public business card or their public face. You can tell from the website that the Founding Oathers (or Oathians perhaps?) are serious.
  • There is potential with the oath to help further the licensing of the MBA degree. The Economist had this view point and I've blogged before about how the MBA is a non-licensed trade degree. A code of conduct or this oath could be part of the licensing process which would go a long way towards establishing more trust and confidence in the MBA degree.
  • Again, potential, which is both the strength and curse of this endeavor. If McKinsey or other blue chip firms required MBA's to sign this oath before being extended an offer, that would send a message. If the Founding Oathians' employers did something similar, that could create change. Or if this doesn't happen, that transitions to my points below:
The Bad:
  • You don't really need to read the oath. It is overly flowery prose that reminds me of bad MBA essays. A better written oath would be more clear, simple, and specific.
  • I am not impressed with the current 648 signatures (or however many they have). In fact, I think that's really low. In today's hyperconnected MBA world where every MBA student is Facebook friends with half their class, every school has 10 bloggers, and every conjoint marketing analysis survey gets spread virally, the oath should have thousands of signatures. There is no reason for anyone not to sign it. For guys, it is an easy way to impress that nursing student you've been working (or veterinarian student if you're really slick and followed my advice). For women, well they tend to be naturally more attentive to the needs of society, and if not, they can impress the art student that they picked up in a bar. If there are not 2500 signatures by the end of the summer, I will be disappointed.
  • MBA applicants that I work with rarely struggle with the ethical dilemma essay. It's an easy straight-forward essay unlike the the Why do you want an MBA or Why this school essays. Therefore, it's not really an issue of understanding ethics but application. The oath does not address the application which is the real issue. With the media attention, this is a missed opportunity. A phrase like "Just because your competitor is doing it is not a reason to change underwriting" would help with application. Instead the oath has a line about vague "sustainable practice".
The Ugly:
  • Recently, the health care industry pledged to save the US $2 trillion dollars over 10 years. After the initial euphoria faded, it became apparent that this was more of a marketing tactic than anything of real substance. With that back drop, I have concerns that this oath could have the same fate. Once the blog posts, interviews, and articles stop, the website could cease to be active and this initiative would fade, leaving everyone even a little more cynical. I hope that I am wrong, but it does have to be the potential to be just a marketing strategy.
Even though, I have pretty much described the oath as a nice website with vague flowery language that I would purge off applicants essays and a real danger for overhyping, I am signing the oath. While the Founding Oathian urges me to do more and spread the word, I'm not ready for that level of commitment.

I am being harsh with this post because I don't want anyone to start the victory lap yet. There is national attention but I want to see if the Founding Oathians have the commitment for change before I commit more. I don't want to get fooled again by a good marketing campaign. Media attention is a limited resource that should be used wisely. Now is the time for responsibility. I hope that that the current momentum is channeled, the oath is continued and long-term goals remain the driving force. This could feed into the next transformation of the MBA program complete with a working ethical framework that candidates must study to achieve an MBA license. That is exciting.

Or it could be used as an example of how MBA students are not really serious about ethics if these efforts don't continue. Founding Oathians, you have seized the mantle of leadership. I have no doubt that many of you have a long track of social commitment. I am sure that you have the capabilities and there is a clear market need, no- a clear hunger for this kind of change. I hope that when I revisit this in 3 months, I will compliment more than your website. I hope that you move beyond media attention and short-term signatures and focus on a 3 years vision. Congrats on starting the project but by reaping the media focus, recognize the responsibility that comes with it.

Make us proud.

Don McLean Does Social Media

During my early years of music discovery (we're talking like age 12), I came upon Don McLean's American Pie. I was drawn to song writing and lyrics so I wound up memorizing American Pie. I still know the first 2 verses but am fuzzy about the rest (kind of like those Dead shows that I wen to). American Pie's lyrics have been analyzed by some, considered a moving tribute by others, part of our musical and cultural heritage by some others, and the worst ever by yet some others. American Pie represented some of my more refined musical taste as I did spend some time deciding if my favorite band should be Black Sabbath, Survivor, or Journey with the quality of their logos and patches for jeans jackets being as much a factor as their actual music.

Luckily, I discovered U2's "Sunday Bloody Sunday" and went on a predictable path of U2 to classic rock, reggae, and Bob Dylan and the Grateful Dead. I never made that well-traveled leap of Grateful Dead to jazz. Instead, I stayed with jam bands for a while, picked up some punk and ska tastes like the Pogues, Mighty Mighty Bosstones, and the Clash before pit stopping on bluegrass. My 2 latest musical purchases were Hot Buttered Rum and the Dropkick Murphys so I'm still pretty much split between drunken Irish pirate music and bluegrass (drunken hillbilly music?). Like most white guys in my demographic, I get my hip hop recommendations from NPR (Yeah K'Naan!).

I digress about my musical tastes. Real purpose of this post is about a video clip of the digital media age and advertising story over the last 2 years that is sung to the tune of American Pie. I don't know enough about media history but this Mad Avenue Blues video got me curious with some great lines like "There we were all in one place/Our business models lost in space".

If anyone watches this and fully understands it, can you help me with the following questions in the comment section? Here's a reminder of my Luddite tendencies around social media for context about why I'm asking these questions.
  • It looks like the 2nd half of 2007 was great for digital advertising but than the "buyers began to have some doubts?" What time period does this cover and what was going on? Who had the "clout"?
  • Who is Sir Martin and what was his role with Facebook and Myspace?
  • What are TimeWarner and Comcast doing or not doing well specifically?
  • "The buyers [Omicrom, WPP] with the biggest fees/Were brought to their knees" Were they bypassed/tech made their role irrelevant?
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