Who is the customer?

By Vijay Yanamadala

One of the biggest lessons from Ben Foster’s presentation on his role as product manager at OPOWER is how to think about the customer. Indeed, both utilities and end consumers were on some level “customers” of OPOWER. Utilities actually paid for the service, but it was consumers who were ultimately modifying their behavior based on the activities of OPOWER.

While it is easy to view the payer as the customer, it’s more difficult to appreciate the more nuanced approach that both are important, indeed essential to your ultimate success. Success is ultimately interdependent and focusing only on the payer’s needs may not lead to optimization for the payer because it ignores the interdependency of the relationship and the ultimate service provided by OPOWER. Ben talked about treating the consumer as the ultimate customer because it is the consumer whose behavior they were ultimately trying to modify.

Then in actually thinking about treating the consumer as the customer, the consumer’s needs may indeed be different from what they describe. He specifically made a point about paying attention to a customer’s pain points and then thinking critically about how to address their pain points as a way to coming up with the best solution. This strategy avoids coming up with products that don’t ultimately address real pain points and thus have a limited potential for real adoption.

In many ways, the OPOWER example applies to the complex landscape of healthcare. As with utilities, there are multiple parties, including healthcare providers (physicians, hospitals), payers (government, private insurance), and patients. Often, in a working business model, one of these entities will be the payer, but ignoring the complex interplay between these three entities will not lead to an optimum business model.

Indeed, the models that have worked best have demonstrated positive value for each of the players involved: providers, payers, and patients. Even if one of these entities is the payer, without demonstrating such positive value for everyone involved, successful adoption is never achieved. There are numerous examples of this sort of failure in healthcare entrepreneurship.

Medical History Office (medicalhistory.com) is a software company founded in 1982 that was designed to automate patient data gathering. Today, if you ask 1000, 999 of them will likely say that they have never heard of this company. They designed software that solely took a physician’s pain point into consideration: the frustrations of paperwork. However, in the process, they created a pain point for patients, burdening them with even more paperwork without any clear benefit received. Even if physicians were to be the ultimate payer, in ignoring the patient as an integral component of the model that would drive adoption, they failed to achieve even limited adoption.

Similarly, Google Health tried to address the patient pain point of incomplete records without taking into account the tremendous burden that providers would have in interfacing with a new system, and they ultimately failed because of it. Tech Crunch takes an even more scathing view of this topic: http://techcrunch.com/2011/06/26/why-google-really-failed-money/ - perhaps Google’s failure to take into account the very reimbursement scheme that connects the system together was their biggest failure. In not recognizing that they may be destroying monetary value for providers through such a system, they were creating tremendous disincentive for one of the key interdependent parties. By viewing the patient as their sole customer, the failed to appreciate how destroying value for another interdependent party would lead to failed adoption.

Thus, in trying to drive better business models for healthcare start-ups, perhaps using the holistic approach towards the customer that OPOWER uses may lead to heightened success. Understanding how each of the parties may benefit, or at the very least not suffer, will be essential to achieving success where the coordinated efforts of three interdependent parties ultimately drive adoption of all new innovations.