Saturday, December 11, 2010

Value and the Chain: Again

Yesterday I wrote a critique on the recent NEJM post by Porter. Let me revisit two issues:

1. The Uncertainty Principle of Medicine: Key to any one of Porter's ideas is that you measure everything. But in medicine, the role of the physician is all too often to observe the  patient. The more you observe the less yo have time to "measure", or at least report effectively on the measurement. Thus there is the equivalent of a Heisenberg principle a foot. If the physician sits there typing away then they are not doing what they are supposed to. If they observe and listen to the patient then they are not providing the data. Given a time constraint, the Uncertainty Principle of Diagnosis in the Value Chain exists.

2. In the paradigm of the value chain world as I used it decades ago, you have profit or cash flow as a single metric. That is not the case here. Let me relate a tale. In 1989 we had a strike at NYNEX, aka Verizon. One of my folks went to Operator Services, the Customer Service world. Well in Customer Services al la the Value Chain one seeks to determine the minutes per call, calls per customer per time period and cost per minute per CSR. CS was always viewed as a cost you tried to minimize. How did you do that? Either by making the service or product foolproof or by minimizing the time on the phone. Now my fellow, a fifth level or AVP type person, yet new to the Bell System, went off to do his strike duty, yet he had not been told how to do CSR work. We forgot. So his view was each time you spoke to a customer it was a new sales opportunity. So he saw this as a way to keep the customer happy and sell more stuff. His time per customer went sky high but he sold a volume of new services, despite the fact that we had to rig the system. We blew the value chain paradigm. That was when I lost faith in Porter. You see this fellow did something different, instead of doing what he was told, he did something great! I took that and brought it to Wireless when I took that over. We could have measured his great idea out of existence. That is also medicine.

Thus the more I think of Porter the more I see someone who knows and understands little and who would institutionalize mediocre at best ideas. Medicine cannot run that way.