Case Study Description of Humana's Bold Goal: 20 Percent Healthier by 2020
Beginning in 2013, Humana Inc., headquartered in Louisville, Kentucky, pursued a major organizational transformation, from being an insurance company focused on paying claims to becoming a health and well-being company focused on improving the health of its beneficiaries. The company set a "Bold Goal" of improving the health of the communities it served by 20% by 2020. To achieve this new goal, Humana undertook a multiyear redesign and investment of people, processes, and products in order to gain the trust of consumers and providers, and to partner with communities to improve health. The case focuses on community initiatives, where Humana was developing its new role as "convener of conversations," providing leadership infrastructure and partial funding to spark community planning with a wide range of stakeholders and to design and monitor interventions that were tailored to local health improvement. At the same time, Humana remained a publicly-held corporation accountable to its shareholders for revenue growth and financial return. The case protagonist, Andrew Renda, MD, MPH, Director, Bold Goal Measurement, must design and implement a business plan, including leading and lagging performance metrics, that would measure Humana's progress toward its Bold Goal in ways that supported continued investment in community health improvement in Humana's local markets, while satisfying its traditional business constituents. This case can be used in courses on strategy, community health improvement, the corporate role in public health, and other courses exploring the intersection of business and society. It also offers a rich opportunity to explore the research design and measurement challenges associated with evaluating the impact of public health interventions on local communities.
Swot Analysis of "Humana's Bold Goal: 20 Percent Healthier by 2020" written by Nancy M. Kane includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Humana Health facing as an external strategic factors. Some of the topics covered in Humana's Bold Goal: 20 Percent Healthier by 2020 case study are - Strategic Management Strategies, Strategic planning and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Humana's Bold Goal: 20 Percent Healthier by 2020 casestudy better are - – cloud computing is disrupting traditional business models, supply chains are disrupted by pandemic , wage bills are increasing, central banks are concerned over increasing inflation, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, etc
Introduction to SWOT Analysis of Humana's Bold Goal: 20 Percent Healthier by 2020
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Humana's Bold Goal: 20 Percent Healthier by 2020 case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Humana Health, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Humana Health operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Humana's Bold Goal: 20 Percent Healthier by 2020 can be done for the following purposes –
1. Strategic planning using facts provided in Humana's Bold Goal: 20 Percent Healthier by 2020 case study
2. Improving business portfolio management of Humana Health
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Humana Health
Strengths Humana's Bold Goal: 20 Percent Healthier by 2020 | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Humana Health in Humana's Bold Goal: 20 Percent Healthier by 2020 Harvard Business Review case study are -
High brand equity
– Humana Health has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Humana Health to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Highly skilled collaborators
– Humana Health has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Humana's Bold Goal: 20 Percent Healthier by 2020 HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to lead change in Strategy & Execution field
– Humana Health is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Humana Health in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Humana Health is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Nancy M. Kane can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Successful track record of launching new products
– Humana Health has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Humana Health has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High switching costs
– The high switching costs that Humana Health has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to recruit top talent
– Humana Health is one of the leading recruiters in the industry. Managers in the Humana's Bold Goal: 20 Percent Healthier by 2020 are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Operational resilience
– The operational resilience strategy in the Humana's Bold Goal: 20 Percent Healthier by 2020 Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Low bargaining power of suppliers
– Suppliers of Humana Health in the sector have low bargaining power. Humana's Bold Goal: 20 Percent Healthier by 2020 has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Humana Health to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Strategy & Execution industry
– Humana's Bold Goal: 20 Percent Healthier by 2020 firm has clearly differentiated products in the market place. This has enabled Humana Health to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Humana Health to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Humana Health digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Humana Health has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Superior customer experience
– The customer experience strategy of Humana Health in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Humana's Bold Goal: 20 Percent Healthier by 2020 | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Humana's Bold Goal: 20 Percent Healthier by 2020 are -
Low market penetration in new markets
– Outside its home market of Humana Health, firm in the HBR case study Humana's Bold Goal: 20 Percent Healthier by 2020 needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Humana's Bold Goal: 20 Percent Healthier by 2020 HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Humana Health has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Humana's Bold Goal: 20 Percent Healthier by 2020 has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Humana Health 's lucrative customers.
Slow decision making process
– As mentioned earlier in the report, Humana Health has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Humana Health even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Humana's Bold Goal: 20 Percent Healthier by 2020, is just above the industry average. Humana Health needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Capital Spending Reduction
– Even during the low interest decade, Humana Health has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Slow to strategic competitive environment developments
– As Humana's Bold Goal: 20 Percent Healthier by 2020 HBR case study mentions - Humana Health takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Humana's Bold Goal: 20 Percent Healthier by 2020, it seems that the employees of Humana Health don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, Nancy M. Kane suggests that, Humana Health is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Humana Health is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Humana's Bold Goal: 20 Percent Healthier by 2020 can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study Humana's Bold Goal: 20 Percent Healthier by 2020 that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Humana's Bold Goal: 20 Percent Healthier by 2020 can leverage the sales team experience to cultivate customer relationships as Humana Health is planning to shift buying processes online.
Opportunities Humana's Bold Goal: 20 Percent Healthier by 2020 | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Humana's Bold Goal: 20 Percent Healthier by 2020 are -
Buying journey improvements
– Humana Health can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Humana's Bold Goal: 20 Percent Healthier by 2020 suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Developing new processes and practices
– Humana Health can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Humana Health to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Humana Health in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Humana Health can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Loyalty marketing
– Humana Health has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Learning at scale
– Online learning technologies has now opened space for Humana Health to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Manufacturing automation
– Humana Health can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Humana Health is facing challenges because of the dominance of functional experts in the organization. Humana's Bold Goal: 20 Percent Healthier by 2020 case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Humana Health can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Humana Health can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Humana Health can use these opportunities to build new business models that can help the communities that Humana Health operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Humana Health to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Humana Health to hire the very best people irrespective of their geographical location.
Threats Humana's Bold Goal: 20 Percent Healthier by 2020 External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Humana's Bold Goal: 20 Percent Healthier by 2020 are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Humana Health in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
High dependence on third party suppliers
– Humana Health high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Humana Health with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Humana Health is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Humana Health demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Humana Health business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Humana Health can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Increasing wage structure of Humana Health
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Humana Health.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Humana Health needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Humana's Bold Goal: 20 Percent Healthier by 2020, Humana Health may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Humana Health can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Humana's Bold Goal: 20 Percent Healthier by 2020 .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Humana Health.
Weighted SWOT Analysis of Humana's Bold Goal: 20 Percent Healthier by 2020 Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Humana's Bold Goal: 20 Percent Healthier by 2020 needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Humana's Bold Goal: 20 Percent Healthier by 2020 is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Humana's Bold Goal: 20 Percent Healthier by 2020 is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Humana's Bold Goal: 20 Percent Healthier by 2020 is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Humana Health needs to make to build a sustainable competitive advantage.
