Swot Analysis of "Kaiser Permanente: Innovating to Transform Healthcare" written by Lynda M. Applegate includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Permanente Kaiser facing as an external strategic factors. Some of the topics covered in Kaiser Permanente: Innovating to Transform Healthcare case study are - Strategic Management Strategies, Entrepreneurial management, Health, Leadership and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Kaiser Permanente: Innovating to Transform Healthcare casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing inequality as vast percentage of new income is going to the top 1%, wage bills are increasing, challanges to central banks by blockchain based private currencies, customer relationship management is fast transforming because of increasing concerns over data privacy, cloud computing is disrupting traditional business models, talent flight as more people leaving formal jobs,
supply chains are disrupted by pandemic , increasing energy prices, etc
Introduction to SWOT Analysis of Kaiser Permanente: Innovating to Transform Healthcare
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Kaiser Permanente: Innovating to Transform Healthcare case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Permanente Kaiser, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Permanente Kaiser 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 Kaiser Permanente: Innovating to Transform Healthcare can be done for the following purposes –
1. Strategic planning using facts provided in Kaiser Permanente: Innovating to Transform Healthcare case study
2. Improving business portfolio management of Permanente Kaiser
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Permanente Kaiser
Strengths Kaiser Permanente: Innovating to Transform Healthcare | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Permanente Kaiser in Kaiser Permanente: Innovating to Transform Healthcare Harvard Business Review case study are -
High switching costs
– The high switching costs that Permanente Kaiser 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
– Permanente Kaiser is one of the leading recruiters in the industry. Managers in the Kaiser Permanente: Innovating to Transform Healthcare are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Permanente Kaiser in the sector have low bargaining power. Kaiser Permanente: Innovating to Transform Healthcare has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Permanente Kaiser to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Permanente Kaiser has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Permanente Kaiser 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.
Organizational Resilience of Permanente Kaiser
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Permanente Kaiser does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Strong track record of project management
– Permanente Kaiser is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Permanente Kaiser is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Permanente Kaiser is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Kaiser Permanente: Innovating to Transform Healthcare Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Kaiser Permanente: Innovating to Transform Healthcare firm has clearly differentiated products in the market place. This has enabled Permanente Kaiser to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Permanente Kaiser to invest into research and development (R&D) and innovation.
Cross disciplinary teams
– Horizontal connected teams at the Permanente Kaiser are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Training and development
– Permanente Kaiser has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Kaiser Permanente: Innovating to Transform Healthcare Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Innovation driven organization
– Permanente Kaiser is one of the most innovative firm in sector. Manager in Kaiser Permanente: Innovating to Transform Healthcare Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Permanente Kaiser digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Permanente Kaiser 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.
Weaknesses Kaiser Permanente: Innovating to Transform Healthcare | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Kaiser Permanente: Innovating to Transform Healthcare are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Permanente Kaiser is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Kaiser Permanente: Innovating to Transform Healthcare can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Permanente Kaiser 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. Permanente Kaiser 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.
High cash cycle compare to competitors
Permanente Kaiser has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High bargaining power of channel partners
– Because of the regulatory requirements, Lynda M. Applegate suggests that, Permanente Kaiser 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Kaiser Permanente: Innovating to Transform Healthcare, in the dynamic environment Permanente Kaiser has struggled to respond to the nimble upstart competition. Permanente Kaiser has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Permanente Kaiser 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.
Products dominated business model
– Even though Permanente Kaiser has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Kaiser Permanente: Innovating to Transform Healthcare should strive to include more intangible value offerings along with its core products and services.
Interest costs
– Compare to the competition, Permanente Kaiser has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High operating costs
– Compare to the competitors, firm in the HBR case study Kaiser Permanente: Innovating to Transform Healthcare 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 Permanente Kaiser 's lucrative customers.
Lack of clear differentiation of Permanente Kaiser products
– To increase the profitability and margins on the products, Permanente Kaiser needs to provide more differentiated products than what it is currently offering in the marketplace.
Increasing silos among functional specialists
– The organizational structure of Permanente Kaiser is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Permanente Kaiser needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Permanente Kaiser to focus more on services rather than just following the product oriented approach.
Opportunities Kaiser Permanente: Innovating to Transform Healthcare | 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 Kaiser Permanente: Innovating to Transform Healthcare are -
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. Permanente Kaiser can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Leveraging digital technologies
– Permanente Kaiser can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Manufacturing automation
– Permanente Kaiser can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Permanente Kaiser 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 Permanente Kaiser to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Permanente Kaiser 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.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Permanente Kaiser in the consumer business. Now Permanente Kaiser can target international markets with far fewer capital restrictions requirements than the existing system.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Permanente Kaiser can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Permanente Kaiser 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Permanente Kaiser can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Creating value in data economy
– The success of analytics program of Permanente Kaiser has opened avenues for new revenue streams for the organization in the industry. This can help Permanente Kaiser to build a more holistic ecosystem as suggested in the Kaiser Permanente: Innovating to Transform Healthcare case study. Permanente Kaiser can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Permanente Kaiser is facing challenges because of the dominance of functional experts in the organization. Kaiser Permanente: Innovating to Transform Healthcare 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.
Building a culture of innovation
– managers at Permanente Kaiser 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 Innovation & Entrepreneurship segment.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Permanente Kaiser can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Permanente Kaiser can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Threats Kaiser Permanente: Innovating to Transform Healthcare External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Kaiser Permanente: Innovating to Transform Healthcare are -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Permanente Kaiser in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Permanente Kaiser has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Permanente Kaiser needs to keep up with the evolution of technology in the Innovation & Entrepreneurship sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Permanente Kaiser 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.
Environmental challenges
– Permanente Kaiser needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Permanente Kaiser can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
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. Permanente Kaiser needs to understand the core reasons impacting the Innovation & Entrepreneurship industry. This will help it in building a better workplace.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Shortening product life cycle
– it is one of the major threat that Permanente Kaiser is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Permanente Kaiser with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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.
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 Permanente Kaiser business can come under increasing regulations regarding data privacy, data security, etc.
Stagnating economy with rate increase
– Permanente Kaiser can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Kaiser Permanente: Innovating to Transform Healthcare, Permanente Kaiser may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Increasing wage structure of Permanente Kaiser
– 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 Permanente Kaiser.
Weighted SWOT Analysis of Kaiser Permanente: Innovating to Transform Healthcare 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 Kaiser Permanente: Innovating to Transform Healthcare 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 Kaiser Permanente: Innovating to Transform Healthcare 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 Kaiser Permanente: Innovating to Transform Healthcare 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 Kaiser Permanente: Innovating to Transform Healthcare 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 Permanente Kaiser needs to make to build a sustainable competitive advantage.
