Case Study Description of Intrapreneurship at DaVita HealthCare Partners
Josh Golomb, president and general manager of DaVita Rx (Rx), was about to meet with Kent Thiry, CEO of Rx's corporate parent, DaVita Healthcare Partners Inc. (DaVita), in August 2013. The two would discuss whether Golomb should lead a new DaVita venture, Paladina Health (Paladina), which operated a network of primary care clinics.DaVita had launched Paladina in early 2011 and the startup was struggling to gain traction: Paladina had already used a significant amount of the $40 million in funding committed by DaVita; the company's primary care clinics had not yet reached the number of patients necessary to sustain a profitable business; and it was in the midst of trying to integrate with another primary care clinic operator that it had acquired years earlier, but was just now merging into Paladina. Although the startup was young and still finding its way in an emerging industry, Thiry believed that Paladina would benefit from Golomb's experiences at Rx, which had also struggled in its early years. The situation at Rx became so precarious at one point that many of DaVita's senior leaders wanted to shut it down entirely. Rx made it through those challenging early years though, and was expected to exceed $600 million in revenues for 2013. However, Golomb wondered how relevant his Rx experience was to Paladina. Rx was closely tied to its parent company-DaVita provided dialysis services to patients with end-stage renal disease (ESRD) and Rx supplied medications to ESRD patients-while Paladina's connection to DaVita was less obvious. If Golomb took the job, what could he do to make Paladina's clinics as efficient as possible in terms of service and its economics, without compromising on its value proposition? Was Paladina just too different of a business to be part of the DaVita family? This case offers an example of "intrapreneurship"-i.e. entrepreneurial ventures launched within large companies-at a Fortune 500 company. DaVita has already had a successful experience launching Rx (after some difficult early years), and the company is now even serving patients from some of DaVita's leading competitors. However, Paladina is the company's first intrapreneurial venture outside of its core focus of serving end-stage renal disease (ESRD) patients-DaVita's main function is to provide dialysis se However, Paladina is the company's first intrapreneurial venture outside of its core focus of serving end-stage renal disease (ESRD) patients-DaVita's main function is to provide dialysis services to ESRD patients and Rx provides medication to ESRD patients. Can Paladina succeed simply by following Rx's example, or will it face different challenges?
Authors :: Joseph Fuller, David J. Collis, Matthew Preble
Swot Analysis of "Intrapreneurship at DaVita HealthCare Partners" written by Joseph Fuller, David J. Collis, Matthew Preble includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Paladina Davita facing as an external strategic factors. Some of the topics covered in Intrapreneurship at DaVita HealthCare Partners case study are - Strategic Management Strategies, Entrepreneurial management, Health, Marketing, Strategic planning and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Intrapreneurship at DaVita HealthCare Partners casestudy better are - – increasing transportation and logistics costs, wage bills are increasing, central banks are concerned over increasing inflation, increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices,
increasing commodity prices, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of Intrapreneurship at DaVita HealthCare Partners
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Intrapreneurship at DaVita HealthCare Partners case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Paladina Davita, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Paladina Davita 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 Intrapreneurship at DaVita HealthCare Partners can be done for the following purposes –
1. Strategic planning using facts provided in Intrapreneurship at DaVita HealthCare Partners case study
2. Improving business portfolio management of Paladina Davita
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 Paladina Davita
Strengths Intrapreneurship at DaVita HealthCare Partners | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Paladina Davita in Intrapreneurship at DaVita HealthCare Partners Harvard Business Review case study are -
Effective Research and Development (R&D)
– Paladina Davita has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Intrapreneurship at DaVita HealthCare Partners - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Diverse revenue streams
– Paladina Davita is present in almost all the verticals within the industry. This has provided firm in Intrapreneurship at DaVita HealthCare Partners case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Paladina Davita 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 Joseph Fuller, David J. Collis, Matthew Preble 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.
Learning organization
- Paladina Davita 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 Paladina Davita is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Intrapreneurship at DaVita HealthCare Partners Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High switching costs
– The high switching costs that Paladina Davita 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.
Superior customer experience
– The customer experience strategy of Paladina Davita in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Intrapreneurship at DaVita HealthCare Partners 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.
Training and development
– Paladina Davita has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Intrapreneurship at DaVita HealthCare Partners 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.
Organizational Resilience of Paladina Davita
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Paladina Davita does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Intrapreneurship at DaVita HealthCare Partners firm has clearly differentiated products in the market place. This has enabled Paladina Davita to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Paladina Davita to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Paladina Davita in the sector have low bargaining power. Intrapreneurship at DaVita HealthCare Partners has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Paladina Davita to manage not only supply disruptions but also source products at highly competitive prices.
Successful track record of launching new products
– Paladina Davita has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Paladina Davita 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.
Weaknesses Intrapreneurship at DaVita HealthCare Partners | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Intrapreneurship at DaVita HealthCare Partners are -
Low market penetration in new markets
– Outside its home market of Paladina Davita, firm in the HBR case study Intrapreneurship at DaVita HealthCare Partners needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Intrapreneurship at DaVita HealthCare Partners, in the dynamic environment Paladina Davita has struggled to respond to the nimble upstart competition. Paladina Davita has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Need for greater diversity
– Paladina Davita has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Lack of clear differentiation of Paladina Davita products
– To increase the profitability and margins on the products, Paladina Davita needs to provide more differentiated products than what it is currently offering in the marketplace.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Intrapreneurship at DaVita HealthCare Partners 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 Paladina Davita has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Intrapreneurship at DaVita HealthCare Partners 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 Paladina Davita 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Joseph Fuller, David J. Collis, Matthew Preble suggests that, Paladina Davita 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.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Paladina Davita supply chain. Even after few cautionary changes mentioned in the HBR case study - Intrapreneurship at DaVita HealthCare Partners, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Paladina Davita vulnerable to further global disruptions in South East Asia.
Capital Spending Reduction
– Even during the low interest decade, Paladina Davita 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.
Interest costs
– Compare to the competition, Paladina Davita 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.
Slow to strategic competitive environment developments
– As Intrapreneurship at DaVita HealthCare Partners HBR case study mentions - Paladina Davita 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.
Opportunities Intrapreneurship at DaVita HealthCare Partners | 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 Intrapreneurship at DaVita HealthCare Partners are -
Loyalty marketing
– Paladina Davita 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.
Using analytics as competitive advantage
– Paladina Davita has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Intrapreneurship at DaVita HealthCare Partners - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Paladina Davita to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
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 Paladina Davita in the consumer business. Now Paladina Davita can target international markets with far fewer capital restrictions requirements than the existing system.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Paladina Davita can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Intrapreneurship at DaVita HealthCare Partners, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Buying journey improvements
– Paladina Davita can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Intrapreneurship at DaVita HealthCare Partners 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.
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 Paladina Davita 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 Paladina Davita in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Innovation & Entrepreneurship segment, and it will provide faster access to the consumers.
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. Paladina Davita 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. Paladina Davita 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Paladina Davita 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 Paladina Davita to hire the very best people irrespective of their geographical location.
Low interest rates
– Even though inflation is raising its head in most developed economies, Paladina Davita 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 Paladina Davita has opened avenues for new revenue streams for the organization in the industry. This can help Paladina Davita to build a more holistic ecosystem as suggested in the Intrapreneurship at DaVita HealthCare Partners case study. Paladina Davita can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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. Paladina Davita can explore opportunities that can attract volunteers and are consistent with its mission and vision.
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. Paladina Davita can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Threats Intrapreneurship at DaVita HealthCare Partners External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Intrapreneurship at DaVita HealthCare Partners are -
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 Paladina Davita.
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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Paladina Davita 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 Intrapreneurship at DaVita HealthCare Partners .
High dependence on third party suppliers
– Paladina Davita 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Paladina Davita in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Paladina Davita will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
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 Paladina Davita business can come under increasing regulations regarding data privacy, data security, etc.
Technology acceleration in Forth Industrial Revolution
– Paladina Davita has witnessed rapid integration of technology during Covid-19 in the Innovation & Entrepreneurship industry. As one of the leading players in the industry, Paladina Davita 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Paladina Davita with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Paladina Davita
– 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 Paladina Davita.
Regulatory challenges
– Paladina Davita needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Intrapreneurship at DaVita HealthCare Partners, Paladina Davita 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 .
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.
Weighted SWOT Analysis of Intrapreneurship at DaVita HealthCare Partners 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 Intrapreneurship at DaVita HealthCare Partners 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 Intrapreneurship at DaVita HealthCare Partners 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 Intrapreneurship at DaVita HealthCare Partners 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 Intrapreneurship at DaVita HealthCare Partners 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 Paladina Davita needs to make to build a sustainable competitive advantage.
