My Involuntary Medical Tourism – And a Bad Pattern for the U.S.

I was in Singapore a few weeks ago for a mixture of work (digital innovation) and play (attend a wedding). Good times.

Until the night before the wedding, when with our Australian friends who’d kindly flown up to meet us, we went out to the deservedly famed Indian restaurant in the PanPacific hotel.

You’ll note that the entrance is pretty dark, to prepare you for the quite dramatic lighting inside.  My friend and I, strolling in, approached the image of Ganesha you see in the picture. Unfortunately I overlooked the 5” high platform on which the Remover of Obstacles was displayed, and tripped — as I fell, I caught a finger on the crossbar on the wall resulting in the all but complete evulsion of the nail (you don’t want me to explain.)

I mentioned the hotel by name above because the staff could not have been more solicitous and competent, and after providing me a napkin full of ice suggested I visit Raffles Hospital, a mile away.

Here begins the voyage of discovery. 

My wife and I appeared at the emergency room check-in desk, and before any administrative questions were asked I was seated in an examination room. The doctor appeared within two minutes to take a look.  He offered me two options.  They could remove the nail, basically hanging by a thread, and I would just wait to see if a new one would grow back; or they could remove it, wash it, reinsert it where it belonged, and stitch it onto the finger.  He told me the latter would improve the chance of a normal nail growing in, so that’s what I chose.

Half an hour later we were done, including a precautionary X-ray I requested. I went back to my hotel with a kit of dressing supplies and medications.

The total bill was 465 Singapore Dollars, or $372. (That X-ray I asked for was taken and read for $80.)

When I got back to the US I went to see my doctor, who said that she’d never heard of reinserting a nail back into a finger, and admired how well it was healing.  She also said that at Mass General Hospital the cost would have been in the thousands.

Let's review: Instant service; a treatment with a great outcome that likely wouldn’t have been tried in the U.S.; and a cost an order of magnitude less than the U.S. equivalent.

Travel indeed broadens the mind.

So it was with a changed point of view that I read of the difficulties of the U.S. blood industry, facing sharply declining demand. The trend is “wreaking havoc in the blood bank business, forcing a wave of mergers and job cutbacks unlike anything the industry…has ever seen.” Transfusions are down from 15 million to 11 million units over the last five years, it turns out, despite the aging of the population, costing the industry $1.5 billion in revenue.

Granted, this was in the business section.  But I couldn’t help wondering why the medical advances at the root of this development weren’t the headline — e.g. total hip replacement formerly required 750ml (1.5 pints) of blood and now uses only 200ml.

To return to the difference in cost between Raffles and Mass General – perhaps this has something to do with it: “Nonprofit organizations collect whole blood from unpaid donors, but hospitals may pay $225 to $240 a unit, according to executives in the business, which covers a variety of costs, including testing. If the unit is billed to the patient, the price can be $1,000 or more.” – CAM

Quotidien Revolution

Innovation is revolutionary only when it results in a shift in power. “Disruption” has become such a throwaway term that we forget our society is reshaping itself through power shifts every day.  Three stories from this weekend’s New York Times illustrate the point.

The Rise of The Toothbrush Test,” asserts that tech companies are increasingly managing their merger transactions without the help of investment bankers (see charts below). The trend arises, says the Times, because bankers understand deals that are based on valuations and earnings per share, but Google, Facebook, Cisco et al. are more interested in the potential to open new markets. (The article title attributes two key yardsticks to Larry Page: “is it something you will use once or twice a day, and does it make your life better?” The smart electric toothbrush is presumably on its way.) If innovation is on the rise across the economy, then it won’t just be tech companies abandoning the financial engineers.

 

Second, David Carr’s regular column on media was titled “The View From #Ferguson.” It’s old news that Twitter trends point to stories faster than CNN, let alone the Wall Street Journal, but there’s a certain symmetry between Al Jazeera relying in part on Twitter when covering the Arab Spring and Twitter drawing attention to the Al Jazeera news crew being tear gassed in Ferguson, Missouri.

Carr points out that Dow Jones (the WSJ’s parent) has acquired Storyful, “which creates narratives from the Twitter stream.” He sites both CNN and NBC as making similar plays.  A decade ago the hand-wringing among media professionals was that citizen journalists could never substitute for trained reporters; now it turns out the professionals can’t do their job without the crowd.

 

Finally, a Harvard Business School working paper comparing the decisions of crowdfunders vs those of experts (“Wisdom or Madness? Comparing Crowds with Expert Evaluation In Funding the Arts”), also mentioned in the Times, concludes that in general a crowd of amateurs and a group of experts will choose the same projects to fund, but when they differ, it is because experts have a higher degree of false negatives, that is, they do not fund projects that turn out to be successful when funded by the crowd.  In other words, experts exert a conservative influence on innovation by suppressing experiments that might make it obsolete — the authors suggest this applies “in fields as diverse as technology entrepreneurship and the arts.”

Investment bankers disintermediated, news crowdsourced, investment reallocated by amateurs — none of this is surprising to the digital natives, or even the digital immigrant (and indeed was suggested long ago by among others Clay Shirky, David Weinberger, and even in my 1998 book BLUR). 

Each of the digital-driven innovations above is a minor footnote to the digital revolution. The big story is the shift in power, and how it will reshape our institutions. If your product or service is used twice a day and makes someone’s life better, watch out.  – CAM

The Future of Marketing – and Next Generation Social Science: A Visit to the Center for Advanced Modeling

2009: “SOCIAL FUSION”
Five years ago, as part of Monitor Talent’s annual gathering of thought leaders, we gathered a set of marketing and social media experts to discuss a hypothesis about how current trends would affect marketing.
 
Our group included thought leaders and entrepreneurs like Clay Shirky (author of Here Comes Everybody), Deb Roy (founder of Bluefin Labs), Charlene Li (Founder of Ray Wong’s former firm, Altimeter and author of Groundswell), and Marc Mathieu, now SVP of Marketing at Unilever. Practitioners from companies including Intel, Nestle, Cisco, Samsung, and Silicon Valley Bank participated as well. 
 
We met to explore a vision of the future that we labeled “Social Fusion.” The term derived from the then-new explosion of social media and the growing capabilities for “data fusion,” the integration of multiple data sets to create a picture of an individual. Now we call that “Big Data.”
 
We began with a five-step argument (see chart below):
  1. Consumers had begun to continually describe their own behavior in media observable to marketers.
  2. Additional information about them was being ubiquitously through their  clickstreams, cellphones and credit cards (now we can add FitBits and Nests), and the technology to fuse these data was developing quickly. Together, these trends implied that robust characterizations of large numbers of consumers would become inexpensive, and would be continually updated.
  3. Advances in cognitive science were providing insights into how the mind makes the choices it does, and
  4. Behavioral scientists (including behavioral economists) were able to test these insights experimentally. Because of trends #1 and #2, the hypotheses could be tested beyond experimental settings like FMRI machines (cognitive scientists) and rooms full of starving students (behavioral economists).
  5. Finally, through the use of agent-based modeling, it was becoming possible to  simulate the interaction of heterogeneous individuals in the real world to validate these hypotheses—and test marketing programs.
 
 
In other words, in 2009 we could foresee the development of true behavioral science, with data gathered from real life leading to testable hypotheses, supporting models that can be used to assess campaigns and guide experimentation in the marketplace. 
 
 
We came up with some interesting thoughts (e.g. using online video for ethnography) and anticipated how marketing organizations would integrate social-media-based relationships and real-time customer interaction with the older elements of the marketing mix.
 
At the time, we agreed that the embodiment of behavioral and cognitive findings into simulation models was the frontier, years away—hence the dotted line around the “Agent Based Modeling” circle above.
 
 
2014: THE CENTER FOR ADVANCED MODELING
 
Last week I visited Josh Epstein, founder of Johns Hopkins Center for Advanced Modeling and IMO the most important practitioner of ABM today. Josh has just published Agent_Zero: Toward Neurological Foundations for Generative Social Science.
 
In it, Epstein demonstrates that the 2009 prophecy has been fulfilled.  He is building neurologically validated models of behavior into his agent-based simulations.
 
To explain, one paragraph about ABM:  the statistical models of, say, econometrics are “data-reduction” models—they throw away information about individuals and model the average.  For example, a model of the growth of personal income as a function of growth of GDP and change in interest rates treats everyone as exactly average—and does not allow for interaction among the decision makers  (“agents”).
 
As our #1 and #2 premises state, the wealth of data and computing power now available support modeling choices at the level of unique individuals. For example, Humana was puzzled that more employees didn’t choose the health plan best suited to their age and family structure.  They observed the choices, interviewed the choosers, and found that people often gave great weight to the choice their colleague in the next cube made, even though he might be in a different situation.  With this understanding, they built an ABM that more accurately predicted actual choices—and figured out how to educate people to make better ones.  
 
Beyond the Wikipedia article cited above, there’s a good primer on ABM here, or you might consider my HBR article with Eric Bonabeau (who did the Humana work) called Swarm: A Whole New Way To Think About Management, though it’s from 2001.
 
What Epstein has done is create a system for ABM that allows you—marketer, HR manager, policy maker, researcher, social engineer—to incorporate neurological findings about how people’s reactions are conditioned. Specifically, he’s incorporated the Rascorla-Wagner model of conditioning, “one of the most influential models of learning” according to Wikipedia. This conditioning changes the tendency of an agent to make a choice. For example, an investor may be tolerant to daily movements of 2% in the DJIA, but each time she loses that amount she becomes a little more fearful of a repeat.  At some point, a 2% change could trigger her selloff, and other agents’ behavior might be affected. This model could predict the unpredictable—the conditions that would signal a market turn. Epstein has applied these techniques to social violence, vaccination strategies, the collapse of the Anasazi civilization, and many other social behaviors.
 
A current application: In 2013, the EU established CRISIS, the Complexity Research Initiative for Systemic Instabilities to develop “a new approach to economic modeling and understanding risks and instabilities in the global economy and financial system. At the heart of this innovation is the idea that the agents within the groups used in traditional models—households, firms, banks and policymakers—behave differently…based on their own characteristics…not always rationally.”
 
Agent_Zero is an academic-level book, but soon the quants in various fields will assimilate these ideas, and the practices of marketing, social policy formation, politics, and our understanding of how we influence each other in daily life will take giant steps forward.
 
And, incidentally, Social Fusion will become a reality.  – CAM
 
Posted by Chris Meyer on March 31, 2014
 

Money from Nothing

Last week I wrote about Bitcoin and cryptocurrencies. Thursday night in New York I stumbled into another innovation in the medium of exchange:

This arrived with my check at the excellent Toshie’s Living Room in the Flatiron Hotel. Hardly a surprising development, but provocative.

I know you’re waiting for me to say this increases the liquidity of your social assets, but I’m not going there.

Consider the next phases of this market:

·  The frank and universal incentive (as opposed to asking your limited number of friends to review you) will further devalue the currency of Yelp approval, or any other social review site.

·  People wishing to monetize their status as Senior Contributor or Mega Maven or whatever should be able to trade-up to the top shelf by showing their status. Finally—value for your Klout score!

·  Would Toshie pour you a second shot to add a review on, say, Timout New York? You could drink all night, going from one club to the next and imbibing in exchange for reviews on all your social media.

More seriously, how does the cost per impression of this medium compare with, say, advertising on taxi screens?  It seems pretty economical, and reasonably well targeted, and builds some goodwill with the customer you already have. So I’d expect to see a lot more of it.

Postscript: earlier in the evening, in exchange for my applause, Melanie Marod, the also excellent singer, gave me a CD of her music. 

To paraphrase Dire Straits, it was an evening of “music for nothin’ and my drinks for free.”  This what happens when Andy Warhol’s 1968 prophecy — “in the future, everyone will be world-famous for fifteen minutes” — meet’s Ray Kurzweil”s from 2001: “We’re doubling the rate of progress every decade.”

Now, everyone’s a nano-celebrity. – CAM

Posted by Chris Meyer on February 26, 2014

 

Whither Bitcoin? Or Wither, Bitcoin?

A Beginner’s Guide to Bitcoin

I’m engaged in a fascinating project — interesting both because I started from total ignorance and because the subject is complex and profound. I’m helping the Fondación Innovación Bankinter pull together a colloquium on “The Future of Currencies: Bitcoin, Barter, and the Informal Economy.”

If you’re unaware of Bitcoin, the underlying fact is that it is a cryptography-based method “to establish trust between otherwise unrelated parties over an untrusted network,” quoting Mark Andreessen’s primer in the New York Times. He sees this breakthrough as in the same league with PCs and the Internet. While this capability — establishing trust — could have many applications (passing secret messages, for example), the one that’s attracting public attention now is as a peer-to-peer payment system and digital currency, or “cryptocurrency."

For the past three months, Bitcoin has been in the news constantly. The Winkelvoss Twins, of Facebook fame, were reported to have profited from a $30 million position in Bitcoin, and quoted as saying the price of a Bitcoin, then about $700, would reach $40,000. Whatever the long term may hold, there’s been plenty of room for speculative profits lately, with the price fluctuating between $500 and $1,200 for the past few months (see chart below). This has at least in part been driven by news, good (“Overtstock.com Is Now Accepting Bitcoins”) and bad (“Flaw in Bitcoin, exchange shutdowns, $2.7 million theft: Is the end coming?")

 

 

So we can add Bitcoin as another game in the financial casino. But there are many more interesting aspects to this development. Some of the facets that fuel the debate include:

•  Anonymity. Some people believe that Bitcoin can be traded with complete anonymity, hence the currency will appeal to black marketeers, drug dealers, terrorists, and others with something to hide. But others argue that because the Bitcoin protocol captures every transaction for which the currency is used, it is much more traceable than cash. In fact, Berkman Center’s Jonathan Zittrain reports that some think it’s a ploy by the US government to capture information about illegal activities.

•  Out of Control. Bitcoin is managed by a peer network; it is a currency not under the control of any government. Some argue this means it will be a low risk global currency, not buffeted by the performance of any national economy.

•  Under Control. The definition of Bitcoins establishes for all time the size of the money supply and the rate at which the current supply grows; this is the monetary policy Milton Friedman always urged for the Fed, to maximize certainty of asset holders about inflation.

•  Bad for Economic Management. As a consequence, if Bitcoin were to become prevalent, nations would lose the tools of monetary policy as a way to manage their economies.

•  Good for the Chinese. If a country wanted to reduce the influence of the U.S. Dollar, supporting crypto currencies could help. China, however, has banned Bitcoins, perhaps because the idea of a currency controlled by no one is not acceptable.

• Friction Free. Because the apparatus for “mining” and trading Bitcoins is not part of the existing payment systems and rests on publicly available internet services, advocates see Bitcoin as putting pressure on the fees, often 5% – collected by banks and credit card companies.

And there’s more.  

I’ve dealt with Bitcoin above, but there is a much richer set of developments occurring in the world of money.  There are many crypto currencies out there — Ripple Labs has created the Ripple Exchange Protocol (RXP) as an open system, and is building not only a currency called Ripple on it but inviting others to find applications. In addition they are developing support businesses, Red Hat to RXP’s Linux. And payment systems such as M-Pesa, Vodaphone’s mobile-based money network developed in Africa, are another source of innovation; recently M-Pesa started transferring Bitcoin, and one third of Kenyans are reported to have Bitcoin “wallets.” And you’ll miss the fun if you don’t check out Dogecoin, responsible for the tip-bot on Reddit.

I’m working on the agenda for the colloquium. Some questions I think we’ll ask include:

•  Why have new payment systems arisen? What needs are the existing systems failing to meet? 

•  How will central banks view currencies existing outside their national monetary systems? 

•  What is the range of applications for a global, secure, peer-to-peer authentication systems not under the control of any central authority? 

•  What developments can we anticipate in the next five years?

Please offer your thoughts on these questions. And what others the discussion should cover.  Please note that the technology of crypto currencies is not the subject here — it is their impact on the world’s economy.

Based on what I’ve learned so far, I think (1) the payment systems available to consumers and businesses today are a rent-seeking oligopoly, ripe for disruption — the profits from these businesses will come down, just as music publishers have; (2) there will be a significant political reaction to contain crypto currencies, regardless of their anonymity or lack of it — see Simon Johnson’s recent post on this; (3) the idea of peer-to-peer verification over the net is a big idea that will have big consequences sooner or later; and (4) we don’t know as much about money and the monetary system as we think we do, and the current institutional framework will be changing, in part because of these developments. The DOJ and Ben Bernanke have already acknowledged that Bitcoin is legal and has some beneficial aspects; and (5) the emerging economies are likely to play a pioneering role in exploring crypto currencies  South Africa’s Standard Bank, South Africa’s largest, is testing integration with Bitcoin.

One scenario is that Bitcoin will be the Napster of money  an approach that perishes in the process of destabilizing the status quo, but leads to massive changes over time. 

What do you think?  – CAM

Posted by Chris Meyer on February 17, 2014


 

To Anticipate and Shape the Future of Business

When I ran Ernst & Young's Center for Business Innovation, we chose as our mission "to anticipate and shape the future of business."  Our intent was to sense the emerging issues, understand their impact, and provide E&Y's consulting business with new frameworks and tools to help clients--a cross-section of the global economy--get ahead of the game. In retrospect, we did well, anticipating Big Data, Social Entrepreneurship, the growing importance of intangible value, and adaptive management a decade before they became common concerns. 

When I left the CBI, I adopted this mission as my own. I write, speak about, and act on new developments in the global economy. (Monitor Talent, a business founded by Monitor Group on a plan based on my book Future Wealth, is an example. Others are documented elsewhere on this site.) My current book looks at the emerging economies to see the next practices that will drive the evolution of capitalism. 

I will write here about new, sometimes half-baked thoughts about the world economy, capitalism, globalization, and economic research, hoping to provoke comment and insight from you. I hope you will be motivated to respond, and point to novel developments you observe. If we have a productive conversation here, we may collectively shape the future of business.

Posted by Chris Meyer on January 24, 2014