EP 09: Aligning Healthcare with Consumer Strategy

with Greg Carpenter Ph.D.

May 13, 2021

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Greg Carpenter Ph.D.
Harold T. Martin Professor of Marketing

Gregory Carpenter focuses on understanding how firms thrive by succeeding with consumers. Based on award-winning research, his recent book, Resurgence: The Four Stages of Market-Focused Reinvention (Palgrave Macmillan, 2014), examines how firms that face serious challenges create a more customer-focused culture and renewed success. He is currently exploring how luxury firms succeed by influencing consumer tastes through brands and how health-care systems embrace shift from a physician-centric approach to a consumer-centric perspective. He previously co-edited the Handbook of Marketing Strategy (Edward Elgar, 2012), and Readings on Market-Driving Strategies: Toward a New Concept of Competitive Advantage (Addison Wesley, 1997). 

Appearing in leading academic journals, such as Journal of Marketing, Journal of Marketing Research, Journal of Consumer Research, Management Science, Marketing Science, and Psychometrika, his research has been recognized by the The American Marketing Association with the William F. O’Dell Award, the Paul E. Green Award, the Donald R. Lehmann Award, and the Sheth Foundation/Journal of Marketing Award. 

Harvard Business Review, Financial Times, Forbes, BusinessWeek, and National Public Radio have featured his research, and it has been cited in arguments before the United States Supreme Court. Recognized by BusinessWeek as one of a small group of outstanding faculty in its Guide to the Best Business School, he was voted Outstanding Professor of the Year Award by the Kellogg Managers’ Program, and he received the Sidney J. Levy Teaching Award.

He teaches an elective in the MBA program, Marketing Luxury, and he is the academic director of two Kellogg executive program: Kellogg’s Chief Marketing Officer Program, which helps prepare executives for the challenging role of CMO, and The Customer-Focused Organization. He co-chairs the Marketing Leadership Summit, bringing thought leaders together each fall to explore the future of marketing.

He often speaks and advises firms. Past and current clients include Bacardi, Carnival Corporation, Coca-Cola, Cunard Lines, Diageo, Dow Chemical, Federal Reserve Bank, Government of Mexico, General Electric, Harley-Davidson, Health Management Academy, Novartis, PepsiCo, Pfizer, SC Johnson, Target, Unilever, and Visa.

Access to information when [patients] want it and how they can access is important. It doesn't address the fundamental issue, the balance of expertise between consumers and physicians.

Transcript

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Gary Bisbee  0:06  

Healthcare leadership is hard work, but what if you could learn from the most brilliant and influential minds in healthcare and beyond? What would you ask them? Would you ask about politics, policy, or maybe leadership? On The Gary Bisbee Show, I’ll do just that. You’ll hear from healthcare’s most successful leaders and those experts who they listen to, as together we’ll explore how the healthcare economy is transforming.

 

Greg Carpenter is the distinguished Harold T. Martin Professor of Marketing at the Kellogg School of Northwestern University. Aside from his hobby of politics and running political campaigns, Greg has been a professor his whole career. He’s widely recognized as an exceptional marketing strategist and he’s been an advisor to names as diverse as Coca-Cola, Target, the Federal Reserve Board, the government of Mexico, and Harley Davidson. Greg discusses how marketing strategy has evolved over the years, from total reliance on building what the consumer wants to consumers needing to reflect the culture of the organization. This frequently involves innovation and leaders doing what has never been done before. Greg reflects on why healthcare fits this model. We asked Greg about personalization in healthcare. Greg is currently conducting research with five large health systems where he and his team are interviewing the leaders, frontline caregivers, and patients. Early findings show that each of these three groups defines success much differently. Greg reviews how to work through this fragmented organizational culture. Our conversation wraps up with a fascinating discussion of the differences between healthcare providers and Starbucks in terms of personalization.

 

Greg, we’re pleased to have you at this microphone. Thanks for being here.

 

Greg Carpenter  2:02

Thanks, Gary. It’s nice to have a chance to chat with you.

 

Gary Bisbee  2:05

Let’s dig into your background a bit. What came first? Your interest in marketing or a faculty position?

 

Greg Carpenter  2:10

Actually, I was more interested as an undergrad. I thought about getting a Ph.D. in something else. I was an economics and math undergrad, so I thought about getting a Ph.D. in economics. It was a particularly terrible time for academic jobs, so I went off and got an MBA thinking that would be an interesting career. When I got to business school, I had not had any exposure to marketing. I took a marketing class and I thought it was much more interesting than the finance I had planned to study, so I stuck with it and ended up with a Ph.D. in marketing.

 

Gary Bisbee  2:38

If you weren’t a professor, what would you be?

 

Greg Carpenter  2:41

The only other job I’ve actually had other than being a professor—I’ve been a professor all my adult life—is in politics. I helped people run political campaigns. Politics is my favorite hobby. I love reading about it. I worked on Capitol Hill for two summers when I was in college, so I’d do something in politics. It’s a fascinating game.

 

Gary Bisbee  3:00

How have you seen the evolution of the MBA student over the time that you’ve been a faculty member?

 

Greg Carpenter  3:08

Let me start off by saying how they’re similar first, and then the biggest change. The biggest similarity is the profile looks very similar today to what it did 30 years ago. Their average age is around 28. They’ve all gone to wonderful undergraduate colleges. We tend to have a few more engineers than things in the liberal arts and art historians, so that’s pretty much the same. What’s different is both their expectations and the kinds of jobs they think about having. When I started, there was a very traditional career path. I taught at Columbia, you left Columbia and you went to Wall Street or you went to GE or you went to IBM and you started on a pretty traditional career. Now the career path they expect to pursue is very different, much more entrepreneurial, much more varied, much less straight and narrow. They’re preparing themselves with a much more versatile set of skills than they were 30 years ago.

 

Gary Bisbee  4:03

Is there as much appetite now for a two-year in-person program as there used to be?

 

Greg Carpenter  4:09

I think the answer is yes and no. Among people who are interested in going to McKinsey and Wall Street, the answer is absolutely yes. If you’re interested in going to technology, the answer is much more mixed. Technology is one of our biggest hires, people who recruit students at Kellogg. Apple and Amazon are huge recruiters, but at the same time, people in Silicon Valley and elsewhere can succeed without an MBA. It used to be, if you wanted to be at McKinsey or Goldman Sachs, you needed the MBA to achieve a certain level. You don’t need that in Silicon Valley. Some people still find it a useful path, but other people are finding other paths: computer science, a master’s degree in engineering, or no master’s degree at all.

 

Gary Bisbee  4:51

Some of them don’t even seem to get through undergraduate courses.

 

Greg Carpenter  4:54

They don’t, and it doesn’t seem to encumber their success.

 

Gary Bisbee  4:58

At least the ones we know about.

 

Greg Carpenter  5:00

As one Ph.D. speaking to another.

 

Gary Bisbee  5:00

You teach an MBA course provocatively called “consumers, culture, and leadership.” Can you share with us, for those of us that won’t have the opportunity to take that course, what the main thesis is there?

 

Greg Carpenter  5:15

I’ve been teaching marketing strategy for decades now. The approach in marketing strategy has historically begun with a consumer. You go out and ask the consumer what they want, you build it, and deliver it to them. What’s different with government organizations is that organizations don’t do it that way, and the ones that are successful or not successful often with that approach. That reflects the culture of the organization. In fact,—this became extremely clear to me in working in healthcare but also in technology companies, in people who make wine—to be successful, you have to understand that what you offer the customer has to reflect the culture of the organization. Oftentimes that involves innovation, which involves leaders doing things that have never been done before that take advantage of the unique culture of the organization to create value for the customers, so being successful as a customer is really a combination of those three factors.

 

Gary Bisbee  6:04

Sounds fascinating. I’m sure it’s oversubscribed every year. Let’s turn to your advisory engagement, some of which I’m familiar with and they’re all fascinating. It’s a diverse group of clients, as we mentioned before. Does it suggest that all companies to some degree have a challenge trying to understand consumers?

 

Greg Carpenter  6:25

I think that’s true. We as humans are not always as empathetic as we could be. We understand ourselves well. We tend to be self-centered beings and understanding the perspective of other people is difficult. It was Thoreau who said that it’s a miracle to look through the eyes of someone else. I think all organizations, even the ones we think of as the most successful, consumer packaged goods companies sometimes struggle with understanding the way consumers look at the world. I think everyone has a challenge with that. We all get into a routine, we all accept conventional wisdom about the way the world is because it’s deficient and sometimes it’s not right.

 

Gary Bisbee  7:04

Have you noticed similarities or differences among industries in how they try to assess the consumer and incorporate it into their marketing strategy?

 

Greg Carpenter  7:13

Absolutely. The biggest distinction is what we’ll call financially and technology-oriented companies and ones that are less so. If you think about a high-tech company or a bank, they tend to think very rationally. Their culture is a very rational one so they tend to think about the consumer in that way. Other organizations tend to be a little bit more flexible in their thinking, so they tend to look at the world in a more holistic way. It depends upon the culture of the organization and what they see in the world. There’s a saying in psychology I’m very fond of it. We’re found in English of saying “seeing is believing.” There’s a psychologist who argues “believing is seeing.” What you believe the world is is what you see. Your perspective that you embrace influences how you view the world. One other factor is how successful you’ve been. The more successful you’ve been, the more difficult it is to get people to see the world in a different way.

 

Gary Bisbee  8:08

I could definitely see that. I don’t know if it’s possible to answer the question, but I’m going to ask it anyway: Is it possible to think about what was your most challenging engagement in an advisory capacity?

 

Greg Carpenter  8:20

Healthcare has been the most difficult problem. Other than healthcare, the two most difficult assignments I’ve had include some work for a microprocessor company once. Very smart people, very committed to what they do, very devoted to the belief that consumers don’t know anything and are irrelevant to their decision-making. A room full of Ph.D. electrical engineers is tough, so that was a very difficult engagement. I think we were ultimately successful. The other is a very odd one by comparison. I got a phone call once from the people who own the Queen Mary 2, who asked me to help them grow their business. Apparently, the Queen Mary 2 travels back and forth between London and Southampton, New York about six months of the year. Their challenge was they could grow the business of transporting people back and forth across the Atlantic by ocean line, so that was a tough assignment, too. Very interesting. The toughest ones have been the most interesting.

 

Gary Bisbee  9:16

Sticking to the travel motif here, I read an article just a couple of weeks ago in the Wall Street Journal about Delta and how they’re holding the middle seat in coach open whereas all the other airlines have apparently now begun to sell the middle seat. They were saying Delta wasn’t sure if they were going to continue to hold that middle seat open. If they called you, Greg, what advice would you give them about that middle seat?

 

Greg Carpenter  9:45

I, of course, would want to talk to a few consumers, but I think the motivation for it is correct in the sense that one of the things that happens with COVID—and I’ve actually published the research in this recently—is that fear overtakes people’s decision-making. A demonstration of a tangible commitment to reducing that fear is would be valued. How that’s going to change as the fear level changes is hard to know, but I think it’s a devotion of resources on the part of the organization to demonstrate that they’re devoted to reducing the fear of passengers who travel. From that sense, it makes a lot of sense from a consumer perspective.

 

Gary Bisbee  10:23

Let’s turn to health care. You mentioned health care, and of course, we were joking a bit before that, if it was 20 or 25 years ago, health care probably wouldn’t have been all that interested in anything about the consumer, but they’re coming around. Where did your interest in health care come from, Greg?

 

Greg Carpenter  10:41

Again, let me answer the question two ways here. My exposure to health care began at an early age. I come from a family of physicians. My grandfather was a surgeon, my father was a neuroanatomist, my brother’s a surgeon. I grew up around the table listening to all kinds of things about healthcare but decided to do business instead. I worked on this problem about how organizations can become more successful with consumers and that lead to engagement with the HMA. I met you, in fact, at a GE event. We were talking to GE people from GE Healthcare, which led to this reintroduction in some sense from you on how some of those same issues were operating healthcare, so I went from looking at how corporations transformed themselves to be more effective with consumers to beginning to think about health care. It’s been about 10 years now.

 

Gary Bisbee  11:33

You very successfully led a consumer collaborative for the Academy that was very well received. I know you’ve conducted a study, what are your early findings from that study?

 

Greg Carpenter  11:47

To put it in some context, the study was to look at the state of customer orientation, or this idea of being customer-focused in the context of health care. We had five health care systems that allowed us to interview the leadership in the organization, the people who deliver the care (the physicians, nurses, and staff), as well as patients. I’ll start simply. The first conclusion is that those three groups see the world in very different ways, they see success in very different ways. Part of the challenge in aligning healthcare and being consumer-focussed is that there are even different definitions of what success is from the leadership perspective, from the physician perspective, and from the patient perspective. The challenge in this is that, like organizations that have fragmented cultures— an university is a great example. We have faculty, alumni, benefactors, all kinds of students, all of whom have different interests. How do you align those in a common focus to achieve an outcome that’s successful for everyone? I think the healthcare issue is that there are different agendas, different definitions of success, and aligning those is the challenge. We were able to identify a few ways in which people overcome those differences and align them to be more successful.

 

Gary Bisbee  13:05

We’ve used the term personalization to describe how a health company can direct it services to individuals or consumers. Can you define a difference in how businesses generally would look at personalization and how healthcare companies look at personalization?

 

Greg Carpenter  13:23

I think Starbucks is the prototypical example of a corporation that thinks about personalization well. If you walk into a Starbucks in a country where you don’t speak the local language, I guarantee you can get your coffee exactly the way you like it. Temperature, the amount of milk, the amount of foam, everything. They’ve understood personalization and this empowerment of the consumer very well. Healthcare is very different. We as a consumer expect that level of personalization in healthcare, but the difference in healthcare is that we lack the expertise and the experience. The systems, in fact, value consistency. The systems look for consistently good outcomes whereas you and I as consumers look for personalized outcomes. There’s a fundamental inconsistency between what the system is trying to create and what we’re trying to create. At a place like Starbucks, the virtue is that the personalization that we create is also what the organization is trying to achieve. Our success as a consumer makes the company successful. Whereas personalization in healthcare creates inconsistency in the delivery of healthcare, which creates all sorts of issues.

 

Gary Bisbee  14:30

Over the last 10 years, the consumer has increasingly available data about health care, clinical care, and so on—whether it’s on your iPhone, your computer—and that’s just accelerating almost exponentially. What do you think that’s going to mean? A more educated consumer with more personal data? Maybe that alignment or lack of alignment you’re talking about might begin to realign itself? What is your thought about that?

 

Greg Carpenter  15:02

The first thing you’ll do is empower the consumer a little bit more, but not in the ways we think about because the data is always not very meaningful. I have a Ph.D. but I don’t understand my blood work when my physician sends it to me. What it does empower me to do is have access when I want and how I want. Part of the challenge in healthcare is consumers try to get some sort of influence in any way they can, so gaining access to the information when they want it and how they can access it is very important, but it doesn’t change the balance of expertise between consumers and physicians. It gives us more leverage and more satisfaction in some sense, but it doesn’t address the fundamental issue.

 

Gary Bisbee  15:46

Let’s stay on healthcare but move to the pandemic. You made a reference before that you’re a co-author of a paper, In a Pandemic, We Buy What We Know. Can you just share the thesis of that article with us, Greg?

 

Greg Carpenter  16:01

About four years ago, I started this paper well before COVID and we looked at the impact of consumers of contagious disease. Believe it or not, there was not a lot of research done on how contagious disease affects consumer behavior. The only evidence seemed to be that people bought less. If you observe the pandemic, what you discovered is that store shelves were empty. People were buying more. What we looked at was really how fear impacted people’s decisions. What we found was that “fear and disgust”—the other way psychologists describe it—together make us especially averse to anything that’s unfamiliar. Normally, humans are programmed to avoid things that are unfamiliar, but when the pandemic comes along, when we’re fearful, this gets turned into overdrive. We, for example, studied people’s purchases of all these crazy things, like Oreo cookies. We looked at the presence of the flu in peoples’ community, the amount they searched for it, and the sale of traditional Oreo cookies versus Oreo cookies with different fillings (like green tea fillings). The more there is of the flue in your neighborhood, the less you buy of the novel Oreo cookies. The point is that anything foreign is seen as unfamiliar and is seen as a threat. Even in these areas where there should be no consequence on our behavior—no one thinks they’re going to get the flu from an Oreo cookie—but nevertheless, we take every conceivable action to try to reduce the threat.

 

Gary Bisbee  17:34

Will we see any long-standing change in marketing strategies across the board, not just in healthcare, due to the pandemic? Or will it go away and we’ll forget it and move on?

 

Greg Carpenter  17:47

I think the two biggest changes are going to be (1) that some organizations have thrived in the pandemic. They’ve discovered that they thrive by focusing on what they do best. McDonald’s stock zoomed up through the pandemic. What did they do? They looted at their menu, they limited their menu because they had to restrict the amount of people who work in the kitchen, and they discovered that—by focusing on their best sellers—they’ve done incredibly well, so focus will stay with us afterward. The second thing is this idea that we can be innovative. We can meet over Zoom, we can have a meeting. By the way, in Zoom, there’s no hierarchy. Everyone’s in a box, so suddenly an organizational hierarchy becomes less important and we can do things much more quickly. Then from the consumer perspective, we expect things to be done quickly and efficiently, and that’s going to remain. Telemedicine, why do I have to go to see my doctor? Why can’t I just Zoom in and send a photograph of this thing on my arm that I’m uncomfortable about? There will be a lasting change in terms of focus, in terms of innovation, and also in terms of what the consumer will expect.

 

Gary Bisbee  18:57

This has been a terrific interview. Let me ask another question if I could about leadership. Do you think the pandemic is going to cause boards of directors to re-evaluate the characteristics of a top CEO in terms of the next generation CEOs? Will the pandemic have an effect on the skill level of CEOs, healthcare and non-healthcare alike?

 

Greg Carpenter  19:26

It goes back to almost the first question you asked about the MBA students: we were training them for predictable careers. The CEOs who are going to be successful in the future are not only the CEOs who are good at the highly structured, complicated problems like you see if your CFO, but they’re also going to have to be good at the highly unstructured, complex, and unfamiliar problems. That’s the big difference. 30 years ago, the CEOs were the CEO of General Motors. You were most likely a finance person and that was a very, very familiar problem, just very difficult. Today, the problems are not just difficult, they are novel and they are much more complex than the other ones. People who are better with these unstructured, complicated problems are the ones who are going to be more successful.

 

Gary Bisbee  20:17

Maybe even more demand for the MBA degree, Greg.

 

Greg Carpenter  20:22

I hope so, Gary. I hope so. We’re working on it.

 

Gary Bisbee  20:24

Greg, thank you very much. This has been, as expected, an absolutely terrific interview. Much appreciated.

 

Greg Carpenter  20:30

Thank you very much, Gary. A pleasure to talk to you.

 

Gary Bisbee  20:33

New episodes will debut every Thursday. Join me in conversations to gain advice and wisdom from CEOs, presidents, and healthcare experts. Health care leadership is hard work, but it becomes more manageable as we learn from the remarkable lives and careers of our guests. I’ll see you there.

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