Succession Planning and Career Development are two key pieces of the Talent Management puzzle. In a nutshell, Succession Planning looks at the organization and its talent depth from the top down. Career Development looks at employees and their potential career paths from the bottom up.

Imagine that within a 3,000 person organization we have a very high performing sales manager, Lisa. The impact of losing Lisa, and others like her, to our competition would be substantial. To actively manage Lisa’s career, we seek to provide a healthy career path for her. So, we engage in Career Development activities to find new and exciting roles for Lisa.

But this creates a bit of a problem: we can’t afford to promote Lisa without replacing her with someone who is capable of filling her position. Since we’re serious about growing our own talent, we prefer to promote from within, where possible, and that brings us to Succession Planning.

Using Succession Planning, we learn who in the organization is the most qualified for Lisa’s sales manager role. This search leads us to Mark, a rising star sales rep. With Lisa’s successor clearly in mind, we can now promote Lisa to the next step in her career.

In most organizations, it’s impossible to know everyone. So to effectively carry out succession planning and ultimately career development, organizations must have the system capabilities to search across all areas of the company to find the person that best fits a given role. The analysis should not be subjective in nature, but instead based on quantitative measurements of the employee’s abilities.

The only way to make all of this possible is to effectively define and employ the old-fashioned notion of skills. What skills do we need and/or desire? What skills are required for us to compete in the market? At a lower level, what skills are needed to successfully perform each job? And, of great importance, what skills do our employees have?

Going back to our example, if we know the skills required by Lisa’s current position, and we’ve been diligent about assessing the skills of our employees, we can now make intelligent decisions about who is ready for the next challenge. Not only can we compare their current skills to the skills required at the next level, but we can take into account many other talent-related factors. We can evaluate their readiness for promotion. We can evaluate past performance appraisals. We can consider their personal goals and priorities. As we consider all of these factors, we are identifying career paths within the organization that are uniquely tailored to the individual.

If we find that Mark lacks a few key skills to be fully equipped for Lisa’s role, we can leverage our learning management system (LMS) to help supplement his skills. After these courses are completed, Mark’s skills profile will update, and he will be more aligned to the requirements of his new role.

While Talent Management has the potential to be vague and poorly defined, we have the ability to keep it objective and action oriented. A sharp focus on skills helps to effectively steer career development and succession planning decisions.

The two questions that ultimately need to be continuously asked and answered are: What skills do we need and what skills do we have?  The delta will set the path.

For this particular dinner, we introduced a theme from our 2013 CP Trends Report and asked participants to talk about how they are effectively working with the 3 key constituents to their business; their Suppliers, their Retailer customers and their Consumers.  Here were some quick takeaways.

Suppliers:  Treat your suppliers fairly. If you squeeze them too much, then service and quality dips. The closer and more aligned you are with your suppliers, the better.  Increased visibility and exchange of 2-way information benefits both parties.  Establish fewer relationships with key partners globally – it is better for both you and your suppliers, allowing for more predictability, better service, leveraged pricing, etc.

Retailer Customers:  Establish closer, more collaborative retail relationships, understanding that retailer issues can quickly become your issues.  Be nimble to quickly respond to uncertainty and changing demand.

Consumers:  Get closer to the consumer, embracing new technologies to better understand changing consumer behavior.  Work with your retail partners to leverage loyalty data and in-store technologies to engage your consumers by reinventing the shopping experience.

I am continually surprised by people (who, frankly, should know better by now) asking me if the date will be pushed out. It’s coming, like it or not. At the meeting, there was no hint in any sense of a possible shift in dates. The discussion focused on the practicalities of the implementation changes required to meet the requirements. The Board was legitimately trying to understand what challenges manufacturers and distributors are facing as they work out the details. The 80/20 rule probably best captures the status of things where the “80%” of normal business scenarios have been worked out fairly well. Now, the industry is wrestling with the “20%”of corner cases and exceptions such as reverse logistics, short shipments, drop-shipments (manufacturer direct to a pharmacy), repackaging, kitting, and serial number (SN) discrepancies. GS1 is working to drive collaborative thinking on these cases.

The Healthcare Distribution Management Association (HDMA) presented on drop-shipments where the distributor never touches the product. They stopped short of making any recommendations and just outlined the problem.  They advocated that they should not be responsible for the pedigree in these instances since they do not take title of these products. As one of the several exception cases needing further consideration, drop-shipments highlight the complexities of the implementation.

Inference, the catchy name for the practice of associating the SNs on items inside a container with the SN on the outside of the container, was also discussed at length. The Board drafted language that they only released the day prior to the meeting so no one had any legitimate chance of reviewing it in detail, if at all. People wanted a chance to digest before responding. There was some general discussion about the fact that the proposed language attempts to define what a “case” is, but the discussion was left for another day after everyone had a chance to review and comment.

Since e-Pedigree consumed so much of the meeting and there still wasn’t enough time spent on it, there was discussion of having a separate meeting focused on e-Pedigree, which should happen soon. I’ll keep this blog updated on new developments as the law is further flushed out and the dates approach. I welcome your comments and questions on this topic.

What’s been most noticeable to me has been the accelerated emergence of the Asian consumer. Even 3 or 4 years ago, the consumer mentality was very cost-conscious with a focus on saving. The wealth accumulation has been immense, as is the amount of discretionary spending now in the hands of Asian consumers.

To describe this emergence, I’ll compare my experiences of walking into a luxury goods store in a major Asian city over the years. Ten or fifteen years ago, luxury goods stores simply weren’t there. After they popped up, the shopper profile was predominantly westerners or Middle Easterners on vacation or business. The few Asians in the store typically did not get much attention from the sales personnel.

Now, as confirmed on my most recent trip last week, the majority of shoppers in the Hong Kong Prada store were Asian, and I struggled to get the attention of the sales personnel. When I finally got a salesperson’s attention, I asked him his opinion of the shift I was observing. He confirmed my suspicions that Asians, specifically Chinese, are now the shoppers more likely to spend on their items. He furthered explained that typically westerners prefer to go after the knock-offs, while Asians typically want the real thing and will pay for it. In most Asian cultures, specifically Chinese and Indian, individual expression is discouraged so the display of an expensive handbag is more of a sign of social stability.

In this Prada store and in general, there is a greater willingness to spend. Asian consumers now feel good about the future.  It was only a short time ago, their memory  of poverty drove a culture of frugality and people saved as much as possible for fear that good times may not last. Today, there are as many Prada stores in mainland China as there are in the United States.

How do Western companies adapt and cater to this consumer demand? Indeed, some brands have struggled in Asia while others have flourished.

It is important for companies and marketers to recognize that these emerging consumers are still ill-informed about brand attributes. No one can become a wine aficionado overnight. Likewise, Asians are still learning the differences between major brands, and, in absence of education, they are relying on their networks. The brand-conscious consumers want the greatest impact of the item amongst their network so they are eager to understand why the brand is important. Successful brands have education programs to teach the consumers the qualities of the brand so they can best portray and describe the qualities to those around them. The best companies are helping consumers know how to talk about their brands.

Additionally, given that tariffs drive prices of many Western goods much higher in China than abroad, many Chinese do their shopping while traveling. Successful brands recognize this and strategically place Mandarin-speaking sales staff in key stores where they expect Chinese tourists. Consequently, these brands recognize that much of the retail investment in China is for marketing purposes to get people to buy their products while traveling. As such, these companies measure their success more holistically. It’s no surprise that Prada chose to go public on the Hong Kong Stock Exchange instead of in Italy, the location of its headquarters.

From a Western perspective, it is easy to reason how one might be intimidated by the tremendous growth and wealth accumulation in Asia while the West struggles with debt and unstable employment. One might say that Asians have done their homework and are now beating the West at their own game. However, be assured that Asians know that they need the Western world in order to be successful. They would be very happy to be more successful than the West, but ultimately see symbiosis as critical.

We will continue the discussion on approaches to the Asian consumer in a more in-depth publication coming soon.

But not all is rosy in the land of cloud. A recent blog post highlighted a survey where one third of responding companies observed that cloud-based solutions were harder and more expensive to implement than expected. I don’t suppose these findings should be terribly surprising to us. All new things come with a disproportionate amount of hype and over-sell.

But apart from the unavoidable hype, these findings remind me that cloud, or no cloud, there are three key factors for success in any project of this sort.

Process Integration

Businesses follow processes. Those processes may be poorly defined and vary from department to department, but processes are always involved. The key to success of any implementation, cloud or no cloud: the organization’s processes must be integrated into the new system.

This not only requires the system to be flexible enough to accommodate the process, but it should also enable new efficiencies. But it is not enough that we think about the system and its ability to incorporate or even improve the business process. In a way, that’s the easy way out. What’s tougher, but very essential, is that the business must ensure that the business processes are defined, reliable, and consistent.

In some cases, the business does not truly understand its own processes, whether it is recruiting a new employee, processing a leave of absence request, or changing a personnel status for benefits purposes. Processes must be defined and repeatable.

Those processes must also be reliable. Apart from any system consideration, the processes of the organization must be reliable enough to accomplish the required work. It makes no sense to incorporate insufficient or broken processes into a new system.

These processes must be consistent. Suppose an organization is composed of six different operating units, and each unit has a different process for hiring, terminating, or transferring employees. On occasions, such variations are required. But too often, these inconsistent processes develop unnecessarily over time and should be consolidated to realize benefit.

Cloud or no cloud, process integration is key.

Project Management

Effective project management has always been a key factor in project success, whether on-premise or cloud-based. I stress the word effective because the degree and style of project management required to achieve success is surely different with different projects. The style and type of project management to send a rover to Mars or bring a new pharmaceutical to market or implement a new HCM solution varies.

But generally speaking, effective project management should not be thought of as some sort of desk-bound obsession with numbers and spreadsheets. Projects are composed of real people completing relevant tasks.  People and their activities cannot be merely reduced to status reports, spreadsheets and Gantt charts. Effective project management means talking to people, coordinating with people, encouraging people and helping people achieve the results required for success.

Effective project management means walking around, asking questions, listening, negotiating, convincing, and yes, sometimes, arm-twisting. I don’t deny the value of spreadsheets, status reports, and Gantt charts – but they’re a poor substitute for the human-to-human contact required to get the job done.

Cloud or no cloud, effective project management is essential.

Change Management

Change is hard. Change can be a real pain. But change is also a constant in modern business life. Sadly, it is all too possible to integrate reliable and consistent processes into a new system, manage the project to a “successful” completion and pat ourselves on the back for a well-managed project, only to have the system rejected by those that use it. Clearly, these kinds of projects have failed.

Every project needs to catalog the change its users will face. A change inventory is a smart tool to incorporate on every project. Simply document each point of change the new system will bring. If the system is implemented in phases, document the change by phase. For example, today this is how we generate a job requisition, this is how we’ll do it at the end of Phase 1, and this is how we’ll do it when the project is complete.

By identifying these change points, we can make an effort to manage the change. What training will be helpful? What job aids will make a difference? What processes need to be further refined? What communication is needed? What support tools can we put in place to make the change easier? Where do we expect organizational resistance? Who can do the hand-holding or arm-twisting required to break through the organizational resistance?

Change is a pain, but cloud or no cloud, change management is key to a successful implementation.

In our well-intentioned and probably well-deserved rush to embrace cloud-solutions, let’s remember the fundamentals. Whether the solution is on-premise or cloud-based, process integration, effective project management and change management are key to success.

Cloud or no cloud, these are still the keys to success.

Overall, 2012 ended up pretty much flat from the prior year in total deal size, but activity really jumped in the fourth quarter with total deal size the largest of any quarter since before the financial crisis. Balance sheets are strong with piles of cash in-hand. Credit is very cheap. This makes it an attractive environment.There’s also pressure from investors to use the cash or return it to shareholders (case-in-point Apple and Greenlight). However, the future is still uncertain, and executives are tentative to go after risk-prone integration exercises.

Regulators are also looming, as most recently demonstrated by the Department of Justice (DOJ) flexing its muscles by attempting to block Anheuser-Busch InBev’s planned acquisition of Grupo Modelo. At the same time, the DOJ has shown no indication of trying to block the AA-USAir deal. Hence, the regulatory environment is hard to predict.

Generally, good times produce deal activity. With strong balance sheets and the recent stock run-up, the climate is ripe, so we should see executives opening up their coffers for the right opportunities. Recognizing this likelihood, companies need to focus on preparing themselves for an upcoming acquisition or divestiture to mitigate the integration risk. It’s easy to make the financial decision to do the deal. It’s much harder to make the deal work and return the value expected. The recent paper, Build Effective Merger, Acquisition and Divestiture Execution Capability, shares some additional insights on making these deals work.

I spent most of the time in the regulatory track. There was good dialogue on implementation approaches for Unique Device Identifier (UDI) with a panel of folks from FDA, Medtronic, GS1, GHX, and Premier. The message is clear in that UDI is coming so get it done (For more information on UDI, download the What’s Next for UDI webinar with guest speaker Jay Crowley, Senior Advisor, FDA).

Perhaps more intriguing to me than the conference itself was the sheer magnitude of the exhibit floor. It was massive, with over 2,000 exhibitors packed like lemmings in rows upon rows of booths where sales reps were pitching their solutions. It was quite remarkable. This was a visual reminder of the fragmentation of the medical device industry with over 6,000 medical device companies in the US alone, 70% of which have fewer than 20 employees.

This massive floor is a clear sign that innovation is happening, and even the smallest firms are getting funding. It also tells me that consolidation is likely to continue. The increased regulatory requirements noted above will make it more and more difficult for small companies to sustain and scale, and they may prefer to simply generate the concept and sell to a larger firm. US companies are especially targeting emerging market acquisitions to get more of a foothold and knowledge in the local market. We should be on the lookout for more of this in the future.

Recently, the Centers for Medicare and Medicaid Service (CMS) released its final rule on the Physician Payment Sunshine Act (PPSA) that was approved as a part of the Patient Affordable Care Act passed in 2010. The PPSA is an effort to create more transparency in the relationship between pharmaceutical manufacturers and Group Purchasing Organizations (GPO’s) with physicians and teaching hospitals.

The Act set forth rules detailing that drug companies and GPO’s would be required to collect data and document instances of payments or transfer of items of value (i.e. meals) to physicians and teaching hospitals. These reports will be filed with CMS with the intent to allow public scrutiny to discourage improper relationships between the entities. At its very heart, the PPSA states that any single instance of cash payment or transfer of value (TOV) greater than $10 or a combined annual amount of $100 would be required to be documented. This data would be collected and reported to CMS for public inspection on an annual basis.

The Act was delayed for more than a year while CMS reviewed concerns from both sides during the open review of the Proposed Rule. Some of the modifications as a result of the review include:

- Non-teaching hospitals, pharmacies (retail and hospital) and laboratories were exempted
- Manufacturers with a diversified product line that generate less than 10% of gross revenues from a covered product were exempted
- CMS will allow more contextual information with regard to payments in an attempt to assuage fears that the original basic description of ‘payment’ would encourage negative speculation
- Originally a 45 day window existed to allow physicians to review and dispute payments info. An additional 15 day window was added to the end for dispute resolution only. No new disputes could be added during this time.

The American Medical Association (AMA) is concerned that these reports will turn into a medical version of ‘The Scarlet Letter’. The vast majority of payments and TOV’s made to physicians are legitimate. The concern is that merely appearing on the CMS website for receiving a payment will attach an undeserved stigma to the doctor despite the fact that the payment was completely ethical and legal. The fear is this stigma will discourage doctors from future collaborations with companies and CME’s, thereby hindering innovation and progress.

Pharmaceutical companies have fears that the details in the reports will reveal confidential information regarding products under development. Under the Rule, payments made to a physician in connection to a drug product under development will be delayed from publication until either the FDA approves the drug for market or four years from date of payment, whichever occurs first. The concern is that many drugs remain in development for longer than four years.

Above all of these concerns is the overall question of whether this law will actually affect the prescribing habits. A recent study by JAMA Internal Medicine shows that it may not be the case. Maine and West Virginia have already adopted similar Sunshine laws and have seen little effect in the prescribing habits of doctors.  Another study by the BMJ Group suggests that education, rather than law enforcement and public scrutiny, may influence prescribing habits to a greater extent. The study found that medical students and residents who attended schools with a gift and payment restriction policy were more likely to prescribe the generic version of a drug than those students who attended a school with no policy in place.

The law is a step toward driving more visibility in healthcare. It is not the end-all be-all, but a step in the process. The unfortunate reality is that the typical patient has virtually no opinion on this point because, in today’s healthcare world, they are either not directly impacted or are ignorant of the impacts. The patient simply accepts the provider’s recommendation. Still, we all know that healthcare costs are exorbitant. Attempting to drive visibility and increase the emphasis on ethical practices in our healthcare system should be applauded. We’ll learn from this ruling as it is implemented, modified and improved.

At its core, US corporate legal structure is simple: a business is either for-profit or not-for-profit. But even in this simple model, companies that strive to do good for the world around them can fall prey to shareholder pressure and Wall Street expectations. For-profits were victim to pressure to abandon social and environmental goals for the sake of maximizing ROI for shareholders.  Dodge v Ford, for example, challenged Henry Ford’s desire to “spread the benefits of the industrialized society with as many people as possible” when he was accused of spending shareholder dividends for community benefit. The ruling determined that “[it] is the obligation of directors to attempt, within the law, to maximize the long-run interests of the corporation’s stockholders.”  In a similar theme, renowned economist Milton Friedman famously purported that the only responsibility of business is to its shareholders. Non-profits, on the other hand, were often forced to take a singular focus on their mission, often at the expense of other community and societal stakeholders. They may be further limited in the impact they have due to their inability to raise capital and grow.

This system of “stockholder capitalism” did not allow those businesses with People-Planet-Profit-minded missions to carry them out. In response to these dilemmas faced by the for-profit and not-for-profit model and the inherent shortcomings of the corporate system in 20^th century America, the Benefit Corporation was born.

BLab Certification – the Birth of B Corp

Recognizing that the outdated corporate legal framework did not serve for-profit companies with triple bottom line missions, the non-profit organization B Lab sought to create a set of standards to help analyze sustainability-minded corporations, and in doing so, advocate for a new corporate structure that could prosper financially while putting purpose at   the center of their business.  B Lab continues to promote this mission with its B Corp certification (separate from the legal status of Benefit Corporation), granting the title to those purpose-driven corporations who meet rigorous performance and legal requirements, while also leading the initiative to legally recognize corporate entities that choose to practice in a socially responsible manner.

Alphabet Soup (B Corp v. S Corp v. C Corp)

Thanks to the efforts of B Lab, many states have adopted a corporate legal structure (a la S Corp and C Corp) called the Benefit Corporation, or B Corp.  A company that declares its structure as a  B Corp is legally required to focus on all stakeholders in its business and not just its shareholders, establishing an obligation to “create a material positive impact on society and the environment and to meet higher standards of accountability and transparency”.

The ideals, practices and values of the Benefit Corporation are not a fad, nor do they reflect the sentiment of a minority.  The Benefit Corporation White Paper expresses figures such as the following:

• 86% of consumers would switch from their current brand to a brand that is socially responsible when price and quality are equal
• 69% of employees consider the social and environmental track record of the company they decide to work for
• 88% of MBA grads are willing to take a pay cut to work at a company with ethical business practices over one that does not

Today this new corporate entity, the Benefit Corporation, is legally recognized in 12 states and 14 more have Benefit Corporation legislation in the works.

The true legacy of B Corps is not in the inherent good that they are doing for the environment, nor is it in the positive returns of social mindedness.  By setting the standards for accountability, transparency, and advocating for the legal recognition of a new corporate entity, B Corps are taking initiative as the pioneers of a new sector of the economy and the catalyst of change in American society from one of Shareholder Capitalism to Stakeholder Capitalism.  The true legacy of the B Corp is the path that it has set and a legal framework to follow so that the next generation of entrepreneurs and investors are spared the cost of trial and error and may continue to build businesses that seek to create value for all stakeholders – shareholders, customers, employees, suppliers, the community, and the environment.