CVS - It's About Time.

Yesterday I wrote an article on Inside CVS's Strategy to Improve the Pharmacy Experience - today I was thinking about how I could show this in a little more detail.

Before we dig in, I would urge my 'Dearest Reader' (channeling Bridgeton) to read this article from McKinsey - Ecosystem 2.0: Climbing to the next level. My favorite part of the article is at the end...

Just a few years ago, incumbent companies were only awakening to the shifts in competition and organization that ecosystems might bring. Since then, players have accumulated lessons and notched successes. The focus now is on proven practices that lead to scale and improved returns. In the emerging world of Ecosystem 2.0, data are the holy grail, the breakdown of sector borders is a given, and successful players try to lock in control points to expand horizontally and vertically across the grid. Every company needs to be watching this trend closely, since the players that first master the new architecture are likely to capture sizable benefits.

Let's pause to consider those three words - capture sizable benefits. But how?

In this image I simplify CVS's current market position.

Tilak Mandadi is building a new customer experience inside the CVS app. In the image above I proposed a simple user interface. If a box is good enough for Google, then a box, a question and a picture of me is good enough for the rest of the world. After all we want to personalize things here.

The app connects to the CVS infrastructure via the web - all the backend end 'stuff' (insane complexity) is hidden and 'bingo, bango, bongo' the app refreshes with the correct answer to Lulu's question. Rinse and repeat times 100 million users.

But... let's not be to hasty says the Bard.

What if Tilak actually achieves that status? The bigger question is this - how long did their customer spend INSIDE the CVS ecosystem?

Google sees about 8.5 billion searches a day. let's say there are 5 billion people connected to the web. That's almost (but not quite) 2 search requests per person per day. Those searches take on average about a minute per person.

Ok, now if one person spends 2 minutes a day on search what do they do with all of their other time?

And now dearest reader you can see where I'm heading. CVS needs to think about how they can capture MORE of my TIME inside their ecosystem. The more time in their world the bigger the opportunity to sell me additional products, content, and services.

Now the question becomes - how do I capture more of my customers attention? Welcome to Ecosystem 2.0 and horizontal value creation. Here's what it looks like. No changes at all to existing infrastructure or knowledge bases. All we've done is to rethink the user interface that engages the customer.

There's this great story out there if you have a minute... The Flatland Trap: Two-Dimensional Thinking in a Three-Dimensional World.

In the book, Abbott created a two-dimensional world populated by various polygons as a satire of the social hierarchies of Victorian culture. In the world of Flatland, the more sides you have the higher your social status. In addition to a satirical commentary on nineteenth century social norms in England, Abbott provided an elegant analogy to explain how our frames of reference influence what we claim to know. The narrator of Flatland is a square, literally. In the first part of the book, the square describes for us life on a two-dimensional plane. One day the square is visited by a sphere, a three-dimensional occupant of Spaceland, and his life is turned inside out.

It's a wonderful metaphor to describe the user interface of an app. It's currently so two-dimensional when there's nothing stopping it from becoming three-dimensional. (Well just more than a few years of thinking about how to do it.)

It looks the same, it feels the same, but it's not the same. It can adapt to seamlessly, (and here's the magic word in healthcare), navigate the customer/individual/patient to the next best action to take on their daily journey.

As Graham Hill (Dr G) so eloquently points out in his many articles on the subject of personalization - the goal of the design is to turn the app into the Goldilocks app for each person in real-time. Everything is perfectly relevant for a market segment of 1 - Me. It always gets me to what I need. Ergo - it is incredibly operationally efficient! Growth and relevance for the win.

Imagine that - I never leave the CVS app - it has everything I need inside it. It knows who I am, it respects my data choices, it shares that data with my consent, and I get rewarded for that exchange.

There's no reason why Google search and Amazon marketplace cannot exist inside the CVS ecosystem - it all boils down to the value of the data exchange - there's a reason that Google pays Apple $20 billion dollars per annum to be the default search provider inside Safari.

Well CVS has a 100M customers - that's not chump change, especially if Google could increase the value of the ad they serve with access to some zero-party data.

In closing - CVS gains time - time on site, time in their ecosystem and that dearest reader is valuable - just ask McKinsey.

Gary A. Stewart Eva Minkoff Glenna Crooks, Ph.D. Robert Sundelius, FACHE Gary W. Druckenmiller, Jr. Prasanga Lokuge Carter Williams Chris Geisler