The article documents the central role that his Mormon faith has played throughout Christensen’s life, but especially as he faced and overcame three of the deadliest diseases – heart attack, cancer and stroke – over the last three years.  In addition, it also provides a window into Christensen’s insights into the US healthcare industry, obtained as both a patient and as researcher/author of The Innovator’s Prescription: A Disruptive Solution for Health Care.  In “The Innovator’s Prescription, Christensen and his co-authors apply the principles of his well developed theory of disruptive innovation to the US healthcare delivery system.  Not surprisingly, he disagrees 100% with the Obamacare approach.  Instead, Christensen and his two colleagues (both doctors and Democrats, by the way), found (again, not surprisingly):

…that the fee-for-service reimbursement system, in which providers earn more by treating patients more aggressively, impedes the kind of disruptive innovation that would lead to better care at a lower cost. There are several systems we could adopt that would be better, but there isn’t a road map to get there. The business models of health are frozen in the hospital and the doctor’s office. The path to fixing the system is to disrupt those models. Here are some approaches:

Routinization. A hospital is really three business models under one roof, each of which manages a different type of medical practice. Intuitive medicine is the realm of highly trained specialists handling difficult diagnoses and treatment. Empirical medicine is the costly realm of chronic care and trial-and-error treatment. Precision medicine, the real goal for the system, is a case where diagnosis is known and so is the therapy. Then treatment can be routinized and moved off-site. Disruption will involve pushing more of medicine into the precision category, then automating that care to make it better and cheaper.

Consolidation. The best way to unleash disruption is if more health care providers combine, controlling hospitals, doctors and health insurance. Christensen makes an analogy to RCA in the 1950s. To get people to watch the first color programming on its NBC channel, RCA also had to manufacture color TV sets. A hospital loses money if it tells patients to go to an outside cheaper clinic. But if it owns the health plan and the clinic, disruptive ideas will flourish.

Precision. The kind of targeted therapies now used in cancer treatment, such as the drug Christensen received, will be applied more widely. Diseases will be subtyped more specifically and therapies tailored to work better. This will also save time and money as clinical drug trials become more focused. Specialty clinics will arise to implant devices more cheaply.

Do-it-yourself. Christensen predicts a rise in self-diagnosis and self-care, as tools that used to be stuck in the hospital reach patients and their families.

I had the good fortune of seeing Christensen speak in person twice at George Gilder’s Telecosm conferences and once at BellSouth, when he spoke at the annual executive management retreat. His presentations were compelling, yet entertaining. Interestingly, Christensen conducted the basic research that underlies all his books and thinking on innovation by studying an industry where failure was endemic – disk drive manufacturing. A friend had suggested it because it resembled the business equivalent of fruit flies, which were the most commonly studied species by geneticists because their life cycle is so short (one day) that cause and effect across generations can be readily observed. Through that study, Christensen developed his theory of disruptive innovation, whereby new market entrants initially introduce new a product or service in simple applications at the bottom of a market and then relentlessly move ‘up market’, eventually displacing established competitors. Bill Gates’ MS-DOS operating system, Job’s/Wozniak’s Apple computer, Jeff Bezos’ Amazon bookstore are a few of the many examples of disruptive innovation and market value creation that fit perfectly with Christensen’s theories of innovation.

First, we have the AJC reporting that Fulton County has inflated housing values for tax collection.

“Morris filed suit against the Fulton County Board of Tax Assessors, alleging the county inflated values in scores of neighborhoods by using foreclosures seizures as comparable sales. The seizures, termed credit-bid sales, represent not money changing hands, but unpaid mortgages when a bank takes over a house. He also says appraisers are disregarding valid sales and arbitrarily setting neighborhoods’ average prices.”

….

Emory University law professor Richard Freer, an expert in civil procedure, said the argument for class-action status seems reasonable in this case, so long as Morris’ circumstances are common to every other overtaxed homeowner. There’s likely to be enormous political pressure on the judge not to make a decision that could devastate the county’s finances, but it’s his job to uphold the law, Freer said.

"If the county’s cheating, the county ought to be held liable," he said. "My guess is that if the class is certified, they’re going to get out the checkbook and try to settle."

Banks (SunTrust, BofA, Regions, Wells, etc.) use deceptive transactional structures to avoid the hits to their income statements AND balance sheets that would come from marking to market. Fulton County exploits the resulting overstated housing values established by non-monetary transactions to reap inflated tax revenues.  Why is there only a civil suit over this?

At the national/federal level, we have more evidence of corrupt CEO’s making fortunes at the expense of shareholders, but with their risks underwritten by taxpayers. (The paper he references documents that the CEO’s at the 14 Too Big to Fail banks pocketed – in hard cash terms – over $2.6 billion during 2000-08. Meanwhile, their companies’ shareholders collectively lost over $400 billion in market capitalization during the same time period. We taxpayers have ponied up multiple trillions to bail out their companies via TARP, Stimulus and Federal Reserve purchases of/loans against toxic assets. Add QE I and II to that and you’ve got some real money! We also know from numerous other sources that these CEO’s knew EXACTLY what they were doing in all respects, including their procedural documentation failures that may eventually and hopefully lead to some of them being put in jail.

To top it all, $1.3 trillion dollar investment manager Bill Gross opines today on the endemic corruption infecting DC. Key quotes:

“We need a President who does more than propose “Win The Future” at annual State of the Union addresses without policy follow-up. America requires more than a makeover or a facelift. It needs a heart transplant absent the contagious antibodies of money and finance filtering through the system. It needs a Congress that cannot be bought and sold by lobbyists on K Street, whose pockets in turn are stuffed with corporate and special interest group payola. Are record corporate profits a fair price for America’s soul? A devil’s bargain more than likely.”

“To rebalance debt loads and re-equitize financial institutions that should have known better, central banks and policymakers are taking money from one class of asset holders and giving it to another. A low or negative real interest rate for an “extended period of time” is the most devilish of all policy tools. And the asset class holder that it affects, or better yet, “infects,” is the small saver and institutions such as insurance companies and pension funds that hold long-term fixed income assets. It is anyone who holds bonds with coupons that cannot keep up with inflation or the depositor in a local bank who cumulatively holds trillions of dollars in time deposits that don’t earn a real rate of interest. This is the framework that has been created by modern-day policymakers who have innovated far beyond their biblical counterparts. To put it bluntly, they are robbing savers and taking money surreptitiously from longer-term asset holders who are incorrectly measuring future inflation.”

Pervasive fraud. Until Americans demand and/or respond to leadership that takes a principled stand against this corrosive corruption, the real estate markets cannot clear the toxic assets that poison them, and the economy cannot begin to heal. We need a Chris Christie in every governor’s office, Jim DeMint and Paul Ryan disciples throughout Congress and Rudy Giuliani-like federal prosecutors in every US district attorney’s office. Meanwhile, the Barack and Michelle tragedy continues its performance at 1600 Pennsylvania.

Some talk about buying/selling advertising in terms of the current industry participants like Fox News. Although Rupert does get it regarding broadband Internet, very few organizations with the size and longevity of any of the existing broadcasting/media companies are ever able to make transformative changes to their business models. See Clayton Christensen, The Innovators Dilemna, for hard proof. The companies that break standard price points will have a different view of the economics/business model, just as Bill Gross (Idealabs) did when he invented the pay-per-click Internet advertising business model that Google has leveraged into a $150 billion market cap. Remember, Google did not even begin to sell search advertising until the 2001-2002 timeframe.

A final point about change in content/advertising markets – the Internet evidences and enables statistical distributions commonly known as the Pareto principle (80/20 rule). Chris Andersen of Wired wrote the signature piece on this phenomenon which he dubbed The Long Tail (link to his website, which links to article, book, Wikipedia, etc.) Andersen’s point is that for digitazable products/services, the changes wrought by the growth in interconnected and ever mor powerful communication/computational processing devices will enable the exploitation of demand that was previously unexploitable due to the lack of sufficient market scope to spread the fixed costs of production and distribution over. The fixed costs are now already incurred, in terms of the infrastructure of the Internet, and the marginal costs of distribution are virtually nonexistent. An Amazon employee described the Long Tail as follows: "We sold more books today that didn’t sell at all yesterday than we sold today of all the books that did sell yesterday."

Excerpt from Andy Kessler’s series of blog posts on Media 2.0 (Kessler is a money manager, investment banker & vc/hedge fund operator who also writes books (latest titled Running Money) and articles published by Forbes, Wired, LA Times, Am Spectator, Weekly Standard & WSJ)

So what is a Media Mogul to do? They control pipes in a world of zero margin costs. It costs virtually zero to sell one more digital song, or run one more digital ad or post one more digital classified. As chips and bandwidth get cheap, digital distribution crumbles the quaint old days.

The time and the tools are ripe for this GO WIDE approach. Especially on the Web, which is nothing but layers and layers of functionality.

Bill Gates

This process will be hastened, he believes, as more and more television content moves online. “Internet TV and the move to the digital approach is quite revolutionary,” he says. “TV has historically has been a broadcast medium with everybody picking from a very finite number of channels. If you want content that is a local sports thing or a hobby that you are interested in, that’s not available to you. The use of the internet to deliver those video signals and the idea of seeing what you are interested in, and having the ads targeted to you, is becoming the standard way that video is delivered. Over the course of this next decade that will be very common.”

Internet advertising, aimed at niche audiences and more creatively ambitious, will provide a way round the increasing problem for advertisers of television viewers fast-forwarding through commercial breaks in shows that they have recorded. “It will be possible to target the ads and it will be important to have ads that the consumer doesn’t skip over, incorporated in the right way.”

Om Malik’s posts – Google… the OS for Advertising and The Web Money Machine – Beyond Adwords (author of Broadbandits: Inside the $750 Billion Telecom Heist, writer for Red Herring, Business 2.0, Forbes, WSJ and now founder/executive editor for GigaOm.com)

excerpts:

Google’s core competency is to use technology in a manner that devalues and deflates4 traditional industries by extracting inefficiencies in existing processes. And the long-term strategic implications of this “Google effect” is much more disruptive than simple market realignment… rather, it’s an issue of rendering old core (human) competencies obsolete and replacing them with new ones reliant on automated, scalable technologies (much like what Wal-Mart did to retailing and what Craigslist is in the process of doing to classifieds). For instance, the only way for traditional media companies to leverage the core competencies they have today in order to compete with Google’s Ad/OS, in the long run, is to start breeding ad salespeople who will have the expertise and capability to sell across all media platforms. Sure, that’s feasible… when pigs can fly.

The media industry is in the middle of a massive change, thanks to the ubiquitous presence of broadband everywhere. Fast pipes are enabling niche networks, venture capitalists are investing in new media properties. The online video market resembles an old fashioned bubble, and companies are sprouting up like mushrooms after a fresh monsoon. All of this is predicated on one business model: advertising. Google bet $1.65 billion in chips on YouTube, betting that it can profit from this shift to online video. Their confidence is understandable: Google now accounts for 25% of all online advertising dollars.

Commander’s Call was yesterday. The boss was getting us all together in groups, civilians, Senior NCOs, Junior NCOs, Officers, etc.. Two things that stuck out in my mind: He noted that there were not enough chairs for the civilians and they were packed out into the hallways surrounding the ballroom and that we SNCOs had a LOT of empty chairs. He shook his head and said, “I’ve GOT to get that mix changed.” As he was talking up his Command and Control Blog (you couldn’t get to it even if I did link to it), he made one of the most astounding, outside the box statements I’ve ever heard come out of a flag officer’s mouth. Other than giving me some leeway for perhaps not having the order he said them right, this is what I heard yesterday. Anyone else who was there and can make it clearer, please do: “The metric is what the person has to contribute, not the person’s rank, age, or level of experience. If they have the answer, I want the answer. When I post a question on my blog, I expect the person with the answer to post back. I do not expect the person with the answer to run it through you, your OIC, the branch chief, the exec, the Division Chief and then get the garbled answer back before he or she posts it for me. The Napoleonic Code and Netcentric Collaboration cannot exist in the same space and time. It’s YOUR job to make sure I get my answers and then if they get it wrong or they could have got it righter, then you guide them toward a better way…but do not get in their way.”

JAMES E. CARTWRIGHT
General, USMC
Commander, USSTRATCOM

Just how cool is that?