About 25 years ago, I would set sail into the murky backwaters of the Louisiana bayou to satisfy an unusual culinary habit. A fearless frog hunter, I sat in the front of the boat with a spotlight while someone else drove. The spotlight reflected brightly off the throat and belly of a frog. As long as the light was in its eyes, it wouldn't move, even as the sound of the motor got closer. When we were in reach, it was easy to grab the frog with one hand while shinning the light in its eyes with the other.
Frogs react to light in much the same way that providers who concentrate on K0011 sales reacted to the so-called clarification of power wheelchair reimbursement. Some providers said they lost more than 50 percent of their power wheelchair sales because of this policy. So it's no wonder the clarification sparked a caught-in-the-headlights terror. While many providers remained unaffected, similar unforeseen changes could occur at any time with other product lines. How should you respond when situations like this take place?
First and foremost, keep moving, and don't freeze like the frog. In my years as a business consultant, I have observed numerous businesses that react to an abrupt change in their environment by being complacent. Maybe they are hoping that the problem will go away because someone else will fix it.
Get the facts about the situation. Don't let your education consist of rumor and innuendo. Go to the source and put what you learn in context. Understand exactly how a new situation will affect your company by quantifying how it could influence your bottom line. And be honest about the situation. Denial and hope are not effective antagonists of reality, and can lead to no action or ineffective action. A successful response requires getting and using the facts.
Consider other scenarios
It is often beneficial to consider multiple scenarios, such as how long a situation might last or how deep any new reimbursement cuts might be. Use a “sensitivity analysis” (a test showing how variation can affect a financial investment) to help quantify the possible effects.
Think of alternatives
To paraphrase Mark Twain, “Thinking is hard work. That is why so few hold thinking jobs.” When we are down for the count, we need to be more deliberate in our reactions, not less deliberate. We also have to think more quickly so we can remove ourselves from harm's way.
Two business concepts that help in thinking about alternatives are substitution and line expansion. With substitution, associate an existing product with the solution of the same problem.
For example, innovative providers addressed the clarification by finding other products to solve the problems previously solved with a power wheelchair. There are many other mobility devices available, so while no universal solution was available, they substituted the best solution possible. Substitution might yield a less desirable solution, but it is better than nothing.
Line expansion is about associating a new product with an existing customer base. The hard part is thinking of these ideas and how to integrate them into the customer-processing activities of your company.
Be objective
If you can't get far enough from the trees, find someone who is. Talk to non-competing peers and trusted advisers, but be sure your plan is objective.
Adjust expenses to revenue
Generating alternative sales takes time. There may be some delay between the cash reported on your balance sheet and the lower profits reported on your profit and loss (P&L) statement.
Don't let that fool you. Don't wait to take action.
Wallace Weeks is founder and president of The Weeks Group Inc., a Melbourne, Fla.-based strategy consulting firm. He can be reached at 321/752-4514 or by e-mail at wweeks@weeksgroup.com.
