Institute for Strategy and Competitiveness
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Competition and Firm Strategy Competition and Economic Development Competition and Society

Health CARE:

Competition in Health Care

Health care is on a collision course with patient needs and economic reality. Without significant changes, the scale of the problem will only get worse. Rising costs, mounting evidence of quality problems, and increasing numbers of Americans without insurance are unacceptable and unsustainable, but the future of health care is not predetermined. It is a mistake to extrapolate and attempt to respond to trends within the current structure. Instead, the most pressing task for leaders in health care is to create a new and better structure. Effective leaders have the insight to revisit the fundamental purpose of an organization and imagine a different and more effective way to attain it. Government control in health care is not inevitable. Indeed, countries with government-dominated systems are moving away from that model. America can move now to a system based on the right kind of competition that will serve patients far better than either a government-run model or the current U.S. system.

Global Health Delivery Project

 

Health Care Curriculum

 


Distressed Communities:


Economic Development in Inner Cities

Past approaches to revitalizing economically distressed inner city communities have defined the problem largely in social terms, to be addressed with social programs. Efforts to foster economic development in inner cities have been based on heavy subsidies and on distorting or blunting market forces. To build healthy and sustainable inner city communities, however, it is necessary to create healthy economies in and near the communities themselves. Economic development in inner cities must be approached from competitiveness perspective, and be based on business opportunities in the inner city that are genuinely profitable. There are existing and potential competitive advantages of inner cities that can support viable businesses and jobs. The inner city can only prosper if it is integrated into the regional and national economy. The private sector must play the leading role in inner-city business development, motivated by self-interest instead of charity. Inner city distress is as much an economic as a social problem.

Economic Development in Rural Areas

The economic performance of rural areas is lagging that of urban areas in the United Sates and also in many other parts of the world. While there have been many efforts to foster economic development in rural areas involving substantial public and private investments, most have failed. There is a pressing and widely recognized need for new approaches to rural economic development, drawing on broader learning about the sources of competitiveness in the global economy. Attempting to mitigate the generic deficiencies of regions will not be sufficient. Instead, each rural region needs a distinctive strategy that reflects its unique strengths, its particular mix of clusters, and which integrates its economy with the closest urban centers.


The ENVIRONMENT

Environmental Quality and Competitiveness

Previous thinking about the environment stresses the need to compel firms to embrace more environmentally friendly approaches. Moreover, societies must trade off economic competitiveness in order to achieve progress on the environment. However, new thinking on environmental quality and competitiveness recognizes that pollution is waste and a sign of inadequate technology and poor management. Addressing environmental improvement requires innovation in processes and methods. Without innovations, environmental improvements will inevitably raise costs. Nations need not sacrifice competitiveness for environmental improvements—they are complementary.

Antitrust and Competition Policy

Competitiveness depends on a healthy process of innovation and dynamic improvement—e.g., new products, new processes, and new ideas—that drive the growth in productivity. Antitrust policy, however, remains focused on static goals such as profitability (allocative efficiency) and cost minimization. It continues to rely heavily on seller concentration per se as an indicator of healthy competition. The primary focus of antitrust in the United States should be on productivity growth and innovation. The need for a vigorous antitrust policy is greater than ever, made more rather than less important by developments in global competition. However, antitrust authorities must use new approaches to evaluating the health of competition and the threat to competition posed by mergers and other corporate practices.


CorporATE ROLE IN SOCIETY AND PHILANTHROPY:

Creating Shared Value

Economic policy and social policy have been largely separate agendas involving different participants. Many see the two as conflicting agendas because of the flaws in the capitalist system. However, there is no inherent conflict between capitalism and social needs. A productive and growing economy requires rising skill levels, a proliferation of new companies, safe working conditions, healthy workers who live in decent housing in safe neighborhoods, and a sense of opportunity. Social and economic policy must be integrated in addressing society’s ills and ensuring true progress.

Corporate Philanthropy

Corporations can use their charitable efforts to improve their competitive context--the quality of the business environment in the locations where they operate. Using philanthropy to enhance competitive context aligns social and economic goals and improves a company's long-term business prospects. Addressing context enables a company not only to give money but also leverage its capabilities and relationships in support of charitable causes.  By aligning charity and strategy, corporations don’t only give money, they donate distinctive capabilities. And that can result in greater social good even as it strengthens a company’s competitive edge.

Strategy for Philanthropic Organizations

Foundations have traditionally focused on doing good by providing funding to worthy social enterprises. Instead, foundations should set the higher goal of creating social value. A foundation creates social value when it generates greater social benefit for comparable cost, or achieves an equivalent social benefit with fewer dollars. Foundations create value in four ways: selecting better grantees, signaling other funders, improving the performance of grantees, and improving knowledge about social problems. To create value, a foundation must devise a strategy that commits to the goal of superior performance, develops a unique area of focus and approach, aligns operations to the strategy, and defines concrete goals in its chosen fields to serve as the basis of evaluation. Many foundations have failed to approach philanthropy strategically, and thus have unrealized potential.

 

 
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