Practice Management

3 Business Books to Help You Grow Your Practice

By Ken Krivacic, OD, MBA

Sept. 27, 2017

In business school, I saw that we can learn from others by studying what happened in the past to a particular business, and how we can take that experience and use it to make us more successful in the future. In business school, this is done by what are called case studies.

In optometry we can do this by learning from each other through continuing education courses, local meetings, online forums and optometric journals. Now I want to take it a step further, and show how we can improve our practices by reading business books that do not focus on optometry, but rather, business in general. These books will not make you a better clinician, but they will make you a better manager of your practice.

Below are three books that have helped shape how our practice is managed, and has helped us become more successful not only in generating more revenue, but also in making the management of the practice a more satisfying experience for patients.

“Good to Great”
by Jim Collins

www.jimcollins.com

Good to Great  is the result of studying Fortune 500 companies over a 30-year time period by Jim Collins, a former Stanford University Graduate School of Business faculty member and current management researcher and author, and his research team. They wanted to know why some companies are good in business while others are great. Since the companies he looked at were publicly traded companies, it was easy to obtain financial data about the companies and use that data to see which companies separated themselves from their competition by a ratio of cumulative stock returns over a time period of at least 15 years.

There are many lessons in this book that we can apply to an optometric practice. These include the importance of core values, leadership, adaptability, culture, the right team, the right technologies and passion. For purposes of this article, I will focus on one, and that is what Collins calls “First Who…Then What.”

What his research uncovered is that good-to-great leaders began the transformation of their companies by first getting the right people on the bus (and the wrong people off the bus) and then figuring out where to drive it. The key point is not just getting the right people on board, but doing so before figuring out vision, or strategy or tactics.

They uncovered three practical rules for making people decisions:
• When in doubt, don’t hire – keep looking.
• When you know you need to make a people change, act.
• Put your best people on your biggest opportunities, not your biggest problems.

In our practice, we no longer hire out of need. We are constantly looking for good people – those with high standards and work ethic, and if we can’t find them, we do not settle for less even if that means we will be short-staffed. At first this was difficult because being short-staffed has a tendency to reduce revenue, but if you stick to the plan, and have the right people on board, they can make it work during trying times.

We have also found that sometimes if an employee is not working out in one area of the practice, rather than let them go, they may work out better in another area. This has happened several times over the years with good results. We have taken a dispensing optician, who was detailed-oriented, but lacked good selling ability, and moved them to a position as an insurance clerk, a position that optimized this individual’s ability for detailed work.

Once you get the right team on board–in the right positions–managing the practice becomes much easier.

“The Three Rules”
by Michael Raynor and Mumtaz Ahmed

Like Good to Great, this is a business book that looks at what makes some companies more successful and longer-lasting than others. The authors, who are officers with Deloitte Consulting, studied 25,000 companies from 1966 to 2010 and used Return on Assets (ROA) as their measure of superior performance.

They found that what separated top performers from others was not what they did, but how they thought. This eventually led to their three rules:
Better before Cheaper
Revenue before Cost
There are no other Rules

By themselves the rules are self-explanatory. What I found interesting is that the rules (at least the first two) summed up how we had been managing our practice.

Click HERE or the image above to read more about “Revenue Before Cost,” and how Dr. Krivacic lives out that principle in how he runs his practice.

Better before Cheaper is a philosophy we have embraced since early in practice. For example, we believe strongly in selling better frames, not cheaper. Name brands, or quality products, generally garner a higher price tag, yet most patients are more satisfied with quality products, and the image of the practice is enhanced.

Years ago we made a brief foray into a bargain-priced frame line, and discontinued it within a year due to the larger-than-average complaints from buyers and the higher-than-average needed repairs, or breakage, with the frame line. As an independent practice, it is hard to compete on price alone. There is too much competition in the optical industry, and there is always a source that your patients can find for a cheaper frame. Instead you should differentiate yourself by offering superior non-price benefits such as a great brand, an exciting style, or excellent functionality, durability, or convenience.

The next rule, Revenue before Cost, is explained by the authors as “Companies must not only create value, but also capture it in the form of profits. By an overwhelming margin, exceptional companies garner superior profits by achieving higher revenue than their rivals, through either higher prices or greater volume.” This makes sense from the material side of an optometric practice since higher-end frame lines and the newest contact lenses to the market garner greater and larger profit, but I would also argue that it makes sense from the clinical side of the practice.

For example, you could try to save cost by not purchasing the latest OCT since it will cost the practice $50,000, or more, to acquire. Yet if integrated properly into the practice, it should increase revenue and brand your practice as being on the front edge of technology.

This book has helped me make decisions when I have a question as to which way to proceed. When in doubt, follow the three rules.

“The Power of Habit”
by Charles Duhigg

www.charlesduhigg.com

Duhigg is a journalist and author by trade. He completed his MBA from Harvard Business School, and has worked as a business reporter for the New York Times since 2006. He was part of the team that won the Pulitzer Prize for Explanatory Reporting in 2013.

The book offers great insight into why we do the things we do, and how you can use this knowledge to help build your business and practice. Duhigg argues that we as humans are wired to follow habits once we establish them. Why not use that ingrained trait to help shape your practice?

My favorite story from the book details the promotion of toothpaste in the early 1900s in our country. At the time, hardly anyone bought toothpaste because so few brushed their teeth. The country was just beginning to prosper, which led to a sugary diet and increased tooth decay, yet selling toothpaste was a failed proposition.

Along came Claude Hopkins, a businessman and marketer, who was approached with the challenge of selling Pepsodent. Hopkins at first declined, noting that selling toothpaste was a sure way to go out of business. After repeated prodding he finally agreed to take on the challenge, and within five years, Pepsodent was one of the best-selling and best-known products on earth. Brushing teeth became a habit not only in our country, but around the world.

What made Hopkins so successful where others had failed? He created a craving, and that craving is what powers the habit loop. Hopkins focused on the film that builds up on teeth that is both seen and felt. The trigger to selling Pepsodent was to remove the film and have smoother and whiter-looking teeth.

One ad said: “Just run your tongue across your teeth. You’ll feel a film–that’s what makes your teeth look ‘off-color’ and invites decay.” Hopkins made millions from Pepsodent. The key, he said, was that he had “learned the right human psychology.” That psychology was in three simple rules:

• Find a simple and obvious cue.
• Clearly define the rewards.
• Do this over and over and you establish a habit.

As practice owners, we can get patients to realize a cue, and then crave a reward, and we can do the same with our staff and ourselves. We can all benefit from establishing good habits and changing bad habits.

We can use these principles to promote the importance of a yearly contact lens evaluation. For years we have battled questions about why patients need a contact lens evaluation, especially if nothing has changed. After reading “The Power of Habit,” it dawned on me: We had not established a cue for those patients, or showed them a reward to justify the extra contact lens evaluation fee.

So, in my practice, we started running two extra tests – corneal topography, which we had done before, but had not tied to patient education, and specular microscopy. We started doing both tests, and reviewing them in the exam room with patients. The cue was: if contact lenses are not properly managed then the result is an unhealthy cornea. This could be shown to patients by distorted corneal maps and low cell counts on the specular microscope. The reward is a healthy cornea and subsequent great vision and peace of mind.

After a year of running the tests, I started having patients ask me, before I showed them, what their cell count was. This amazed me, and I have been doing it daily since with patients still wanting to know what their cell count is.

There are countless other ways to use cues and rewards to change habits. It is a way to manage a practice to your benefit.

Editor’s Note: Visit ROB’s and Bausch + Lomb’s Innovation in Practice web site to learn more about making the power of habit work for your patients and practice.

Is there a book that has influenced you, and helped build your practice? Send me a note, and we can compile a reading list from which we can all benefit.

 

Ken Krivacic OD is the owner of Las Colinas Vision Center in Irving, Texas. To contact him: kkrivacic@aol.com.

 

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