How to create a strategy for a destination

 

I always touch on strategy when I speak at industry events, but I think it is time to put this particular discussion out front.  Some of the advice being given about how to develop health travel destinations and products is bad, wrong or incomplete.  It does little for the industry if “consultants” get it wrong; it gives the industry a bad reputation, it suppresses the number of patients who would otherwise explore the great options we offer.  In such cases, bad advice is actually doing harm!

This article imagines a short case study of how to build health tourism right, and I mean for everyone.  The process applies to large and small, medical and spa, east and west.  Tactics and execution differ, but the strategy process is universal.

Comparative Advantage

You build health travel by first identifying a comparative advantage, which is an economic principle that in simplest terms means doing something better than a competitor does it.   That “something” is your comparative advantage.

After you identify a comparative advantage, the challenge is to turn comparative advantage into sustainable competitive advantage - amid the complexity of three, intersecting value chains - tourism, distance medicine and the clinical business unit.  Inventing comparative advantage from scratch is possible, but it is more expensive and takes longer.  Better to start with something you can do, now.

Competitive Advantage

Competitive Advantage is a set of things you build to become more profitable than the average for your industry.  Sustainable Competitive Advantage happens when you take steps to improve or protect your strategic position from competitors and new entrants.

Building Competitive Advantage in the Workers’ Paradise

Let’s take the example of Crimea, Ukraine.  Crimea has a concentrated base of existing, old-school hotels and resorts.  Among these are vivid examples of comparative advantage in its fifty or so, Sanatoria health resorts, which specialize in water cures and have a medical doctor on staff to prescribe treatments.  The Sanatoria facilities vary widely from Russian noble palaces to vintage crumbling concrete, of the time when Crimea was billed as a workers’ paradise. 

Natural water cures are much admired regionally, but not well understood by many potential tourists.  That said, Sanatoria give us a specific, solvable problem rather than a fuzzier, bigger problem. 

The Next Step is to Review Your Strategic Position

Your strategic position arises out of understanding the general environment in which you work.  Visualizing your position compared to that of competitors, helps formulate an overall strategy in slices of: cost environment and current desirability, scaled for health travel readiness, (a larger bubble size means higher readiness).
Exhibit 1: Ukraine after 3 or 4 strategy moves
Exhibit 1 shows where I think Ukraine (and by extension, Crimea) is today and where it could be in three or four strategy moves, within the narrow, differentiated category of beauty medicine.  Smart practitioners use each strategy stage to build the skills, customers and reputation for the next and ultimate stage.  Each strategy step creates the conditions for the others and usually, you can count on the gains from each step to finance future efforts.

In Exhibit 1, Crimea should first move to the right on desirability and simultaneously, create the conditions for health travel product improvements by starting on longer-term projects like capacity, training, medical schools and promotion tools. You don’t need to complete long-term projects in advance of implementing your strategy.  They’re related, but can be sequential.

The next phase of an overall strategy should be toward bigger scale (a larger bubble) by adding high-demand and high-value services.  Subsequent steps should focus on more complex technical achievements like improving medical capacity and tourism product function, product quality, selection variety, aligned processes, skills training and offering differentiation.  You’ll plan promotions after mapping each stage.

What Should Ukraine Do?

The goal is to carve out unique, high-value positioning that can be defended, over time.  Successful strategy must connect the current entity to its environment, existing skills & resources. To support your efforts, learn the difference between strategy and tactics.

One of your first decisions is where do you want to be and how can you get there?   The trick to executing is to use what you can do RIGHT NOW, with very few additional resources.

Could a “Beauty” Strategy Work?

Strategy is a unifying pattern of activities that you can communicate easily to the whole value chain.  In the case of medical tourism, this extends to three different value chains, which have very different cohorts: housekeepers, doctors, partners, competitors, customers, therapists, investors, travel writers…etc.

It always takes fewer resources to reframe existing beliefs about a place, than it does to create a new image or belief.  A Russian friend describes Crimea as an inexpensive, bohemian Eden.  Travel writers describe Crimea’s landscape as uniquely beautiful.  We have described pictures of the Crimean coast, in terms of other very desirable places - like Big Sur + Napa.  A general Internet search presents testimony that the most beautiful women in the world are Ukrainian.

The thread that runs through these anecdotal connections is beauty, and a certain sensuality. Being known for beauty is a great place to start.

Here’s how it might work.  Exhibit 2 shows how, in relatively short order, Crimea could become a world leader in the narrow, differentiated category of beauty medicine. Step 1, beauty; Step 2, skills; Step 3, medical capabilities; and Step 4, beauty medicine.  This path develops Crimea into a real health travel destination, much more quickly and coherently than a generalist path would do.

Exhibit 2: Imagined country positions: Near future
Importantly, beauty is hard to imitate and has desirable, high-value positioning.  High positioning is a great hook from which to hang other service categories. Currently, you can’t easily sell Crimean heart surgeries to the neighbors, but in ten years?  Maybe.

An Explanation of Strategic Choices

  • Lowest Price & Lowest Differentiation, (Bottom Left Quadrant).

   Think of commodity-type products or the U. S. retailer Wal-Mart, in this regard.  The strategy is very hard to execute because it requires large size and scale.  In health travel, perhaps only India and China have the opportunity to claim this space.

  • Highest Price & Highest Differentiation, (Top Right Quadrant).

    This is where branded products in high cost country environments need to aim. EU countries will set strategy on the right half of Exhibit 2 because of their high cost environments.

  • The 3rd Choice is a Focus or Niche Strategy, (Any Quadrant).

    This strategy builds your company, country or region around a segment of either price or differentiation.  It is the correct choice for smaller countries, narrower segments like individual clinics, facilitators and many regions.  Beauty Medicine is a focus strategy.

Can Beauty Do All That?

Sure.  Lots of other differentiated positions could do it too.  Beauty just happens to be Crimea’s obvious strong suit.  Beauty has very high strategic positioning, premium pricing and can be defended by brand or structural barriers.  Beauty is always much admired and could take practical form in architectural competitions to renovate Sanatoria…or be as simple as an innkeeper encouraged to plant a garden or paint a door.

This path has the virtue of being very simple to communicate to every person in the health travel or tourism value chain and it nicely frames editorial coverage in magazines, websites and social media. 

Connection to Sanatoria

The strategy connects directly to Sanatoriums because these also promote health, wellness and yes, physical beauty.  More, some of the highest demand and closely connected health travel products are dentistry and plastic surgeries.  Regionally, these services are strong draws in the Czech Republic, Hungary and Turkey.  Given the choice of Bulgaria’s beaches or Turkey’s ruins…many would be drawn toward beauty medicine and natural health cures.

Want to help a country, region or firm develop their medical travel business?  This is how.  Now, get out there and start doing it better!

FURTHER CONTENT PUBLISHED BY THIS AUTHOR

The Undeveloped Customer

Resources, 01 May, 2012

Scott Frankum: EMTC 2012

Travel maturity

Articles, 15 October, 2010

Scott Frankum speaks on market maturity and how it may cause a sea change

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