Graham Thomas

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On November 26, 2017, Graham Thomas commented on Disney n Chill :

I’m not sure Disney can go head-to-head with Netflix on its own subscription service. While Disney has a better chance of making it work than most content providers I think consumers may balk at paying subscriptions for multiple different services with offerings from only a single studio when they can pay a single subscription to access a greater variety of content from TV and Movie studio companies through platforms like Netflix and Amazon Prime.

One option for Disney would be to treat their own digital on-demand platform as an intermediate play that complements the theater and Netflix experience by trying to capture customers who may not be willing to go all the way to theater to watch a new movie but might be willing to pay extra to see it before it ends up on a service like Netflix. They could make a deal where 2-3 after a movie launches in the theaters, families can go onto a Disney streaming site and pay per movie to see new releases – these could be offered from this period until several months later when they make their way onto Netflix. The hope would be that those who are die-hard disney fans will still go to the theaters to see it soon after release, but that as time goes on and those who are continuing to see it in the theater are doing so more out of convenience they can expand the pool of people paying a premium for early viewing by making movies also available in peoples’ homes.

To your point about how little of Disney’s total revenue comes from their movie business I think that the biggest value in a Disney streaming play would come not from the revenue from the streaming itself but rather from the data Disney can collect and use to cross-sell its other business lines and experiences. For example, if it operated its own streaming network Disney could send parents suggestions for Christmas toys related to the shows and movies their kids have been watching on their platforms. Or they could offer personalized vacation bundles that highlight specific attractions on their cruise lines or in their theme parks that correspond with that families most-watched content. Finally, by seeing who’s most engaged with particular shows over time, Disney could better allocate theme park space to be representative of their most popular current content improving the value of that offering. The possibilities of leveraging the streaming data for cross-sales are likely the primary reason Disney is trying to go head to head to Netflix and take back control of the digital streaming experience. Perhaps by pricing at cost or at loss they will be able to succeed in gaining a major subscriber base and using the platform to fuel revenue growth across their entire business rather than in one new business line.

I agree with the suggestions that you’ve laid out at the end of your piece around leveraging its existing customer network to increase their value-add both in customer care and adherence support and in demand forecasting. However, I think that Katharine’s point above on doubling down on managing health more broadly and leveraging their massive network of physical locations is critical. While Amazon and other D2C companies may play a growing role in drug delivery going forward, healthcare will make the transition to full digitization much more slowly than other industries because of the important role of trust between healthcare providers and patients (which is bolstered by face-to-face contact in the care delivery chain), the high need for personalization of care (which often requires physically seeing a patient to read between the lines of what they are telling a provider), and the high cost of getting something wrong in diagnosing a problem and assigning a treatment plan.

As such, CVS should think of how they can use their physical infrastructure to expand access to more people for basic care needs, travel vaccinations, or ongoing treatment check-ups for those dealing with chronic disease (CVS’s minute clinic program is a great platform to leverage for this). Then they can use digital platforms to bring value-added services, higher levels of effectiveness, and better results to those customers who they are establishing these face-to-face trusting relationships with. These digital services could include things like auto-reminders for Rx refills, easy ordering and delivery of those refills, direct messaging access to pharmacists or care managers through CVS, platforms for tracking medication usage and/or symptoms and side-effects of their medication and diseases, and automated suggestions for supportive or preventative measures the patient could be taking alongside prescription medications (e.g. daily vitamins and supplements). By establishing trust with patients and providing them a suite of supportive services that includes both online and offline interactions CVS can protect themselves from players like Amazon who can’t match the offline service piece that CVS would be capable of offering.

Interesting article about climate change’s impact on wine growers. I agree with your assessment that Jake Kloberdanz, the CEO, should be looking at accommodation measures in addition to mitigation measures, but I’m not sure something as drastic as turning to Greenhouses is the answer, at least in the short-term. Wine in particular has a great deal of history and “romance” tied up in the way it is produced and I think consumers would balk at Greenhouse-grown wine grapes. There is likely a spot for a niche player to capture those who like to be on the cutting edge of new things and who care most deeply about climate change to build a greenhouse winery (and to get lots of free publicity from the novelty of it) but the vast majority of wine drinkers would likely reject such a move.

In the same way Jean-Claude Biver was able to attack the quartz watch movement by emphasizing the “authenticity” of a Swiss mechanical watch, “normal” wine-makers would attack greenhouse wine as less authentic and fake. This would likely have an even more detrimental affect on greenhouse wine than quartz watches because wine is something that is consumed so having it be “natural” is even more important to consumers.

As such, I would recommend that OneHope double down on things that are perceived as more natural, such as relocation of vineyards and better irrigation and shading techniques as mentioned above. OneHope could also look into “adaptive plant material” techniques ( which use things like longer root stalks and selective breeding for later blooming varietals to adapt to a warming climate.

On November 25, 2017, Graham Thomas commented on The Drowning Power Grid: CenterPoint’s Plight to Keep the Lights On :

Interesting piece on the effects of climate change on power supply. In response to your questions I’d argue that a more resilient power system is absolutely a humanitarian issue as evidenced by the 50+ deaths in Puerto Rico, many of which arose from power loss after the Hurricane. In terms of whether the government should pay for upgrades to infrastructure there are ways that they can make upgrades more economically favorable without simply paying for them out of pocket. For example, they could allow for CenterPoint and other providers to slightly increase utility costs, which are currently government regulated, in order to cover the costs of necessary upgrades. This would pass on the costs in a distributed way to a broad network of customers. The government should also think not just about how to encourage utilities providers to mitigate the effects of climate change but also about how to play a central role in prevention of climate change long-term. This could mean more seriously experimenting with a national cap and trade system for carbon credits or imposing a tax on carbon production. This would make it more economically attractive for providers like CenterPoint to build alternative, more climate friendly production plants as they would now forced to internalize the negative climate externalities of carbon production.

On November 25, 2017, Graham Thomas commented on Isolationism, the Antithesis of Innovation :

Really interesting piece – thanks for writing it! In response to the questions you pose, I think that the question for Viiv and many private organizations is not what responsibility they have towards speaking out on and influencing public policy but how to best do it. The magnitude of the impact of protectionist policies on multinational organizations is too large for them to not be involved. As a piece entitled “The Retreat of Globalization” in the Wall Street Journal Asia noted, globalization has led to a world-wide surge in economic production for the past 3 decades. Perhaps even more importantly for a company like Viiv, globalization has brought hundreds of millions of people out of poverty and this collaboration is just one example of how connecting, ideas, people, and resources across borders can unlock so much potential.

In terms of “how” to influence public policy, Viiv needs to look at who the most important decision-makers and speak to them in their own language through as many mediums as possible. This is a tactic that Bill and Melinda have been employing for the past several years as they worry about the impact of foreign cuts on international development. For example, in a March opinion article for Time, Bill argued that foreign aid helps make America safer – a message intended to appeal to even those with traditionally nationalistic tendencies. He also published a piece in the Guardian in September of this year making the argument that even a giant philanthropic organization like the Gates Foundation can’t plug the gaps created by foreign aid cuts and that this aid is critical to global security and stability. This was a message meant to take away politicians’ excuse that the responsibility should fall on other global players and to resonate with those in Europe who live next door to some of these “less stable” neighbors.

It’s interesting to read about a business that’s trying to encourage and capitalize off the push towards more nationalization and forced domestication of the supply chain. The main difficulty I foresee in building a strategy off of expected political change is how hard it can be to distinguish bark from bite, particularly with the current administration. Is Trump’s critique against pharmaceutical companies simply a momentary twitter tirade or does it signal more serious policy changes to come? If pharma-specific regulations do come how quickly will they come? Given the uncertainty it’s dangerous for Patheon to invest too heavily in building excess capacity because it may never come, particularly given the pressure on the health system to reduce drug costs acting as a powerful disincentive for pharmaceutical companies to do anything that will increase their COGS.

In order to hedge against this uncertainty Patheon should make sure they have a path towards profitability and cost-effective production even if tariffs never materialize. One way to do this would be to try and locate manufacturing capacity close to major pharma distribution centers to save on transport costs. They should also double down on the technology spoken about above to offer advanced value-add capabilities that aren’t as readily available overseas. For example, as personalized medicine and individual dosing becomes more popular they could build that kind of customization and flexibility into their newer manufacturing plants. That way their future success is diversified across multiple future trends instead of being tossed about by unpredictable and ever-shifting political headwinds.