Part I: Understanding the Problem via Upstream Thinking

$1.($i$)$ Does CVS make money from activities other than selling medical drugs $($acting as a pharmacy$)?($ii$)$ What is the portion of this in CVS annual revenue? $($iii$)$ How should the store layout be configured to allow to have pharmacy and non$-$pharmacy revenues to be both of significance for CVS$?$

$2$a$.$ Imagine you are applying the iceberg model to CVS before launching PSI, describe the following $($that collectively led to having $$dissatisfied$$ customers$)$: $($i$)$ what were the symptoms? $($ii$)$ what were the recurring patterns? $($iii$)$ what were the underlying systems? $[$Note things were fuzzy or not clear before PSI was launched.$]$

$2$b$.$ Imagine you are applying the iceberg model to CVS after launching PSI $($use summary data collected from employees and users, Exhibit $1$ and $2),$ describe the following: $($i$)$ what were the symptoms? $($ii$)$ what were the recurring patterns? $($iii$)$ what were the underlying systems? $[$Note things became more clear after PSI was launched.$]$

$2$c$.$ Assuming you were part of CVS PSI team, what is the insight by CVS from answering these $2$a & $2$b questions?

$3.$ CVS is attempting to quantify the underlying $$PSI Business Case in Numbers$$: if the effort were to be produce results $($a component of upstream thinking$)$the potential impact of PSI on revenues via the estimated defection rates could be significant. Refer to the below quote as the starting point to read, absorb and to estimate the impact via $3$a and $3$b$.[$Answer below questions.$]$

To do this:

$-$You need to distinguish the number of customers versus number of scripts.

$-$The case provides $[$what$-$if$]$ guidelines for minimum and maximum reduction of defections, which you can use to estimate the contributions of PSI. $[$More hints are provided below.$]$

$3$a$.($i$)$ Can CVS easily look up $($not estimate$)$ the Lost Revenue from Defections? $($ii$)$ Why?

$3$b$.($i$)$ What would be the rationale for CVS to develop estimates before implementing the PSI changes? $($ii$)$ Which $1$ of $7$ questions of Upstream Thinking best captures thrust these calculations?

$3$c$.($i$)$ Should you focus on heavy users or light users in making the estimate? $($ii$)$ Why?

$3$d$.$ Before you start your estimation approach: $($i$)$ What is the maximum additional revenue that can be generated based on PSI, theoretically? $($ii$)$ Provide reasoning why this is the maximum?

$3$e$.$ Describe your approach to calculating the revenue gain in a narrative form before attempting the calculations $($before you make your calculations, which is in the next question$).[$This narrative is here to make sure you are not parachuting calculations in$!]$

$3$f$.$ Estimate the potential total $ magnitude of $$impact$$ as improvement in financial contribution to revenues, consistent with explanations of your assumptions and calculations. $[$The survey of customers revealed the potential for defections and preventing defections. Below you should focus on revenue gain from preventing different types of customer defections only due to poor service.$]$

$4.$ Via the Pharmacy Service Initiative$$CVS is trying to do something. $($i$)$ Can we think of PSI CVS as a form of tackling iceberg model syndrome $($organization spends $80\%$ of effort on $20\%$ of challenge$)?$ Provide a sample quote that justifies your answer, explain why it does, $($ii$)$ Also, Starting from $($but not limited to$)$ below quote and linking these quotes and their wider context which $1$ of $3$ barriers captures the CVS situation best, why.