When you think about innovation within your own medtech company, do you think about the need to generate more ideas at the front end, or do you bemoan what happens to all those seeds of opportunity once they enter the mouth of your product development monster? There is a lot of focus in the business press on generation of new ideas, but a big issue in the medical device industry is execution. Perhaps we need to focus more on innovating the execution process instead.
What got me thinking about this was my recent exposure to several new publications. First, I read an interesting short review of a new book in the Economist. The book, titled "The Other Side of Innovation: Solving the Execution Challenge," is by Vijay Govindarajan and Chris Trimble. I haven’t read the book yet, but the brief review paints a picture that supports my thesis above.
Then I saw Wynne Bailey of PricewaterhouseCooper (PwC) present their recent report Medical Technology Innovation Scorecard. It is a fascinating and well-researched comparison of the factors affecting the innovation ability of major developed and developing nations, focused entirely on our industry. It looks at historic data as well as projections of how these countries will fare in the future given the global pressures we all work under. Regarding the United States, it offers a sobering view of a nation that has long held the top place, but whose supremacy is being eroded by many factors. Not least they cite what they call the innovator’s dilemma, which the report elaborates thus:
“... the US has been so successful in medical technology innovation that it has created a legacy that the current system will continue to seek to defend, support, and protect. The powerful financial incentives that form the cornerstone of the US system will present a barrier to adopting faster, smaller, cheaper, and better technologies that would represent radical, disruptive innovations.
Such innovations are emerging more quickly in China, India and Brazil. These developing nations are in many ways starting without the ‘innovation handicap’ of a comfortable level of performance and payment. A scarcity of financial resources is driving them to experiment with more efficient technologies, processes, distribution strategies, and business models.” (p12)
The innovation handicap – this certainly sounds familiar to me. United States Medtech companies that currently dominate the global market have built some great franchises, but perhaps spend so much effort defending these franchises that they’ll miss the disruptive ones with the power to turn markets upside-down. Take the pressure to reduce the cost of healthcare (cost being another area in which the US leads). The comparative data in the PwC report is chilling, projecting that per capita healthcare spending in the US will be twice that of any other nation in the survey by 2020 (p11)). This of course assumes that the US remains willing to pay, which seems unlikely given the inevitable cost reduction pressure our industry will come under. Healthcare reform will bring more Americans into the system, causing insurers to react more strongly to cap costs. As America grays, further automatically increasing government spending on healthcare through programs such as Medicare, legislators will focus on cost containment.
Is the innovation machinery within our companies built right, and well-oiled for this cost reduction pressure? Let’s be clear: cost reduction is not just about driving the cost of the latest widget down; it’s about the overall cost and outcome of a given therapy. For example, reducing the total cost of a cardiac by-pass will require innovations to the whole system of delivering a good outcome-- not just to the surgical procedure that starts the chain of events. Certainly innovative technology in the procedure itself can have an impact, but so can techniques to reduce time in intensive hospital care or to lower readmission rates. As another example, the costs of chronic disease might be best reduced by shifting treatment further upstream to more sophisticated preventive care. Some of these issues are more public health policy issues, but some are most certainly things we can address in our own companies.
Seeking further insight, I turned to one of the best innovation implementation champions I know. Cheryl Perkins, before founding her consultancy Innovationedge, was Chief Innovation Officer at Kimberly Clark, a diverse giant with numerous healthcare businesses. For effective innovation, companies need what she calls translators. “Translators are people who are able to take something that is the seed of an idea--- the beginning of an understanding about an unmet need. They convert the idea into a tangible solution that’s going to fit with the market need, have competitive advantage, and deliver on the functional and emotional benefits required by the end user. What I frequently see is leaders who narrowly define a problem and leap to a solution. They don’t necessarily understand the market, customer, end user or patient. The resulting efforts often then become bogged down and never deliver a market solution.”
Perkins explains that what translators do is define the real problem, not the symptoms, and then start to translate needs into something that is viable both technically and commercially. To support her point I’ll cite these examples from my experience. Consider chronic disease management, an area ripe for innovation. It depends entirely who you ask as to how the problems of chronic disease are defined. Talk to doctors, who see patients infrequently and fleetingly, and they might tell you the issue is compliance with treatment plans: “If only my patients would simply do as I told them.” Talk to patients and a very different picture may emerge: they are tired, and frustrated with the everyday chores of monitoring and treating themselves, hating the inconvenience and indignity of the doctor-prescribed regimes. Who do decision-makers in your company interact with the most? Executives generally go to big events such as Academy meetings and trade shows where they tend to meet and listen to the most involved professionals. It’s usually key opinion leaders (KOLs) who have the loudest voices, but they differ in opinion or practice from the bulk of the profession. Those of us who put our feet on the streets often hear a very different story from everyday patients, and it is the collective voices of all the stakeholders that have often helped bring about some of the most successful market-winning medical innovations.
I’ve used a simplified example to help explain Perkins’ point; there are similar scenarios for products used only by healthcare professionals. For instance, I often find one of our first acts when we are called into a company to help them develop a new surgical product is to encourage them to talk to the ordinary surgeon, as up until then they are often most reliant on KOL’s. As Perkins reiterates, good translators balance all the viewpoints from the various stakeholders in the market and hunt for innovations that will be both commercially and technically viable and have the biggest impact. “They take the blue sky and make it into something that is feasible, commercially and technically. They build a bridge between marketing and R&D, documenting a basis for interest and then turning it over to the people who execute.”
Who can step into this role? The skill set of such people, Perkins advises, includes “.. decent soft skills, and business and technology savvy. They can come from any function, and are lateral thinkers who look for patterns and adjacencies. They probe What-if and Why so they know they are getting at ultimately what the real problem is. They usually reside on the fuzzy front end of development.”
My cockney grandmother had something practical to say about what to do with blue sky. As a small boy standing beside her on any of those balmy overcast London days, when the sky began to break into small islands of blue between the clouds, she would say to me, “There’s enough blue sky to make a pair of sailors trousers.” My grandmother knew that finding the blue sky wasn’t it, the hard part was knowing what to do with it.
Bridge Design Inc.