How to Maximize the Value of Acquired Technology

The increasing rate of both mega mergers and startup technology acquisition in today's med device market brings with it unique and timely challenges.

Carolyn Rose

In the past couple of years, the medical device industry has witnessed a big uptick in megamergers--with some of the deals being measured in the billions of dollars. In addition, big medtech firms continue to spend considerable sums to acquire on startups as well.

Yet the companies doing the acquiring--whether they are merging with a big competitor or acquiring a startup--often struggle to fully realize the potential value of the technology they have gained. Technology acquisition can be a complicated affair, marked by complexity, nuance, and often a steep learning curve. Below are a few steps to help effectively navigate the challenge, and ensure the potential of the investment is fully realized.

Challenge Assumptions

Which assumptions exist and how can they be validated or refuted? Before seeking to learn what is unknown, challenge what's believed to be known. What are the key capabilities of this technology? What makes it better than the competition? What are the existing or intended use cases? Why? By addressing fundamental questions regarding the technology and its ecosystem, a company can discern fact from assumption, hypothesis, or half-truth.

So how do we challenge assumptions and vet early working hypotheses about the technology's value and market? Applied ethnography is an often underused but effective learning tool in this capacity.

Applied ethnography is a combination of in-context observation and interviewing to understand behaviors and the drivers behind them. This research method allows us to understand the current context and needs of actual or potential end users of a new, or newly acquired technology. Specific activities might include observation of use/interaction, user shadowing, narrative tours that examine the context, space, and flow. They can also encompass artifact analyses that look at current analogous and auxiliary tools and their roles and relationships, and in-depth interviews with users and relevant stakeholders such as purchasing decision makers. These activities provide context and grounding --often the 'evidence' that either supports or refutes early assumptions and hypotheses.

Understand Current Value

Regarding new technologies, the demand for 'what's next' often supersedes the understanding of 'what's now.' The desire to identify new markets might have us thinking existing ones are old news. However, there's a lot to be learned from early adopters, pilots, and existing customers of newly acquired and adopted technologies--even if in a small or niche market. Applied ethnography can also be leveraged in this capacity in order to fully understand a technology's current value. Beyond informing effective market strategy and messaging, it's often the case that this method reveals that the new technology is not being used in the way or to the extent that the developer intended, leading to opportunities to derive additional value. It's quite likely that the technology can be improved to better serve the existing market and/ or be adapted or positioned to better serve unintended use cases, potentially leading to new markets.

Uncover Potential Value

Particularly during its fledgling stage, the potential value of a new technology tends to be informed by early sales feedback and the opinions of select industry thought leaders. Plotting an innovation direction around this feedback alone is a high-risk proposition, as its heavily biased and often not representative of actual or potential customers in aggregate. Additionally, knowing a customer 'want' is different than understanding the underlying customer 'need.' It is often the ability to better enable customer goals that would derive the most value. Applied ethnography empowers its users to understand wants, needs, and goals and the relationship between these things in a way that is unbiased and unfiltered. Synthesizing this information with important external influencers like industry and social trends, impending regulations, reimbursement models, and emerging technologies begins to unveil the broader potential value of a technology.

Applied ethnography can be an effective tool to help inform and direct marketing and innovation strategies following a technology acquisition. This method enables us to challenge assumptions, understand current value, and uncover potential value through a deep understanding of the needs, goals, and drivers of current and potential customers.

Carolyn Rose is the director of research and strategy at Insight Product Development (Chicago, IL). She can be reached at [email protected].