In an industry led by the likes of Medtronic, Boston Scientific, Abbott, and Edwards Lifesciences, there's a popular notion that innovation doesn't happen at large public companies, it happens at small startups that large companies try to buy in an effort to grow inorganically. That's not necessarily true.
As many industry thought leaders have explored, big medtech companies can still innovate at a startup pace. But an expert who spoke at the Design of Medical Devices Conference in Minneapolis last week says these companies have to learn to approach innovation differently in order to be successful.
"Innovation is not a 'thing'. I know that seems really obvious, but I assure you that at a large company that makes a lot of 'things' that is not always obvious," said Cristin Moran, the vice president of Growth Science who, up until just a few weeks ago, led front-end innovation at 3M Healthcare. "It is in fact really hard to imagine innovation not being a 'thing'."
St. Paul, MN-based 3M ranks as the 16th largest company in the medical device and diagnostics industry. Growth Science is a company that partners with a select few large companies using data science and predictive analytics to help innovators risk manage new product launches, acquisitions, strategic growth initiatives, and venture capital.
"Here's the deal. You have a portfolio of projects that are moving through the pipeline. That portfolio of projects has all sorts of different drivers and all sorts of different intervals and it makes sense to me that one needs a different set of processes and ways of thinking to accommodate that portfolio of projects."
Large companies in every industry struggle with this, she said.
"The thing is, what you really need is not a process. What you really need is a person that understands how to navigate processes because one process doesn't do it," Moran said.
Entering a new market space is a totally different project, for instance, compared to growing through expansions of a portfolio technology.
Big public companies have a lot of strengths, she noted, including the fact that these companies usually have an established business model (sometimes multiple models), an established customer base, and a set of core technologies. Some of these strengths can also be a challenge though. Having established customers is clearly a great thing, she said, but introducing new innovations to an existing customer base means not doing something that is so radically different that it forces the customers to consume the product differently.
Having core technologies and capabilities is clearly a critical component to working in a technology-driven industry like medtech, but large companies end up going back to that pot of core technologies to innovate. That's not necessarily wrong, Moran said, as part of her goal at 3M was to make sure the company had tools in place that equipped technology-forward projects to be successful. But, she added, companies that are built around a portfolio of core technologies must be careful about relying too heavily on such projects.
Meanwhile, startups are still trying out new business models, and they are still learning who their true customers are. Invisalign, for example, became successful only after figuring out that their customer wasn't the orthodontist, it was the dentist.
"The big public company has a track record of being successful. That's a great thing. It's also kind of a tether," Moran said. "The bigger and more successful you are the harder it is to decide that there might be different ways to be successful,"
"It's natural for us to want to rely on the past to predict the future," Moran said. "The startup is unshackled from that burden, but they have their own burdens as well."
Moran presented a 2017 case study from an unnamed large company (not 3M) that has a council of elders in place to decide which projects get approved and which don't, and of those projects that do get approved, how many resources are dedicated to them. It turns out, only a very tiny percentage (less than 1%) of approved projects actually ended up being successful.
"That does not seem great," Moran said. "They didn't know this."
That was, she added, until her current company, Growth Science, worked with the company and analyzed its data to show the breakdown of the company's project success rate.
So what can large companies do to be more innovative? Here are some tips from Moran:
1. Know When a Great Idea is a Great Idea for Someone Else
"I think what happens is we have a lot of small talk at our jobs, and this small talk is disguised as big talk," she said. "You're in this meeting and this project has been going for four years and it's morphed over time and kind of not doing what we wanted it to do ... somebody says 'why are we working on this? That's a big moment."
Moran said one of the biggest mistakes made at any technology company is mistaking problems in the market for problems you should solve. Sometimes a great idea is a great idea for someone else, she said.
So companies need to figure out before setting out to solve a problem in a given market is whether or not the company is uniquely suited to deliver a solution in that space.
"You have to learn how to be different, not better," she said.
2. Ask Big Questions
"We often begin by asking hard questions before we have explored big questions," Moran said.
She recommends elevating the conversation from small talk to big talk and says that asking big questions can help build the necessary trust for tackling hard questions.
"It's very easy to think about things you can do instead of thinking about things you should do," Moran said.
Big talk is that type of talk that companies should be having at the beginning of a new project but often don't, she said.
"We like to talk about things we know so we'd rather talk at the very beginning of a project about the technology because we love talking about that, we know about that, we love to talk about the capabilities and what the risks might be and we think we're having a really meaningful discussion, but we don't really have the discussion we need to be having," she said.
The discussion that needs to happen at that beginning stage, according to Moran, often happens at the backend when a project has dragged on for a while and the company is trying to determine if it should live or die and if there is value in keeping it alive.
During her 13-year tenure at 3M, Moran realized that the mistake the company was making before was that it was approaching innovation by looking for a problem and trying to solve it. But there were more important discussions to have at the front end of innovation, long before there are even problems and solutions in play, she said.
"So what I started doing was moving that backend discussion way up to the front, even when it was just a trend," she said. "We would have discussions at the very beginning when things were just a glimmer in the eye, there was really no solution, there was really not a real understanding of the problem, and people thought we were crazy. How can we talk about a cost model when we don't even know what we're making? You can't, but here's what we're going to do: We're going to figure out what we don't know and then we're going to go figure those things out as we figure out what opportunities are out in the market and what ideas a company might have to solve those problems."