Technology Forecasting

20 Min Read
Technology Forecasting

Originally Published MX May/June 2006

BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT

Medtech executives can improve strategic planning with a structured method for exploring emerging technologies.

Robert R. Andrews

Market leaders across all industries have at least one trait in common: vision. This is especially true in the medical device industry, in which breakthrough products can result from the adoption of even minor technological advances. To gain and maintain their competitive edge, medtech executives are often faced with the challenge of identifying such emerging technologies and incorporating them into their corporate and product development planning. Accomplishing such a task requires company leaders to develop keen insight into trends that may determine which technologies are the best candidates for future medical applications.

0605x53a.jpgFor companies whose entire livelihood and existence rely on having a thorough understanding of medical technologies, the stakes are high. Firms that focus too narrowly on present-day or near-term technologies can rapidly find themselves capable of making only minor alterations to existing products, and therefore continually playing catch-up to their market-leading competitors. In such situations, companies become capable of producing only me-too products that must compete primarily on the basis of pricing. While it isn't impossible that a strong niche in me-too products could support a solid ongoing enterprise, such a business strategy has limited potential and is clearly not the most profitable alternative.

By contrast, companies that adopt innovative technologies into their corporate and product development planning can create medical devices that dominate the market and dictate price. Investor support for such innovative companies is typically strong, and the return on investment (ROI) in new-technology development can be outstanding.

Technology forecasting is a structured method for identifying developing technologies that are expected to exert strong influence on the market at some time in the future—say, two, five, or 10 years down the road. By employing such a method, medical device executives can develop a well-planned strategy to guide the staffing, budget, and resource allocations needed to create innovative, market-leading products. This article offers a step-by-step guide to technology forecasting that can help medtech leaders identify customer needs, search for technologies to help meet those needs, and shape their company's strategy to develop products accordingly.

What the Customer Needs

To ensure that the development and adoption of a new technology will benefit a company's bottom line, company leaders should first be sure that they are headed in the right direction to satisfy a real market need. Without such assurances up front, companies can easily find themselves working hard and spending vast resources to develop a technology that will always be searching for a buyer.

By conducting customer research, medtech companies can identify unmet needs for which users are seeking solutions. With this information in hand, companies can then allocate resources as necessary to find innovative technologies and create new products that will address the needs of users. Such investments of a company's resources are usually far more profitable than when similar resources are devoted to modifying existing products for line extensions.

An example of the importance of customer needs in the equation of new technology development is provided by the well-known trends toward aging populations and rising healthcare costs that are apparent in the world's industrialized nations. The convergence of these trends creates a dilemma for healthcare systems—whether private or government operated—because they cannot afford to pay for inpatient monitored care of an increasingly large number of elderly patients. Monitoring such patients in their own homes is an obvious cost-cutting solution; but to accomplish this, users require access to advanced monitoring and patient communications systems.

Today, the development of cost-effective devices for convenient and efficient home care is in progress, made possible in part by advances in wireless communications technologies. As more and more such devices are created and adopted, it will become increasingly easy and less expensive to diagnose and treat low-mobility patients in the comfort of their own homes.

A number of methods can be used to help medtech companies understand such market needs, including one-on-one customer interviews, focus groups, telephone surveys, and conjoint and factor analyses. Each of these methods has its own distinct advantages and limitations. Conjoint analysis, for example, enables companies to understand how customers value product attributes individually and in a group, providing meaningful insight into how trade-offs among competing characteristics should be made. If optimizing one attribute impinges on another, it is useful to know which of the two is deemed more important. Factor analysis, on the other hand, enables companies to create different bundles of product characteristics and determine which of the bundles would attract the greatest number of users. Finally, focus groups are helpful for concept testing and understanding the healthcare environment, which can have a major impact on product success.

Analyzing customer-needs data can help medtech companies understand customer dissatisfaction with current products and develop a sense of the overall needs of their key markets. By learning about the mistakes of their competitors and the limitations of existing products, companies can better serve customers with a novel product.

An example of such customer—and patient—dissatisfaction can be found in the field of cancer therapy. In conventional chemotherapy, drugs administered to cancer patients must diffuse across cell membranes to attack cancer cells. Such a technique often requires a lengthy course of treatment using high doses of extremely toxic drugs, which frequently also cause harm to normal cells and tissues. In the future, however, advances in nanotechnology are promising to make it possible to target the delivery of chemotherapy agents through the use of nanoparticles. Such an option may bring about significant improvements over current chemotherapy regimens by reducing the damage to healthy cells and improving the medication's effectiveness against tumor growth.1

Once a company has developed a list of the key needs of its customers and markets, those needs should be prioritized according to the urgency expressed by customers. Such an effort can help guide the company's allocation of resources so that areas of greatest importance to customers are given serious consideration in a timely fashion. It can also help companies to determine which areas of exploration are most likely to result in products that can be sold at premium pricing because of strong customer demand.

Finally, the list of customer needs should be refined again so that it leads only to projects that can be undertaken within the scope of the company's strategic business goals. This final selection is an important way for company leaders to ensure that they do not take on more than their firm is prepared to handle, and to identify how they will create and capture value from their innovation activities.

Ideation

Once a company has identified a list of unmet market needs that are within its areas of interest, the next step is to begin developing ideas that the company can pursue as possible solutions. Innovative solutions to unmet market needs may come from any number of sources, and it is useful for a company to cast its net as widely as possible during this early stage of exploration.

One approach to generating new ideas is to conduct a group ideation session focused on identifying solutions to a particular need. The ideation process utilizes brainstorming, forward-looking vision, and multidisciplinary knowledge to explore truly novel solutions. The end result is a series of technology and product concepts that have the potential to address needs previously identified by the company's customers. When fully realized, such technologies and products may offer an opportunity for long-term domination of the marketplace.

Ideation sessions work best when the company is able to pull together a team with diverse expertise, enabling the group to tap into industry-spanning skills (see sidebar). Potential participants in a company's ideation sessions might include physicians with a medical specialty in the appropriate areas of concern, technical field professionals, academic experts, and skilled engineers. Gathering such diversity can help a company explore a wider range of potentially useful technologies and product concepts, and refine those ideas in the direction of an ideal set of solutions.

When the company and its advisers have formulated several concepts that are thought to have good potential, the firm should conduct additional research to refine the list. Considerations that should be brought into play at this stage might include not only the maturity and readiness of the proposed technology solution, but also its availability in terms of the company's intellectual property rights. Technology solutions for which the company does not have clear freedom of use may need to be excluded from further consideration unless appropriate licensing arrangements can be made. When a company's follow-up research is complete, it should have a strong pool of candidate technologies and product concepts that are both feasible and in line with the company's business plan.

The Promise of New Technologies

If the company has conducted a thorough process of ideation, its list of candidates will likely include a number of well-known technologies as well as several that are in various early stages of development. The strategic importance of this latter group of emerging technologies cannot be overstated. Such new technologies frequently enable companies to take entirely different approaches to meeting market needs, and can lead to the development of products that have a distinct and long-lasting competitive edge.

In the $4.4 billion market for diabetes blood-glucose monitoring, for instance, many companies are actively exploring alternatives that might reduce the discomfort and inconvenience associated with traditional fingerstick testing. One candidate comes from the developing area of bioelectromagnetic resonance technology, and employs an external device to detect changes in a person's electrical impedance in response to a glucose-specific electromagnetic wave emitted by the device. If it proves out, such a noninvasive approach would dramatically change the blood-glucose monitoring process for diabetics and create an improvement in patient care that could be leveraged as a competitive advantage for many years.2

As this example suggests, companies should pay close attention to emerging technologies that could play an important role in the development of future products. They should broaden their search parameters to ensure that they are kept abreast of the latest technological developments, and should seek to establish contacts and relationships with institutions working on emerging technologies. Paying attention to this area will facilitate a company's efforts to bring possible solutions to fruition.

Because a company may be considering the adoption of many different technologies at various stages of maturity, it is helpful to plot them on a timeline. Categorizing candidate technologies according to their maturity can help a company keep track of when a particular technology might be ready for adoption into the products it is developing. Companies can also keep track of emerging technologies under development by competitors in order to know when they might begin to have an impact on the company's business. Categorizing technologies according to the following criteria is a useful method for keeping track of which are current and which are in the development pipeline for future application.

Short-Term Horizon. This segment should include technologies that are expected to have a strong impact on the market in one to two years (see Table I). Such technologies may have already been applied to some products in the medical marketplace, but they are not yet dominant or commonplace. These technologies can be used in line extensions or product modifications designed to enable a company to keep pace with its competition.

Enabling Technology

Application

Potential Improvement to Current Practice

Histopathological image processing     and content-based data     compression

Breat cancer biopsy

Automated reliability and consistency equivalent to     experienced, rested pathologist.Automated reporting compatible with electronic health     records.Measures tubule formation and pleomorphism, counts     mitotic figures, measures strength of receptor     activities.Potential application to other cancer types and other     pathological assessments.Intelligent image compression preserves areas of high     resolution where required.Compatible with reduced data storage and     transmission requirements.

Image and novel signal     processing

Magnetic resonance     imaging and     ultrasound

Ability to compensate for image blur caused by     patient motion.Ability to enhance image features.

Sensory data processing and novel     signal separation

Fetal     electrocardiography     (ECG)

Noninvasive technique.Improved antepartum and intrapartum care.Can distinguish and record fetal and maternal ECGs     from 15 weeks gestation.Can distinguish separate ECGs of twins and triplets.

Electroencephalography     (EEG)

Automatic separation of morphological features from     EEG recordings.Automatic removal of movement-related signal     artifacts.Reveals previously obscured details of brain activity.Reduced time for recording and analysis permits     quicker decision making.Potential application to other signal recordings (e.g.,     magnetoencephalography, fetal     electroretinography).

Physiological     monitoring

Integration of ECG, respiratory, and ambulatory data     can assist in vital signs monitoring.Potential application to remote patient monitoring     applications.

Structured light source and 3-D     camera

Patient monitoring

Invisibly illuminates objects and enables camera to     measure depth and profile.Reduced cost compared with competing technology.High speed (virtually real time).Potential application to improve fit of prosthetic     devices.Potential application to improve reconstructive and     plastic surgery.

Low-cost thermal imaging and     foundry uncooled thermal     imaging

Permits diabetics to monitor peripheral circulation.Permits early assessment of sports injuries.Potential application to postoperative wound     inspection for onset of infection.

Organic light-emitting diode and     pulse-oximetry sensors

Creates thinner and more-flexible sensors.Reduced cost.

Medium-Term Horizon. Often still in the research stage, technologies included in this segment may require two to five years of development before they are usable in medical products (see Table II). Technologies in this category can help companies deliver products that create a competitive advantage.

Enabling Technology

Application

Potential Improvement to Current Practice

Computer-assisted screening

Retinal image screening for     diabetic retinopathy,     glaucoma, and age-related     macular degeneration

Cost effective screening for hundreds     of thousands of fundus camera images.Reduced workload for screening technologists and     opthalmologists.Reduced long-term support costs.Can be applied to monitor laser treatment     programs.

Microbiological testing and     disease screening

Automated image processing for assessment of     bacterial cultures, wound infections, etc.Potential for enhancement using hyperspectral     capability (below).

Hyperspectral sensing and imaging

Enhanced retinal and skin     disease screening

Multispectral technique for earlier detection of      disease.Reveals diagnostic information hidden under white-     light and broadband examination.Extends to microbial cultures.

Titanium-powder injection molding

Orthopedic implants

Metal injection molding for high-performance     materials.Improved implant characteristics related to use of     titanium instead of steel.Facilitates creation of complex shapes.Elimination of machining and wastage.

Long-Term Horizon. Technologies that are just beginning to emerge and may take 10 years or more to hit the market are included in this category. Although the utility of some such technologies should be considered speculative, those that prove to be viable can enable companies to develop breakthrough products that alter the competitive landscape.

Company Impact

0605x53b.jpgRegardless of their novelty, proposed solutions will only succeed if they are practical for the company to develop. It is extremely costly to dedicate resources to initiatives that fail. This is especially true in the increasingly competitive medical device industry, where profit margins are under continual pressure and R&D costs may exceed three times the average for all manufacturers. Thus, it is imperative that companies evaluate proposed projects extensively before embarking on lengthy and costly development programs. Company leaders should refine their list of potential projects by eliminating ideas that could fall prey to any of the following common causes of failure.

Product concepts that a company expects to complete in a short term of one to two years should require only capabilities that are already within the set of core competencies available to the company. Observing this rule will help the company capitalize on its strengths and skill sets to create a competitive advantage. By contrast, entering an unfamiliar market or taking on the development of a new product hastily, without the skills needed to support such efforts, has caused the failure of many medtech projects—and more than a few companies. Permitting this to occur can divert resources from areas of expertise, jeopardize new-product success, and dilute a company's brand recognition.

Projects that can be scheduled for completion in a medium- or long-term time frame may require capabilities that are currently on the fringe of a company's expertise. Because such projects are on a longer schedule, companies have more time to develop the expertise necessary to support them. Competencies can be grown internally or obtained by partnering with engineering firms, academic institutions, or other medical product companies.

Companies should measure the feasibility of project proposals against their expected demand on company resources. Such evaluations should review project requirements in terms of budget, staffing, and other resources. The company should also compile a project completion timeline and assess whether the demands of such a schedule are manageable. Projects that place intense strain on a firm's finances or staffing generally have a higher risk of failure, and probably should not be undertaken.

The projects that make it to a medtech company's final list should have the potential to become successful, market-leading products. In general, this means that the projected products must be capable of improving patient care, reducing healthcare costs, or creating other significant improvements. While such benefits may be uncertain and difficult to predict, company executives should review project proposals with these criteria in mind. Projects that clearly hold no such potential may not be worthy of further consideration.

Considering all that a company may need to invest in the completion of a new-technology project, it is important that the eventual product be differentiated from competing solutions and proprietary to the company. Companies should review the status of competitive products and related intellectual properties to ensure that they will not encounter roadblocks in these areas.

Any technology or product concept that poses a strong threat of failure according to the factors outlined above should be eliminated from the company's list of proposed projects. Only the concepts considered to be most effective and feasible should be passed along for strategic planning, the next step of technology forecasting.

Developing a Strategic Plan

A refined and focused list of proposed projects should guide the company's formation of a strategic plan for product development, manufacturing, and marketing. Such a plan will incorporate differing implications for the short-, medium-, and long-term time horizons, and should be used to dictate the direction of the company's product development activities.

Technologies in the short-term horizon can be incorporated into fully defined product development plans. Because these technologies are already relatively mature, there is minimal risk that they will alter the device development timeline. To secure the greatest advantage from the adoption of such technologies, however, medical device companies must work quickly to beat out their competitors.

Technologies in the medium- and long-term horizons should not be included in near-term product development programs. The refinement of such technologies may not be completed in accordance with the company's project timeline, and it would be costly and time-consuming to sink resources into developing the technology and the product concurrently. Moreover, such immature technologies are subject to considerable modification that could substantially delay product development.

Companies that are planning to make use of technologies in the medium- and long-term horizons should be prepared to watch over the development and refinement of those technologies. Companies should stay abreast of developments in the field, monitor experimental applications, and continually conduct research that relates to their own projected applications. Moreover, they should prepare the ground within their own walls, so that the company has the resources needed to make use of the technologies when they have reached an appropriate level of maturity.

Once a company has mapped out the direction of its R&D efforts in accordance with appropriate time horizons, it should continually update those plans. Doing so can help the company shape strategies for keeping its efforts on track. Resources can be properly allocated, typically with the greatest concentration of resources dedicated to near-term technologies. And staffing levels can also be adjusted, so that the company has adequate support for projects in the medium- and long-term pipelines—especially those with market-leading potential.2

Monitoring the Competition

Bringing a novel medical device to market is unlikely to be profitable if competitors launch better products using a newer and more-efficient technology. For this reason, it is important that medical device firms continuously monitor their competitors and keep track of emerging technologies that may disrupt their path to market leadership. Company leaders should be aware of new patent filings, and should read institutional research publications and technical journals to stay in the know on industry happenings.

If a medical device company is successful in launching a product that attains market leadership, precautions should be taken to protect its innovation. Signing exclusive licensing agreements with research institutions that are developing potentially useful technologies can help to protect a company's proprietary advantage. Similarly, companies should ensure that their partner organizations—including outsourcing partners—will assign key intellectual property rights to the company.

Conclusion

By predicting and preparing for future technological advances, medical device firms can be first to adopt pioneering technologies. Marrying these breakthroughs with customer needs will lead to the development of highly demanded, differentiated, and innovative medical products, leading to profitable market dominance.

Whether a medtech company aims to attain or maintain market leadership, technology forecasting should be an ongoing feature of its organizational culture. By identifying emerging technologies and estimating the timetable for their readiness for commercial application, companies will create a roadmap that can direct important strategic decisions.

Reference

1. MedGadget: Internet Journal of Emerging Medical Technologies [online], available from Internet: www.medgadget.com.
2. HW Chesbrough, Open Innovation: The New Imperative for Creating and Profiting from Technology (Boston: Harvard Business School, 2003). Robert R. Andrews is medical division manager for the commercial group at Foster-Miller Inc. (Waltham, MA), a product development and process engineering firm with a specialty in the medical device and pharmaceutical industries.

Copyright ©2006MX

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