In an ever-changing medtech space, how do companies keep up with the pace of change? How do companies adjust and innovate their business models to reflect that?
Leaders from some of medtech’s biggest names attempted to answer some questions around that at AdvaMed’s The MedTech Conference yesterday. (Want to find out more? Leaders from major medical device companies will discuss innovation in surgical robotics, diabetes tech, cardiovascular and neurovascular tech, oncology and more at DeviceTalks West, Oct. 18–19 in Santa Clara. Register here.)
A panel on “Disruptive Business Models in Medtech: The Next Frontier of Value-Centric Innovation” included:
- Veronica Acurio, president of the Medical Solutions division, 3M;
- Gio Di Napoli, president of the GI operating unit at Medtronic;
- Brian C. Montgomery, chief strategy officer at GE HealthCare;
- Simran Sbharwal, VP of global marketing for hips at Smith+Nephew;
- Jay Zhu, Ernst & Young partner for medtech strategy, transactions and commercial, as moderator.
Here are some of the key takeaways:
(Some of these quotes were edited for brevity and clarity.)
Is business model innovation harder in healthcare than in other industries?
GE HealthCare’s Brian C. Montgomery
There certainly is more complexity in some of the things that we have to deal with. But it is not that other industries don’t face those things as well. Maybe the pace of change has to be a little bit different. But, I think we have a lot of things in this industry that we can look across to other industries and draw parallels and say how can we learn some things sometimes, then this may be helpful for us. Our provider customers don’t change as fast as maybe the tech industry or maybe some other parts of the world change. We can draw some parallels for what we can do.
Medtronic’s Gio Di Napoli
I think you get to know your stakeholders. So you need to know how to create this cycle of innovation that is going to be stable. I think the challenge is to get started. If you’re a startup, you have an idea, and you need to get to market. It requires a lot of capital and time. Product development might be challenging in terms of timeline and also in terms of the money that you have to have to raise. But, once you get to a position where you know you have continuous innovation, I don’t think it’s any different than any other business.
Smith+Nephew’s Simran Sabharwal
For me, it actually depends. If business model innovation includes a disruptive technology which is in its early infancy, then yes, it does take a longer time because you’ve got a heavier evidence burden and a heavier reimbursement pathway to go through. But, the beauty of business model innovation is it’s beyond product innovation, too. And so if you’re looking at innovating in process or innovating based on government policy changes, I actually think sometimes it’s going to be faster.
3M’s Veronica Acurio
I think it’s true that it is harder to do business model innovation in healthcare. The things that come to my mind are, No. 1, the role of some variables that are not typical in other business models like the ones outside healthcare — reimbursement, data, privacy. It’s also all of the compliance elements that exist here when you’re trying to drive a business model for setting a different standard of care. Those would be, for me, reasons why I would think they’re a little bit different than just business model innovation in other industries.
What comes first — disruptive technology or a disruptive business model in medtech?
Sabharwal
It’s a bit of chicken and egg, but I actually think what needs to come first is a burning platform for change. That, generally in medtech, tends to be around an unmet customer need that has an urgency to get addressed, right. In my experience, if you look at wound, orthopedics and sports, where we’ve seen a lot of business model innovation, there’s been an unmet need that needs to be addressed. We’ve developed disruptive technology that addresses that, and we’re now doing innovating within the business model pathway in order to drive adoption of our technology. I’ve seen more of that. But, I also know that there have been instances where governmental policy changes or reimbursement changes, for example, have led to people thinking differently on business models and that has then created an opportunity to develop products as well. I think it really depends.
Acurio
In our case, the example is that we have concretely started with disruptive technology, but I agree that it could come simultaneously. It will come from both ways. In our case, it started with disruptive technology. I believe you can also drive business model innovation driving a customer need more than just centered in the technology.
Di Napoli
I think technology is the foundation of any business model. You’ve got to look at what you have in your portfolio, what you’re thinking about bringing to market. I don’t think you can start with a business model. First, I think you should have a technology roadmap. From there, begin with a very creative approach for how you can position this in the market globally, in the U.S., with customers, with payors, with the regulatory bodies. Technology, I think, is the start of this. I believe it’s the way to start.
Montgomery
I think it also starts with the customer and looking backward from what they’re telling you their needs are. Then, that can help to say, what are the areas that we can change in the business model to best meet those needs? It’s got to work in parallel as we go.
Other key takeaways
Di Napoli on working with partners
Do you guys know the NIH syndrome? Not invented here. It’s a big, big barrier to go through this. It has to be our technology. I mean, I don’t see other ways to go to market with some other company’s help. But, the reality is that you can’t pretend to do everything by yourself. It doesn’t make sense, especially in tech, right, especially in AI, especially in digital. There are much better companies out there that move faster than a giant like Medtronic can move. We went out and really just learned a lot over the last four years at the point where, you know, when this opportunity [to develop GI Genius] came into realization, it was not easy to make a call. But we did it.
Montgomery on integrating new tech
I think it starts with what problem you’re trying to solve. We spend a lot of time trying to get to the bottom of that. If you’re aligned with your customer and the problem, then you as the company are the best position to help them that solve that problem. And magic can happen. You can start to really innovate around business models.
Sabharwal on triggers and learning experiences along the way
For us, it’s largely been driven by an unmet need. That’s been the biggest trigger. Just kind of having thought leadership, driving towards that technology offering has also been another trigger. Getting people who are senior leaders in their societies turning around and saying this could really change the game and then advocate for you, that’s been another trigger that allowed us to really kind of engage and drive in that space. In terms of best practices, I think the biggest learnings that I’ve seen is it’s important to select pilot markets and not try to globalize because as you get to a business model innovation, even if it’s disruptive technology or digital, no two markets are the same.
Acurio on the mindset needed to innovate business models
It keeps me thinking about the importance of having the right mindset in the organization to drive something like this. It is not common in our industry to drive business model innovation. I mentioned earlier that I think it’s a little bit harder in some cases. Allowing the current processes that we have to drive innovation to build a business model is super important. It requires mindset, leadership, understanding that there’s an opportunity to create greater value. There’s tons of opportunities in the healthcare industry today that show that opportunity to create greater value in care, greater value in an outcome-based model that is supporting so many of the pressures that the healthcare system has around the world.