Innovation Success and Failure—Meeting Stakeholder Needs
By Ty Hagler
As I navigate different industries while wearing a few different hats—innovation management consultant, industrial designer, and product developer—I try to absorb as much knowledge as I can from the successes and failures I see in the marketplace. And if there’s one thing that both successes and failures remind me of, it’s the fact that there are no shortcuts in product development.
Any new product development professional worth his salt understands the importance of building a deep understanding of customers and stakeholders prior to design, development, and launch of a new product, through customer-focused ideation and research. But do companies always know how to meet the needs of their customers and other stakeholders from the very beginning, at concept stage? Well, that’s another story.
The Intricacies of the Healthcare Markets
One of our core markets is in the development of medical devices. Working in healthcare, whether it’s in pharmaceuticals, biotechnology, diagnostics, or medical devices, can be very rewarding. But what these areas all have in common is a huge level of risk, since these markets not only play to customer needs but have to meet the stringent demands of other stakeholders during the development process.
Each of the healthcare markets have a number of gatekeeper stakeholders, including the Food and Drug Administration, various health plans, hospital formularies, and other government agencies that administer healthcare to millions of people, such as the Veterans Administration, Medicaid, and Medicare. When a company is designing and developing a product for healthcare purposes, teams must know the end-users—patients and/or providers, but they must pay painstaking attention to the other stakeholders that control market access, pricing, and insurance reimbursement for the product.
Exhibit A: Brilliant Execution in the Medical Device Market
I recently observed an instructive example of success and failure in the area of medical devices. The first company is one that I admire and respect. Everything about this product is stunning—the design and development process has yielded a versatile, elegant product that’s first-in-class. But the best part is that bedrock knowledge the company obviously obtained up front in the process, since they have achieved multiple indications (read: approvals) in over a dozen areas. Indications for the first company’s product line range from classic rehabilitation cases like knee surgery, but also run the gamut from recovering stroke victims to non-ambulatory physical therapy.
To achieve this many indications takes time and effort, but most of all, it takes knowing your stakeholders. This company obviously invested a great deal of upfront resources in knowing what the rehab market needed from a new device and gave third-party stakeholders reason to believe in a product designed to meet previously unmet medical needs. They then went about designing insanely great products that would achieve international approval and adoption at third-party level, so that more patients would benefit from use.
Exhibit B: Fitness Center Exile
On the failure side, I ran across a second company that obviously didn’t do their homework. Their platform of rehabilitation products is simply repurposed technology that looks pretty commonplace in any fitness center from the 1980’s. Compared to the elegance and quality of the first company, the lack of investment in understanding the customer and quality products indicates that the company leadership is exploiting an old platform with few options for growth. At this point in their history, the team that’s developed the product has failed in terms of market access. They have no approved indications, and they are left to marketing their product at trade shows and through their website.
By failing to know their third-party stakeholders in both public and private healthcare payer organizations, the second company has achieved zero indications to help treat the myriad of conditions that require physical therapy. Instead of getting in there and competing with the first company, this product is now basically an over-hyped elliptical machine.
One more thing—it’s one thing to take shortcuts, but another entirely to ignore the advice of your stakeholders. In our research, we found evidence that this second company ignored third-party payers’ advice for changes in the product design and instead opted on a second shortcut, simply attempting a label change. Now, instead of having a market challenger on their hands, the company has a white elephant, hoping that they can sell a few fitness centers on the trade show circuit.
I’d personally rather have one of the devices we’re working on land in every major medical center in the country, and I’m not willing to advise shortcuts along the way.