Voices: the CMB Blog

In the world of medical technology, the historical driver of value has been feature-driven. Hospitals, insurance companies and other payor audiences have been willing to pay a premium for new features—up to a point.

Today, though, in a climate of increased scrutiny over costs, more competition, and stricter reimbursement rules, payors are no longer eager to pay for minor features. This is especially true when looking to “leaner” markets outside of the US. Furthermore, consumers are becoming more empowered in their healthcare and as a result are increasingly looking for solutions that fit their lifestyles, rather than technical feature sets.It’s time for medical technology companies to think about step-change innovation as a driver of value for them and their customers. And this innovation needs to begin and end with focus:

• …on the customer segment: What are the current and potential markets for this product? Are there under-penetrated segments where a gap exists? Traditionally, companies have not focused on the end-user (the patient); yet this is an opportunity for innovation. We have also seen quite a few products “de-featured” for emerging markets and then brought back to the developed world for a unique segment. Is there a viable market segment that would be served with a “light” version of your product?

• …on the customer goal: What are customers trying to accomplish with your products? How can you make their jobs easier? This requires communicating solutions—rather that discrete features—that directly solve a pain point. This could involve software, services, etc.

• …on regulation: Between healthcare reform, re-admission rules and electronic records, healthcare is a prime field to view regulatory changes as an opportunity to make the customer’s life easier. In what ways will regulations change your customer’s business and how can you help?

Looking for innovation in your existing portfolio can be highly lucrative. An example of a “de-featured” product is from GE India: it stripped the bells, whistles and 423 pounds from GE’s $100,000 Logiq 9 ultrasound machine and introduced a handheld device at about a tenth of the price. While this monitor was less advanced than its predecessor, it was a great fit for India due to small size and portability.

What hidden gems lie in your portfolio? Have you uncovered and exhausted opportunities for innovation?

Rachel Corn is a Director at  South Street Strategy Group, she specializes in finding growth opportunities in new market segments, new products and businesses and innovative business models.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies. 

Earlier this year CMB’s MedTech team partnered with the Massachusetts Medical Device Industry Council (MassMEDIC) to survey members for their perspectives on the past, present, and future expectations for innovation and growth in the medical device industry. Click here to download: The 2013 MedTech Industry and Innovation Study.

Today most companies are watching their expenditures closely and are challenged with how to effectively get the word out to prospective customers, but on a limited budget. The key to this is focus, across three different dimensions that we call AMP:

• Audience. It’s tempting to think that “marketing” doesn’t happen until after a product is finished and ready to sell. However, efficient and effective marketing is tailored to specific segments. This requires a company to have a firm focus on what it’s selling and to whom – early on in product development.

• Message. In today’s media environment, generic messages are worthless. With a specific, well-researched target market in mind, companies can craft tailored marketing messages that speak specifically to that target’s needs and goals.

• Promotion. There are some core tactics that every marketer has in his or her arsenal of tools: advertising, PR, conferences, social media, among others. Focus on key tactics and related outlets that you know your target market will look to for the needs you’ve identified.

Blanketing the entire marketplace with broad messaging is expensive, and typically ineffectual for anyone other than big brands who have to maintain broad-based awareness. Doing less in a deliberate way can make your money stretch farther and deliver more tangible results in terms of new, worthwhile prospects. Following the above guidelines, in this specific order, can help you focus your marketing activities.

Do you already have a segment you can hone in on to AMP up your marketing?

Rachel Corn is a Director at  South Street Strategy Group, she specializes in finding growth opportunities in new market segments, new products and businesses and innovative business models.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies. 

At any point in the innovation process, businesses can come across new information, trends or practical issues that challenge thinking about what the end result of an innovation should look like. Maybe a new technology can’t scale or the application doesn’t have a big enough market. Or perhaps competitive analysis reveals that a new service or business model isn’t as unique as once thought. There are examples that many of us could on draw from our own experiences. Challenges like these can be frustrating and force businesses to think differently—creatively—about how to move forward. They actually provide the constraints within which an innovation project must operate.

At the FEI conference in Boston, there was a lot of talk about the role of constraints in creativity. Pasquale Cetera, VP of Portfolio Management and Strategy at Merck, brought this into focus during his presentation on R&D decision-making. Pharma is clearly a very developed industry, and this is a key challenge in innovation. The low-hanging fruit has already been developed and is on the market, so to bring new products to market requires more time and investment than ever before. This, along with the fact that regulations are ever-more stringent, means that the average length of drug development is rising, and pharma companies find themselves under pressure to focus and improve success rates at each stage of the development process.

It’s a big challenge with a significant bottom line attached to it. The necessity to maintain the business in spite of this has given rise to innovations that simply were not needed to make a profit until recently. Some of the innovations that Pasquale highlighted include:

• New lead optimization approaches in the Discovery stage, so that suboptimal leads are let go early-on

• Use of biomarkers to improve the probability of success in Phase 2 (Efficacy & Proof of Concept)

• Business model innovation: from fully integrated pharma companies (FIPCOS) to fully integrated pharma networks (FIPNETS)

• Collaboration with health payers to solve problems vs. traditional antagonistic relationships

Innovating within these kinds of big-picture constraints isn’t just a big-industry phenomenon. There are impressive innovations coming out of emerging markets, be it in the form of new agricultural models that support small farmers, mobile computing in Africa, or new type of distribution system for a CPG in India—as a few examples.

So, the next time you come across a challenge that alters the reality of your business, I encourage you to approach it not as a threat, but as an opportunity to differentiate and push innovation farther than it would have gone otherwise.

Jennifer is a Director at  South Street Strategy Group. She recently received the 2013 “Member of the Year” award by the Association for Strategic Planning (ASP), the preeminent professional association for those engaged in strategic thinking, planning and action.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies. 

See how CMB and the South Street Strategy Group helped SunTrust use a customer-centric approach to inform brand strategy, improve marketing tactics, and drive organizational  transformation. Read the case study.

Next week you'll find us at the Front End of Innovation 2013 sharing how we, along with our partners at South Street Strategy, took a practical, focused, and innovative approach to new product development for Tauck Worldwide. Read a little bit about what we did here:

The Challenge

Tauck Worldwide, an industry leader with over 85 years experience in premium guided tours, wanted to create a new travel concept to meet the needs of a population increasingly comfortable with researching, planning, and traveling on their own. Tauck needed innovative thinking to define and build a new type of tour product – one that appealed to next gen customers, conveyed a unique brand identity while standing out from competitors in the crowded travel market space. 

What We Did

CMB and principals from South Street Strategy Group used a multi-method, multi-source approach to:

• Select top opportunities on which to focus

• Ideate across functions with executives and senior managers, leveraging insight and experience in the market

• Research and assess the competitive landscape and baby boomer’s core  travel goals and needs – particularly un-met needs

• Test alternatives to guide product development, pricing and identify target guests who are most interested in the new product line

• Identify acquisition targets in the travel industry, new business models, and new product offerings, by leveraging core competencies, that would create significant value for the company and address baby boomer needs

• Work with the CEO, CFO, and COO and the New Ventures Group to ensure recommendations were aligned with business constraints, addressed operational challenges and met business goals

How It Was Used

Tauck launched the Culturious brand as a totally new product line on time and with unanimous board approval. The new brand, which currently consists of 8 packages and destinations, meets customer needs by offering small-group tours geared toward active baby boomers with an interest in active, culturally engaging travel. The brand has won awards, including the 2010 Innovation prize from the Connecticut Quality Improvement Award Partnerships (CQIA).

To learn more about our approach to New Product and Service Development click here.

For more of our case studies click here. 

With ever more crowded industries, and customers’ ever-growing access to information that guides decision-making, if ever there was an era where the customer came first, this is it. Landing on a strategy that will delight current and prospective customers requires getting to know them both qualitatively and quantitatively. And herein lies the challenge. This kind of insight takes time and money and often gets pushed off or short-changed.

It’s true that data should not be the only driver of your strategy. Indeed, as Steve Lohr of the New York Times recently wrote: Listening to the data is important…but so is experience and intuition. After all, what is intuition at its best but large amounts of data of all kinds filtered through a human brain rather than a math model?

Taking these words to heart, strategy is both an art and a science. At some point, asking for the umpteenth model of sensitivity analysis simply isn’t productive to decision-making. On the flip side, building a strategy based on anecdotal evidence from the sales team (for example) will usually result in more pain than gain, financially and operationally.

Data will ground your thinking in facts. Intuition and experience will guide your thinking on why the facts are what they are and how to take action.

I often find that data is at its most valuable when used to:

• Prioritize. Having data around which questions or problems are most important to address and which opportunities are most attractive is imperative to prioritizing which paths or solutions a company chooses. Even one data point can have big impact: when one of our clients learned that 50% of its online directory was inaccurate in some way, the decision around which customer-facing channel to focus on first was easy to make.

• Challenge assumptions. Without an outside-in approach, companies are making big bets on assumptions about the market and their customers. An insurance company I once worked with wanted to extend their brand into what seemed to be an adjacent product space from their point of view. However, customer research revealed that customers actually didn’t trust that company—or any insurance company—to manage this new line of business well.

• Shore up confidence. Whether launching a new product or service, redesigning a brand or moving into an adjacent market, a new strategy needs to be sold up the executive chain. Data, from the mouth of the customer, not only reduces risk in decision-making but helps sell the decision internally. Bringing the outside in changes people’s minds.

How well do you apply the science of data to the art of strategy?

Jennifer von Briesen is a Director at  South Street Strategy Group.

South Street Strategy Group, an independent sister company of Chadwick Martin Bailey, integrates the best of strategy consulting and marketing science to develop better growth and value delivery strategies.

See how CMB and the South Street Strategy Group helped SunTrust use a customer-centric approach to inform brand strategy, improve marketing tactics, and drive organizational  transformation. Read the case study.