“But when I have drilled down into the work the so-called innovation labs were actually doing day-to-day, I have discovered that it is actually the innovation managers that “don’t get innovation” It turns out your boss was right to shut down your lab and here are five reasons why.” Forbes, Tendayi Viki
We try and stay pretty positive about innovation and disruption – after all, it is what we do for a living. However, I saw this article recently, and it struck a chord with our entire team.
From the article, we agree with the author’s points about:
Most people working innovation labs tend to conflate innovation with creativity.
A lot of innovation labs are working on projects that are not aligned with the parent company’s strategic goals.
Innovation labs need to have a strategic focus.
The job of an innovation manager is not to imitate the outcomes of innovative companies (i.e. ping pong tables and bean bags), but to understand and implement innovation practices to create one.
After many years, most innovation labs have to demonstrate impact.
How Do You Know If Your Innovation Effort Needs Disrupting?
I am proud that (before it was all the rage) I was one of the 1st Chief Innovation Officers in healthcare. As part of a $12-billion-dollar machine that had been running pretty much the same way for 75 years, I certainly found the task daunting. Coming from the startup world, where I had successfully helped launch national healthcare disruptors like RediClinic and The Little Clinic, it was a shock to the system (mine and theirs). That journey is food for another story. However, my time there changed me in a very positive way, and I am certainly pleased with the results.
I mention it, however, because the article above made me realize what I could not verbalize but was feeling – most corporate innovation programs are little more than “innovation as theater.” Even with best intentions, many of them have missed their purpose, which is to disrupt. Instead, many innovation managers busy themselves (and burden others) with the non-essential work.
We decided to add in a few self-check questions that we believe all innovation managers should ask themselves. And if the answer is “Yes” (please be honest here) to most of them – then you probably need to rethink your innovation efforts.
Is your Innovation Lab more than walking distance for more than 95% of your employee base?If so, bad idea. Innovation is for anyone who can contribute – incrementally or significantly. Who are we to think innovation only lies with a small team? This approach is a sure fire way of creating the “us vs. them” scenario.
Do less than half of your “market ready” innovation projects get adopted by the core business?If so, then you are probably innovating for yourself. If no one wants or can use your best work, then you are not aligned with the work of the “core.” Remember, it is the big machine that pays for your experiments (and expresso machine and bean bags). You have to be meaningful to them if you want your work to take root in the market and grow.
Do you spend more time at innovation conferences than producing successful “market ready” innovation projects? This one should be obvious. No one can tell you what will disrupt your business better than you. That is what you are paid to do. As fast as you can, learn the basics of minimum viable product development and agile methodology – and get busy disrupting. If you want some help learning or doing – call us because this is what we do best.
Well, that is what we think at least. But hey, we could be wrong. Let us know one way or the other.
After reading my 3 earlier posts, I hope we have you convinced that this is a worthwhile effort and that you should join us. By joining the forum – you join the movement to create a better healthcare system.
The solutions for transforming healthcare will come from harnessing diverse ideas from across the ecosystem of healthcare stakeholders. We are inviting individuals inside and outside of the healthcare industry to join us on one platform to ignite conversations and build solutions for new business models within US healthcare.
That means you – yes, you are invited!
When you sign up, you will join other passionate healthcare and innovation professionals to create meaningful change in the US healthcare industry. You will also cultivate new professional relationships, elevate your personal brands and identities, and receive direct attribution in my forthcoming book as permanent proof of the important co-creative role you played.
Please know this is not a marketing scam – we are sincere in our work and care deeply about our goals. Our end result will be a book published in 2014 that you will get to share in the credits for creating.
After that, there will be three Phases to the modelH project, which will last through at least March of 2014.
The three Phases are:
1. CoCreate a healthcare business model generator, called modelH. We will draw from the work of Alexander Osterwalder and Yves Pigneur in their book, “Business Model Generation: A Handbook For Visionaries, Game Changers, and Challengers” to create a new framework for developing health model innovation throughout the remainder of the project. Building the modelH engine is the most critical part of the project, and we’ll be devoting most of our time – 4-5 months – on this module.
2. Generate and evaluate ideas through the modelH engine. Next, we’ll gather your inspiration, insights, and research to develop ideas that can be tested in the modelH engine. These ideas will address our three main areas of concern for healthcare: creating positive consumption experiences, improving the care delivery mechanism, and aligning payments and incentives. If we’ve built modelH correctly, we will be able to produce innovative business models that reflect a new direction for US healthcare. We expect to spend 2-3 months on this module of the project.
3. Validate the health model innovation solutions. The final step is to review our modelH solutions to ensure they are fair, reasonable, and feasible. Once validated, Kevin Riley will be compiling the work into a visual playbook to be published later in 2014. We expect to spend 1-2 months on this module.
This project is a labor of love for all of us and the modelH team is fronting the cost to put all of this together. Our reward is the same as your reward: pride in creating a new path forward for US healthcare. It’s an opportunity to do something meaningful that has the potential to effect change on a system that is in dire need of change and to positively impact the lives of millions of Americans. We’ll also provide attribution to all contributors in the book as proof of the important role you play.
Keep in mind that this is an experimental project, and we expect some bumps along the way. If you encounter troubles, inconsistencies, or simply need clarity on how it all works, kindly let us know so we can improve the process. Also, we will have a firm “no jerks” policy in place within the modelH forum. We want disruptive thinkers, not disruptive individuals. If you are serious about making something that will help all of us create the healthcare system we so desperately need, please join in with a heart and mind for that task. If not, please sit this one out.
What is a business model canvas? Wikipedia defines it as “a strategic management template for developing new or documenting existing business models”. It is not a business plan, but rather a visual language designed to align business activities that produce value by illustrating potential trade-offs. The idea was initially proposed by Alexander Osterwalder.
A business model canvas for the American healthcare system
Phase 1 of the modelH CoCreation Forum aims to create a business model canvas specifically for healthcare. To do so we must first agree on what defines value within the American healthcare ecosystem. Our definition of value is based on Michael Porter’s work in What is Value in Health Care? – “the patient health outcome achieved per healthcare dollar spent”. Therefore, a value-based healthcare business model must result in:
Increased access to necessary care through an engaged delivery system;
Reduced aggregate cost of care, with a market-driven, balanced incentive and reward model; and
Improved consumer experience yielding an informed decision maker aligned to their risk and reward.
Our healthcare business model canvas, which we are calling modelH, must also work in a market-driven system. Better ideas can then be generated and evaluated using that engine because they 1) create shared value and 2) can succeed in the marketplace. Likewise, current models and trends can be evaluated through this engine to see if they are effective.
The basis for modelH is Alex Osterwalder’s work on business model generation but modified to fit the uniqueness of the American healthcare domain. Our community will participate in modifying the Osterwalder model as needed to create the modelH Healthcare Business Model Canvas.
Our work on Phase 1 of for modelH will take on two distinct conversation types.
The 1st conversation type will be to look at the core Building Blocks of Osterwalder’s model and debate their nuances in regards to healthcare business models. Wikipedia defines these core elements as:
Customer Segments – the customer groupings a business model serves.
Value Propositions – the collection of products and services a business offers to its customers.
Channels – the way a company brings its value proposition (product) to its customer segments.
Customer Relationships – the type of connection a company wants to create with their customer.
Key Activities – the most important tasks in the execution of a company’s value proposition.
Key Resources – the internal assets required to create value propositions for customer segments.
Key Partners – the external relationships needed so a company can focus on their Key Activities.
Costs – the most important financial concerns of a company’s business model.
Revenue – the way a company makes income from each customer segment.
The 2nd conversation type will be to define the new Building Blocks needed for healthcare and how they should be incorporated into the canvas. The additions to be discussed are:
Externalities – the external forces (regulations) imposed on healthcare business models.
Jobs-to-be-Done – the customer’s JTBDs, which may not adhere to a company’s value proposition.
Intermediaries – the influencers/intermediaries between the healthcare customer and the product.
Experiences – due to multiple intermediaries, customer experience bears a greater look.
Cost Drivers – for healthcare to exists, the cost drivers must come under control.
Payments Sources – in healthcare, customers are separated from payment sources in many cases.
Platform – the healthcare ecosystem is interdependent, requiring an infrastructure to work.
We will do this in the order of importance to a business model – starting with the Customer and ending with the Platform. The result will look something like this:
Hello again. I wanted to give you all another update on the big project I am calling modelH. This project is a dynamic collaboration between Innovation Excellence, Batterii, and a bunch of great healthcare thinkers including me.
Last week I told you about what we were trying to solve. This week I aim to tell you how.
I need your help to make this work. But before we ask you to get involved, let’s talk more about how we can solve this problem – together.
How do we solve the problem?
The American healthcare system is not so much broken as made up of working parts not working together.
The modelH team believes the ecosystem can be fixed! The answer lies in aligning the business model, so all stakeholders share an understanding of “value” across the themes of consumption, delivery, and financing. Our definition of value is based on that of Michael Porter, put forth in his paper entitled What is Value in Health Care?. Value in healthcare is measured as the patient health outcome achieved per healthcare dollar spent. A better healthcare business model must then result in:
Improved consumer experience yielding an informed decision maker aligned to their risk and reward,
Increased access to necessary care through an engaged delivery system, and
Reduced aggregate cost of care, with a market-driven, balanced incentive and reward model.
Our goal of Health Model Innovation is lofty, but achievable. We believe modelH will result in a practical guide to fixing the healthcare system that all stakeholders can use to create better aligned and market-sustaining business models.
But our goal is too big and too important to try and solve alone. This cannot be done without the actual stakeholders co-creating the solution together, outside of an over-focus on any particular theme, or an over-influence from any stakeholder group.
Phase 1 is to agree on the framework and tenants of a healthcare business model canvas. This will create a structured means for business model generation, similar to the one developed by Alexander Osterwalder and team, but designed to work in the American healthcare system.
Phase 2 will use the healthcare business model generator to develop and evaluate innovative market models and business ideas with the hope that some party within the ecosystem, or even outside of it, takes them to market.
Phase 3 will take our findings and publish them in a visual playbook for all healthcare innovators to use.
Stay tuned – next week we will discuss how to build a business model canvas for the American healthcare system.
Any healthcare company that builds products or talks with customers ought to have an “Innovation Center”. The idea is to create a physical facility that is part consumer lab, part living laboratory, and part workplace- aimed at designing and delivering the healthcare models of the future. It will be an environment where all organizational and community stakeholders can experience your company’s view of the future of healthcare and be inspired to help create it. An Innovation Center can incorporate the brand promise within a physical setting. An Innovation Center shows true commitment to practice innovation in healthcare. It is time for all healthcare companies embrace the future the way the Mayo Clinic has done for years.
To get started on what I am about to talk about, watch this virtual walk-through of the Mayo Clinic Center for Innovation.
What is an Innovation Center and Why Would You Need One?
The main objectives for an Innovation Center are:
1. Designing
2. Prototyping
3. Collaborating
4. Simulating
5. Validating
6. Envisioning
Lets discus them in some detail.
1. Designing.
Job # 1 of an Innovation Center should be to create (and improve upon) intentional experiences for your customers. You cannot have a good experience without good design. The Customer lab can serve as the place to visualize and practice Design Thinking. Wikipedia defines Design Thinking as “a style of thinking [designed with] the ability to combine empathy for the context of a problem, creativity in the generation of insights and solutions, and rationality to analyze and fit solutions to the context. “
An Innovation Center lets you teach the process and the methods of Design Thinking. These are the tools and techniques that great designers use to generate ideas and solve problems. Your aim should be to create an employee base trained in the arts of creative problem-solving.
Source: Design Thinking for Developing Innovative Communication Strategies By Don Bulmer
2. Prototyping.
Job # 2 of an Innovation Center should be to create faster paths to market for new products and models. One such method to do this is referred to as rapid prototyping and uses the discipline of Minimum Viable Product (MVP). MVP enables designers to validate assumptions about their “product” in two important aspects: its value and the demand for it.
By definition, MVP is the version of a product that gets built through one cycle of a build, measure, and learn loop – as fast as possible. Once the MVP is confirmed (keep in mind it may take a few iterations), other lean methodologies can be employed to build upon it. An Innovation Center allows this rapid prototyping to occur outside the traction of the legacy product and technology build systems at your company. MVP delivered through an Innovation Center enables product developers, system designers, and business analysts to determine whether people want what they are building – in a manner that gauges acceptance and demand – yet preserves capital and time for your company.
3. Collaborating.
Job # 3 of an Innovation Center should be to create a physical place designed to facilitate adult learning and team collaboration. As discussed in the book Where Good Ideas Come From: The Natural History of Innovation, big ideas are a series of smaller ideas coming together to form something that is meaningful to the market. The Innovation Center should be a co-laboratory that brings multi-disciplinary thinkers together on a common problem. Think of it as a modern version of a Library, except you are allowed to talk, experiment, and interact on topics of importance to your customers and your company.
You cannot ask people to collaborate on work if there has been no historical support for collaboration at your company – they simply just do not know how. They remember when they were kids but were programmed out of that model through a progression of educational settings and work scenarios where individual work product was the mode of operation. Asking people to change their work models without giving a realistic means to do so is merely rhetoric. An Innovation Center is designed to force interaction between co-workers. When combined with modern adult learning techniques like teaching collaboration, an Innovation Center can be the breakthrough that your company needs to re-educate its employees on how to work together.
4. Simulating.
Job # 4 of an Innovation Center should be to create a place to simulate customer interactions. Simulation is another great tool for adult education. While classroom learning and computer-based training still have their (small) place in the arsenal of training tools, nothing substitutes simulating a real life scenario to embed the training into the mind, and actions, of the trainee.
If your current training facilities do not invoke/inspire interest and a spirit of learning about how the customer feels in response to your customer-facing interactions – consider extending the facilities into an Innovation Center. Use the space as a simulation center to teach how to deliver the best results to a member and video it to review in private.
I had the opportunity to a take tour of the CAMLS — Center For Advanced Medical Learning And Simulation in Tampa, FL. I was highly impressed with this innovation facility and what it will accomplish for the future of medicine and healthcare. You can see some images from my time there in this short video.
5. Validating.
Job # 5 of an Innovation Center should be to create a place to have customers provide feedback on your company’s products and services. Part of the MVP concept mentioned above requires feedback. Healthcare is not like software – it is harder to have Beta users and not create tenuous or even dangerous situations. Proper validation through customer feedback is essential to great product design.
An Innovation Center as a customer lab allows this to happen with the control and confines of your company and reduces the need to pay outside parties to accomplish this oft-repeated task. To be a great consumer company, your company should foster its ability to do firsthand consumer research.
6. Working.
Job # 6 of an Innovation Center should be to your workplace of the future. Unless your company offers workspace like Google (and there are many of these, especially in Austin!) – consider using your space to transform your company’s cube farm into a dynamic workplace. Even if you are doing the best work on Earth, if you are sitting in a cube farm only lit by artificial overhead lighting, chances are you are miserable. Employers are obligated to make great environments for all people to work in, not just the executives. But convincing leaders about what this space should look like is hard to do.
An Innovation Center is supposed to look different – so make it your staging ground for your transforming workplace. Build it with the most modern yet simple furniture. Give it the technology bells and whistles that are fun to use and make people happier when using them. Keep it open and well lit. Provide couches and comfortable chairs to think in. Make it like everybody’s favorite thinking place – Starbuck’s. This will greatly enhance the employee experience and value proposition – and as a result, create a more productive workforce.
7. Envisioning.
Job #7 of an Innovation Center should be to create a fluid understanding of what the future of healthcare might look like. According to Microsoft, their “Microsoft Innovation Centers (MICs ) are state of the art technology facilities for collaboration on innovative research, technology or software solutions, involving a combination of government, academic and industry participants.” Apparently there are now more than 100 Microsoft Innovation Centers worldwide. IBM has several IBM Innovation Centers as well. The concept used at Microsoft’s Innovation Center is “Behind this door lies the future – not a vision of what we want, but a vision of what will be.” Your company should adopt this philosophy as well.
Telling is greatly improved by showing. Teaching a man to fish is how the old adage goes – try putting the pole in his hand near the water, and you are off to the races. Showing removes the need for employees to try and interpret what your leaders are envisioning. Instead, it evokes people to quickly debate on what they see or come up with ideas on how best to implement them. This should be a focus for your company.
Justifying the Cost
In Summary, an Innovation Center can be easily justified as both a capital expenditure and a resource development tool. To compete in a consumer economy, a company needs the capacity to think, react, and dream at the speed of the customer. The natural functioning of business units is contrary to this need. A customer lab opens up the ability for consumer thinking for the whole company, without jeopardizing the current operations.
So the question is not, how can an insurance plan justify an innovation center on an ongoing basis? – but how can they not if they want to become great consumer healthcare companies?
But a word of caution on this idea – companies and the people that work for them change – what is needed today will be old hat tomorrow. If you are going to build your own innovation center – don’t pour it in concrete. Meaning, save room for new ideas and build it modularly so sections that are no longer relevant can be removed.
Hello to all. I am working on a new project I am calling modelH. This project is a dynamic collaboration between me, Innovation Excellence, Batterii, and a bunch of great healthcare thinkers.
Our goal is to create a business model canvas specifically designed to generate and evaluate healthcare business models that can create positive consumption experiences, improve care delivery, and align and control costs. We then want to use our framework to co-create and test some innovative healthcare business models. The results will be compiled in a book to be released in 2014.
modelH – Health Model Co-Creation Forum
What is the problem we are trying to solve?
The American healthcare “ecosystem” in its basic form operates along 3 themes: care consumption, care delivery, and care financing. These domains are interdependent points of interaction along a value chain of healthcare. To impact one point, you really impact them all. Make no mistake – healthcare is a business! The problem is that very few people create business models that are considerate of all three points of view – and certainly no one has come up with a framework to make this easier.
Also, across the value chain of healthcare, there are four key stakeholders: patients, providers, payers, and purveyors. To put it in simple terms, the party who consumes the product of healthcare (the “patient”) is usually not the one who pays for it, or at least not most of it. The party that pays for it (the “payer”) is best served when it is not used, and is therefore motivated to push for less of it. Furthermore, the parties that deliver it (the “provider”), and the parties that support its delivery (the “purveyor”), are not aligned to place realistic boundaries on its cost, thus forcing the system into bankruptcy. Due to its divided nature, the ecosystem is overrun with inefficiencies and creates dis-incentives across themes and between stakeholders so that each maximizes their own value, often at the expense of the others.
But the system is not so much broken as made up of working parts not working together. Our diagnosis of the problem is a misalignment of the ecosystem’s building blocks. Our prescription is to reset these building blocks into a better working order. The outcome will be a healthy and aligned ecosystem that is both market-driven and cost conscious.
There is no better time to try and fix the healthcare system than amidst the current environment of reform. The team behind the modelH CoCreation Forum feels that a collaborative and systematic approach is the only means to overcome the interconnectivity barriers that exist to get past where others have failed. We have the means to accomplish this collaboration though Batterii’s CoCreation® Platform. We have the right approach for how to systemically validate a healthcare-specific business model through Kevin Riley’s Business Model Method for Collaborative Healthcare Innovation. And through Innovation Excellence and our own networks, we have access to a community of radical innovators with representation across all key stakeholders, as well as business model experts, ready to engage with us in this year-long project.
This is where you come in! But before we ask you to get involved, let’s talk more about how we can solve this problem – together.
Wednesday, March 13, 2013, 1:00 pm – 4:00 pm in Lake Mary, FL; 5th Annual Leadership Summit on Health Plan Innovation
Why not combine the best parts (contributions) of a start-up company with the necessary (working) parts of a legacy company to form something both new and necessary? There has been a lot of movement in the launching of healthcare vertical-specific accelerators that bring together legacy healthcare companies into partnerships with entrepreneurs and health start-ups. The quid pro quo is to create learning and business opportunities for the startups and affect the legacy company with agility and innovation. Some recent examples are DreamIt Ventures, Rock Health, Blueprint, Healthbox, New York Digital Health Accelerator and Startup Health to name a few. This panel is designed to inform and discuss a health plan or provider who might be looking at creating their own start-up accelerator.What You will Learn:
Can a traditional, low risk corporate culture stimulate innovation to stay ahead of the curve? I believe they can. If culture eats strategy for breakfast, innovation has to be part of the digestif at the very least.
But how can health insurers innovate and become more flexible in a heavily regulated market? They need to develop an organizational culture that prioritizes innovation and ties it to the organization’s strategic direction.
Creating a Culture of Innovation for Health Plans
The intent of innovation within an organization is to transform the core models and marketplaces (incremental innovation) as well as disrupt the core model (disruptive innovation).
You can see an extended version of the talk I will be giving in the Slideshare below.
I had two unrelated experiences in the last 2 weeks around return on investment in healthcare. One was a question from a social media follower on how I approach ROI, and another was reading a BLOG entitled “ROI in Health IT is More Than Just the Pricetag.” I disagreed with the BLOG’s premise as I feel that Healthcare IT projects are some of the most costly and poorly executed across all industries. I decided to write up a short post on this subject.
Can healthcare have a return on investment?
The cost of healthcare should be a primary concern for all of us. Healthcare Reform, while providing access to more consumers, does not address the underlying problems of escalating costs. And costs are most certainly rising. In the 2008 Robert Wood Johnson Foundation publication entitled High and Rising Health Care Costs: Demystifying U.S. Health Care Spending, you can clearly see that unless the model changes, and cost controls are implemented, the healthcare system as we know it today will implode.
Source: Robert Woods Johnson Foundation
I responded to the BLOG author that cost matters more than anything else. If we do not reign in cost, we will bankrupt the system given its current trajectory. In my experience, many – if not most healthcare models do not produce a viable patient health outcome compared to their cost.
Likewise, we are often misguided to make statements like technology will solve our problems. Healthcare companies produce loads of unused and unusable technology. It is now the time to invest in creating an experience that produces known outcomes – and whatever technology is required to create those experiences, and then go forward. But to lead with the constant battle cry of “technology will save” us, whatever the cost might be, takes the care out of healthcare.
Healthcare Does Have an ROI Equation
I like to think ROI is quite definable for healthcare. ROI is the production of value as compared to its economic cost. Value is very definable in healthcare. “Value” is the patient health outcome achieved per healthcare dollar spent.
So more value is achieved when you get:
Improved patient engagement,
Improved patient experience and patient outcome, and
Reduced aggregate cost of care.
How Do I Create ROI for Clients?
I have based my work in this area on Clayton Christensen (Jobs-to-be-done), Tim Brown (Customer Experience), Eric Reis (Minimum Viable Product), Alex Osterwalder (Business Model Innovation), Peter Senge (Co-creating Shared Vision), and Harvard Business Review (Decision Design).
I combine these premises with deep and varied healthcare experiences to deliver collaborative business modeling, decision driven organization design, and agile communication techniques to ensure that your great ideas have momentum, and meet the market ready to accelerate profitable growth for your company.
My operating premise related to creating ROI for clients is two-fold:
Information about what markets, products and/or services NOT to pursue is valuable. And as such, the minimum cost in time and resources spent on obtaining that information is vital.
Business Models cannot keep up with the rate of change brought on, and accelerated by consumer empowerment. As such companies must invest in R&D, innovation, or what ever you want to call it and in customer experience.
Within these guidelines, the search for new business models is in-and- of-itself valuable and often a good return on investment. Care must be take though, to lessen the cost and time commitment in finding and proving out new models – this is what I call The Drawing Room.
So I encourage and teach companies to validate ideas and advance them to the market in the fastest and most cost-efficient manner possible. I advocate for the “NO” in innovation – so many, perhaps most, ideas are appropriately killed or sidelined. Using the tools and techniques in “The Drawing Room,” I show you how to do it quickly and painlessly.
Once a good idea passes certain stage gates, it needs a real business plan to match its prototyped business model. Calculating the staging of expected return on investment in a collaborative fashion, and communicating it to all stakeholders is the second part of the equation. I have built many businesses and business lines for companies – so there is a lot of art and science I have discovered in getting everyone on the bus and then communicating pre-decided progress against goals in an effective way.
I will be giving the keynote at the Pre-Event Kickoff for Jacksonville Startup Weekend today and I am going to speak on a simple, but valuable concept – learning from your competitors. Last year at the Startup Weekend for North East Florida I was honored to give the keynote. I am proud to say that I am slated to give it again this year at the 2013 Startup Weekend on January 25th.
Understanding of the Consumer’s Need of Your Product
This is obviously of the utmost importance. If you cannot clearly and simply identify your consumer, you do not have a product. I speak in great depth about this in other BLOG posts so I will not go into detail on it here. But I will refer you to the following blog posts for reference:
At Last Year’s Startup Weekend I focused on how start-ups need to consider the larger market ecosystem surrounding their product. At the time, I was the Chief Innovation Officer for GuideWell and we were making plans to build our own start-up accelerator. We also had an active pipeline of ideas that we were watching the market for with the intent that we would make an informed build, buy, or ally decision on how to proceed.
During the discussion at Startup Weekend, I attempted to elevate the attendees thinking about their product so that they considered how it fit inside the prioritized needs of the existing marketplace. This is especially true in the healthcare space, where market entry is difficult and reliance on the existing infrastructure is of utmost importance. I asked them to consider if the product had viability to a large insurer like the one I worked for, and if so, would the best path forward be as a vendor or to outright sell it. I cautioned them that being a product vendor of a multi-billion dollar, highly-regulated company is high on the impossible side for a start-up, and could ultimately bankrupt them trying to get up to compliance with a long list of requirements and regulations. While this can be viewed as very unfortunate, it is nonetheless true.
Instead, I planted a seed for them to consider approaching large companies with the intent to sell their product and its IP in its current state. This form of exit strategy, I believe, will become more viable over the next several years. It allows the entrepreneur to acquire cash and most probably a retained contract to further develop it for the legacy company. Of course, that too comes with its’ own set of difficulties.
Understanding Your Competitors Position Against Your Product
Henry Ford
I wanted to make some additional points on the need to have a greater understanding of the market and your product’s place in it. Today we will look at what we can learn from our competition. Here again, I advocate that if you cannot clearly and simply identify your competitors, you do not have a product. Even product category inventors like Ford and Apple have competitors.
Henry Ford, the inventor of the automobile, was once quoted as saying “If I had asked people what they wanted, they would have said faster horses.” While this may contradict the points I make around properly identifying your minimum viable product, at least it points to the fact that there is always some form of competition. I add to that the notion that you can learn a great deal from them.
My absolute favorite writing on this subject is from the blog of Marc Hedlund, the founder and CEO of the failed start-up Wesabe. His cautionary tale is entitled “Why Wesabe Lost to Mint .” Both Wesabe and Mint were/are online financial tools that puts the users’ bank accounts into one place, sets a budget, tracks their goals, etc. In 2009, Mint was acquired by Intuit (the makers of Quicken) for $170 million – not bad. Even with a year head start, users, press, and revenue – Wesabe lost to Mint and closed its doors forever. Why?
In his post, Hedlund bravely looks at the mistakes he made that led to being beat by Mint. In essence, he boils it down to Mint’s superior efforts in creating a simpler and more automated tool for consumers. Wesabe’s product features went deeper but required more user input and manipulation. Mint’s product features started at a much higher level but gave the appearance to the user of full automation. Hence, Mint was easier to use – so more people used it. By the way, since 2007 Mint has added all of those “deeper” features, and so much more. The lesson here is (in my opinion), it is better to win today with less, and add more tomorrow. This is the heart of the minimum viable concept model.
Hedlund and the team at Wesabe were mistaken in their interpretation of what their consumer’s minimum viable product actually was. They learned it by watching their competitor, but they learned it too late. Today’s start-ups must be nimble enough to quickly recognize market needs and pivot to ensure they always serve the customer best.
Final Words
So I ask all you entrepreneurs out there, particularly in the healthcare space, to take heed of my words and think extensively not only about who are your customers, but who your competitors are and what you can learn from them. You can see the deck I presented with here.
