OCTOBER
2010
Pivot to Succeed
Success is often about letting go of preconceived ideas not
supported in the marketplace
By Dr. Robert C. Keefer and
Ray W. Swanson
In today’s medical world where FDA
approval is uncertain and investors shy away from risky ventures, a clever
invention with incremental advantages over the competition is not enough.
Successful innovation is required to turn good ideas into promising ventures
that attract investors, gain regulatory approval, and meet the higher
expectations that are common to tough economic times.
True innovation,
however, appears to be an elusive goal for many companies, if the results of a
recent global survey are any indication. While 84 percent of executives
surveyed said innovation is extremely or very important to their company's
growth strategy, only 55 percent claimed their company is better than
their peers' at innovating. These results haven’t changed since 2008.* Clearly, many companies are struggling with how to be
innovative.
Here’s our take on what pharmaceutical
and medical device companies need to do to lay the groundwork for commercially
successful product innovations:
Know
your market
In previous Pulse newsletters and when
working with clients, we’ve always emphasized that conducting a
Commercial Opportunity Assessment is the first step to make in developing a new
product, a new indication, or a new market or delivery method for an existing
product. It’s a critical step. Assessments should be done before getting a
patent, determining regulatory strategy, conducting clinical trials or
developing a marketing plan. Don’t proceed without it.
A well-executed Commercial Opportunity
Assessment will give you a complete understanding of:
- Market profile: What
is the prevalence of the condition your product targets in the country
where you want to launch, and how does that affect the market opportunity?
- Definition of the customer: This includes not only who will
use the product, but also who will pay for the product.
- How the product will be used by medical professionals,
and how it will be viewed by payors:How will the product change the
treatment paradigm? Will it motivate physicians to change behavior and
switch from the current product they have been using for years?
- Competition: How
is your product different or unique, and are these factors meaningful
enough to result in a clear differentiation and marketing strategy? How
will competitors respond to your product?
Employ
an iterative process
If we want to build a product that
fulfills an unmet need to the degree that a customer will actually change their
behavior enough to buy our new product, our view is that the process to gather
the information on what to build is as important as the questions we ask. Truly
successful innovation occurs when you take a thoughtful and iterative approach
to the entire process. First, start with the basic idea, what you believe
is the “unique selling proposition” of your proposed product. Talk to customers
and use their feedback to modify the product concept. Then, before you invest
more of your company’s resources or time, go back and do it again. Be sure to
talk to all categories of potential customers, including the economic buyers,
and not just who you believe the users of the product will be.
Done well, this approach, while
requiring discipline and a willingness to let go of unfounded assumptions, will
give you a chance to learn specifically what you need to do to improve on your
idea. Market feedback almost always indicates the need to adjust your thinking,
however minor, away from the original preconceived idea for the product.
Sometimes, this feedback dictates a need for a more radical approach –
requiring that you pivot or turn the product concept towards a completely new
direction.
The important thing is to listen to the
customer, and then be willing to make the necessary changes in the product or
product idea. Following this iterative process ensures all opportunities and
obstacles to market acceptance are rooted out before you go to the expense of
completing and launching the product.
In addition to needing experience and a
well-balanced and fully resourced team, success requires a commitment to
objectivity and openness. Sometimes the cold hard facts of truth can be painful
to accept. Team members have to be focused yet open-minded enough to recognize
the signs indicating it’s time to rethink product design or the customer
offering. You can’t wear blinders and ignore signals in the market. If you do,
this behavior will ultimately come back to bite you.
There are more than enough examples –
and not just in the medical field – of what happens when a management team,
even one balanced with commercial and scientific expertise, proceeds too far on
their own internal assumptions without adequately listening to the marketplace.
Here’s one well-known example: Pfizer's development of inhalable insulin. The
company assumed diabetics would rather inhale their insulin than stick
themselves with needles. A lot of money was spent developing a device that
patients would carry on their belt. It wasn’t until the product was sitting on
the shelves and sales were poor that the company learned patients found the
device cumbersome and too expensive and doctors wouldn’t prescribe it.
On the other hand, Addrenex
Pharmaceutical is an excellent example of a company that took an iterative and
market-driven approach to assessing the market opportunity. Their single-minded
goal in product development was to pursue the fastest pathway to commercialization
of their product. They started off thinking an ADHD indication would be
fastest. Conversations with potential customers and partners told them the
fastest and least expensive route would be in the form of a hypertension
indication. They made pivotal decisions based on the objectivity of the market.
Team up
with specialists
While focus is important, companies
should take care to not commit substantial resources to any one pathway until
there is solid market validation for the product. Until then, don’t commit
precious resources that will have been wasted if you find, too far down the
path, that your original assumptions were faulty due to incomplete or
inaccurate data.
Even when you have an experienced
management team, sometimes the addition of an outside specialist can help.
Teaming up with a firm that has substantial expertise in conducting commercial
assessments and bringing medical products to market can provide these
advantages:
- Objectivity: Enhancing
your team’s perspective with amember from outside the company often
leads to more accurate insights due to their unbiased and objective
perspective. Internal team members, for a variety of reasons, have a
tendency to plow ahead ignoring signals from the market.
- Faster to market: Specialists with a toolkit of lessons learned
can help you avoid the common mistakes and accelerate time to market.
- Flexible expense: Much as you might outsource part of the engineering
design for your new product, teaming up with market assessment and
commercialization specialists boosts your capability when you need it,
with the ability to dial the cost back down later, when you don’t.
Strengthening your team with a commercialization expert can result in
faster time to market along with greater cost savings in the long run.
Remember
this
Inventing is about creating ideas.
Innovation is about turning those ideas into profitable business ventures.**
The key to successful innovation begins with employing an iterative,
market-driven approach to assessing your product’s commercial viability, along
with sharp ears and eyes to see the signs when you need to pivot and a
willingness to do so!
*McKinsey & Company, McKinsey
Global Survey “Innovation and commercialization, 2010.”
**inspired by:McKeown, Max (2008), The Truth
About Innovation. London, UK: Prentice Hall.
To our Subscribers: If you want to generate more sales by
launching your product on the other side of the Atlantic, please contact Robert
Keefer or Reinhard Merz for a free consultation and to see if we might be of
assistance. In today's fast-pitched world and pinched economy, every new
market can bring tangible value to you. We can help you think through
your options, and we would enjoy working with you. Our phone number
in NC is 919-941-0700, and in Germany it is +49 6221-27262.
Pulse is a publication of Technology Commercialization
Group, LLC, 1009 Slater Road, Suite 450, Durham, NC 27703. To contact the publisher and
editor of Pulse, phone 919-941-0700 or email robert.keefer@tcgmedtech.com. All materials
copyright ©2009-2010 TCG, LLC. All rights reserved.
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