Innovation Across the Value-chain: Broadening your ‘customers’ for sustainable sales
November 26, 2021

Innovation Across the Value-chain: Broadening your ‘customers’ for sustainable sales

Market Validation

Dan Hansen from Apagie discusses the importance of identifying customers throughout the healthcare value-chain who collectively drive innovation adoption. Once identified, understanding these customers and their problems is critical for securing sustainable sales.

As New Zealanders we love innovation. We find new ways to solve simple problems, and the world knows it too. When it comes to healthcare it’s the same. Many technologies and products are developed by end-users; they solve a problem they have experienced themselves. However, the rates of commercial success for medical innovations are confronting. Estimates suggest that approximately 90% of these innovations will fail to be commercially successful. One of the leading causes for this alarming rate is the narrow definition of a company’s ‘customer’. Innovators need to see their ‘customers’ as those right along their value-chain; not just the end user but how their product gets to market. 

Why does it matter?

Like any system, healthcare has a complex interaction of parts contributing to the whole; comprising clinicians, administrative staff, insurance companies/payers and patients/caregivers, each contributing to the adoption of new technologies. Such a complex interplay of players means the simple focus of solving a single customer need is not enough to drive the necessary pull-through to create lasting and sustainable sales. Therefore, an in-depth understanding of who is in your system, their role in the care pathway, and challenges they are experiencing, is needed – this is validation. A solution that can achieve solutions for each of these roles is more likely to be adopted, and less likely to be displaced by newcomers down the line. 

The perspective of manufacturers owning the value-chain (pull-through) is common to the retail space but is relatively rare in healthtech and engineering. The essence of pull-through is about manufacturers taking responsibility for driving end-user purchasing instead of leaving it up to the distributor, retailer etc, to serve the customer. Because of this, when we speak to businesses wishing to validate their products with potential customers we encourage them to include all those who contribute to the product getting to the end-customer. This includes the distributor, the referrer, the provider, the insurance companies/payers and the end customer.

The illustration below shows a simple value-chain from innovator to end customer:

Validation needs to be along the entire value-chain and care pathway

Validation that focuses on only one or two players in the care pathway will likely miss the insight needed to create pull-through. For instance, US-based hospital bed manufacturer Hills-Rom Co. sought to understand how they could help a hospital to grow profit – the desired outcome for businesses. They interviewed clinicians and patients across departments, even to the point of volunteering as ward orderlies to better understand their customer. What they discovered was nurse time, while a leading cost for the hospital, was often devoted to menial and non-nurse required tasks, such as fetching items that have fallen from beds and changing the TV station. Recent research also uncovered that nurses and nurse assistants ranked second for occupations with the greatest number of musculoskeletal disorders. Hills-Rom Co. then sought to design a bed which alleviated the need for menial nurse tasks and reducing muscular strain, and thus reducing unnecessary cost. Here four clinical roles contributed to the creation of a solution; the nurses, the patients, insurance companies (WorkSafe etc) and the hospital accountants. 

What might a pull-through programme look like?

In the example above, Hills-Rom Co. could also engage with nurses’ unions to develop and promote nurse and nurse-assistants’ wellbeing in their hospital network. Likewise, Hills-Rom Co. could create an education programme for ways to reduce nurse injuries when moving or assisting patients. A significant benefit of these programmes is the proximity companies have to their market; allowing companies to stay in touch with their customers, notice any market changes and maintain the customer insight needed to sustain innovation. 

Mapping the care pathway helps to identify marketing opportunities along the value-chain

Sleep apnea machines are typically administered by sleep clinics throughout NZ, however patients often go through a series of steps to reach the final provider. For instance, a patient may experience snoring which keeps their wife up at night, she then impresses on her husband to go to the GP; the GP inspects him and decides to refer him on to ABC sleep clinic where your product is eventually sold by the clinician. Now there are multiple referrers and chains in this link which must be considered to drive pull-through. Unless the wife refers her husband to the GP, no products are sold, and unless the GP chooses your option over alternatives like medication, no products are sold; and if the GP doesn’t know how to find a trusted and competent clinician to refer his patients to, no products are sold. 

Example of pull-through

A savvy innovator may market to the key patient’s wife with sleep apnea improvements, particularly around improving sleep, educate the GP around the benefits of sleep apnea machines and provide an opportunity for GP’s to get their highly sought-after CPD hours up. To drive referrals to your clinics, innovators may work with the GPs to find highly qualified and experienced clinicians who work at partner sleep clinics.

These quick examples are by no means exhaustive, but what they show is an understanding that innovators have customers right along the value-chain and should be considered when building lasting sales. 

6 steps to get started:

  1. Map out your care pathway
  2. Identify those who influence the patient from presentation to recovery
  3. Who are your most influential customers – don’t forget your patient’s wife,
  4. Interview these ‘customers’ to determine their challenges, anxieties and desired outcomes 
  5. Identify areas of friction or difficulty on behalf of your customers
  6. Innovate around how you could solve your ‘customers’ problems and alleviate friction.

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