by Reto Zumbühl and Philip Lehmann
Let’s have a look at the innovation process that ERNI uses to facilitate innovation in the medtech industry.
How do you manage innovation? Swiss medtech companies rely mostly on three types of solutions: building internal development centres, collaborating with universities and startups (open innovation), and innovating through partnerships with other companies and consultancies. About one-fifth of the companies purchase third-party ideas and prototypes using market screening and incubation programmes in the process of merger and acquisition. These solutions often occur side by side. According to the Swiss Medical Technology Institute, preserving innovative capacity concerns 79% of companies and was listed as the main challenge by medtech business leaders in the study. About 60% of companies are worried about accelerating innovation cycles in the market and also see the increasing demand for solutions instead of products as a challenge.
This article showcases the customer-centric innovation process model as used at ERNI. We focus on two approaches to facilitate our customers.
1. As a customer, you can partner with us and together we can cover the full path from ideation (generating ideas) to scaling up and implement- ing the innovation sustainably.
2. We can collaborate with your internal development centre in selected innovation stages only, providing you with tools and methods that are most appropriate for your challenge.
By breaking the innovation process down, we identified six steps that will take you all the way from the beginning to the ready-to-be-implemented innovative product or solution: Searching fields, Ideation, Customer journey, Prototyping, Market validation and Full approach.
First two phases of innovation in detail
Let us illustrate the two initial phases (searching fields and ideation) with one of our recent cases. The customer operates in the area of in vitro diagnostic tools and is a well-established company with a diverse portfolio of middleware products for IVD laboratories. A few of its products are at the end of their product lifecycle and the company already plans to introduce a new and innovative product in the coming five years that will replace some of the existing solutions. ERNI was approached by the company to help with the initial stages of the innovation process and to enable the development of the new product.
The focus was set on customer insights, market segmentation, future markets, technology trends and the ideation process. The overall goal was to craft a product vision for the customer’s future portfolio and to collect innovative ideas to be used as a backlog for the necessary innovation.
At the beginning, we conducted several workshops with our customer’s customer-facing teams to identify customer segments and describe specific needs for each segment. Throughout several additional workshops, we analysed the needs and proposed a list of product features that are likely to fulfil a specific need of a large segment. Working in close collaboration with the customer’s area representatives and using their knowledge of different geographical and vertical markets, we prepared a simulation of how these markets will develop and what each one’s needs will likely be. We also researched technology reports, summarised trends and identified which of the technology areas are relevant for the client’s goals.
Strengths and weaknesses of current products
Innovation does not always have to be disruptive. It’s all about finding the right balance – keeping what works and adding new features and approaches if needed. That’s the reason why we also performed a strengths and weaknesses analysis of the current products. We used structured questionnaires to ask stakeholders from the departments of research and development, sales, product management and field service to identify the strengths and weaknesses of the products. The initial feature list was further amended after the inquiry. As our customer already had the competitive analysis prepared before we started our collaboration, we included the analysis and combined it with the rest of the data collected. The final list of ideal features for a new product was identified from these various sources.
Crafting a product vision
To craft a product vision, we recommend the KANO model, which helps to focus beyond basic product functions and introduce and better understand the role of the ‘delighters’ – product features that resonate with customers. According to the KANO model, we distinguish between the basic features, the performance features and the exciting features of a product. The basic and performance features are very easy to identify if you already have a product portfolio and experienced product managers. Where it gets really interesting is the exciting features. These are the features that most people would refer to as innovation. In this particular case, we identified cognitive technologies as the trending topic and prepared a workshop with the customer to identify how cognitive technologies can be implemented in the field of in vitro middleware. We looked into the role of a technician working in the IVD laboratory of the future and implemented chosen cognitive features that would simplify their everyday tasks – from manipulating substances to assisted computer interaction.
Another customer of ERNI was running a hardware- related business. This type of business can lose margins on its product sales in medtech when the hardware becomes a commodity and activities of their competitors push prices down. That was the starting point for our recent collaboration – and our goal was to find solutions to secure or even increase its margin. We guided the company through the initial stages of becoming a software and service-oriented company. Our collaboration consisted of ideation, customer journey and low-fidelity prototyping. As a result of the series of workshops, the customer then had five integrated business models to choose from, all with concrete product ideas for services and for software solutions that would complement its existing hardware business effectively and open up opportunities for future business models to be implemented.
After generating tens of ideas for the backlog during the ideation phase, we applied the customer journey mapping to assess and compare these ideas with real customer needs. This meant that we took a selected customer persona – a typical user of the future product – through his possible journeys interacting with the new business model/service idea/product. The goal of this phase was to understand the pains and gains of the customer and where they occur; this further led to the process of visualising the final result in a value proposition canvas. Ideally, you want to move between ideation and customer journey in several iterations. Run a customer journey mapping workshop, learn about the pain points and then adapt the business model or ideas. In the case of our hardware company, we ran four such cycles.
To make the idea tangible and get the stakeholder’s approval, we recommend two to three iterative prototyping sessions. They will allow you to take the first steps towards market validation. With prototypes available, your team can go outside, meet customers and other stakeholders and test the idea in a broader business context. In our case, the first test happened in front of the management stakeholders, where we received not only some valuable feedback but also confirmation that the ideas had the potential to work from the perspective of the business as a whole. After getting management buy-in, you can further continue with the market validation by going out and meeting real customers, performing prototyping workshops with them, delivering additional rapid prototypes and deploying prototype solutions to the market to gain more feedback. Again, these two phases (prototyping and market validation) are iteratively connected, and you can move back and forth several times before adapting the idea to a final prototype.
This generic pattern can be applied to any problem statement with the need to create a new product idea or business model, or even used for company-focused innovation initiatives such as when you wish to innovate your internal processes. After that, you can do the full approach and realise the innovation, either through a pilot project or a full implementation. Doing this, you also have to consider the impact on the cultural setting and be prepared to transform your organisation towards the innovation mindset as a whole.