IT firms must innovate better, says PwC
October 7, 2013 in Medical Technology
Medical technology companies may be losing their competitive edge and are in need of a different approach to innovation in a new outcomes-based health economy, according a new study from PwC’s Health Research Institute.
The report also includes a Web-based interactive innovation scorecard to assess medical technology companies based on leading innovation practices.
Only 14 percent of medical technology executives say that they formally manage innovation activities, which is essential to creating new services and business models, according to PwC. Just 17 percent believe their companies are innovation pioneers. The HRI report outlines how medical technology companies need to expand their approaches to innovation outside traditional RD, in order to remain competitive.
“Historically, medical technology innovation has relied on incremental improvement,” said Christopher Wasden, managing director and global healthcare innovation leader, PwC, in a news release. “But ‘innovation’ needs redefining for an environment that rewards value – measured in affordable patient outcomes and customer satisfaction — over volume.”
“True innovators learn from failure — fast, frequent, frugal failure,” Wasden said. “Medical technology leaders need to change their business models, their corporate DNA, to embrace lean innovation beyond their core operations.”
[See also: Better care calls for better business model.]
Key report findings also include:
- The value of a device is no longer solely in the product itself but in a company’s ability to help customers solve broader problems.
- New competitors are staking their claim – at least 18 companies have entered the medical technology space and are driving innovation at the pace of technology.
- New integrated services and business models that address clinician and consumer needs are becoming more important.
- Medical technology executives expect a higher level of innovation over the next three years but lack formal processes to achieve their goals for new services and business models.
- Medical technology companies have been slower to apply new social, mobile, analytic, and cloud (SMAC) technologies than other industries.
- Medical technology companies are looking to open innovation as a key approach to drive future growth.
“Three things are essential to transform today’s medical technology companies for the future,” said PwC principal Ed Yu. “Embrace failure — create an innovation operating model that separates breakthrough and radical innovation from incremental innovation. Embrace the disease — select a target area and collaborate with health industry counterparts to get closer to the patient. Finally, measure innovation in new ways with forward-looking metrics and connect the dots for shareholders. That’s the formula for success.”