• Matthieu Vallin

Launching tech players into healthcare: 5 key learnings from a successful market-entry strategy

In early 2019, the board of a global Japanese technology firm had a bold ambition: to enter and disrupt the UK healthcare market. They hoped to do so by leveraging proprietary technology assets and forging breakthrough partnerships with startups and academic institutions and they chose Sia Partners to bridge the gap between ambition and action.

The timing was right. Healthcare and pharmaceutical markets are currently being radically reshaped by a suite of technological advances in data science, machine learning, artificial intelligence, wearables, 5G, and quantum computing. By keeping a pulse on these disruptive forces, Sia Partners is well-placed to advise our clients on growth opportunities and market entry strategies within the healthcare ecosystem.

Our client challenged Sia Partners’ Growth and Innovation teams to:

  • Build a market-entry strategy with an array of entry points, each with a clear route to first revenues

  • Determine how to leverage their cutting-edge machine learning, artificial intelligence, and quantum computing technologies

  • Design and run pilots, partnering with pioneering startups to de-risk first steps in unfamiliar markets

We’ve come a long way in 6 months. Working jointly with our client's leadership, we not only defined a spectrum of market-entry routes, but also set up several pioneering pilots with biotech startups. What follows are five key learnings on how to make an impact in unfamiliar markets.

Source: Raconteur Health

Learning 1: Take a step back from technology, and focus on the bigger picture

Technology firms tend to focus on current market disruptions when establishing an entry strategy. This isn’t wrong, but it isn’t looking at the big picture. Sure, data science, machine learning and artificial intelligence are revolutionizing healthcare and pharma as we speak – but developing solutions on this basis is short sighted. A technology-led view of the world might be an instinctive response for a technology company, but it doesn’t lead to breakthrough innovation.

Instead of focusing on riding the latest technology wave, zoom out to the bigger picture. Consider using other lenses to inform your strategic vision, such as major demographic trends, disease prevalence, major ecosystem shifts and changes in customer behaviour. For example:

  • How will global urbanisation impact healthcare needs, affect the spread of disease, and influence healthcare infrastructure?

  • How will the rise of chronic diseases in an aging society influence the balance between in-patient and out-patient care?

  • How will the convergence of social care and healthcare transform the patient’s care pathway?

  • How will the rise of population health radically improve treatment development, delivery and outcomes? + 8 more (contact me for more information)

These are monumental questions to answer, but they are not technology-led questions. Behind these questions lie profound digitalisation and technology opportunities, but the technology remains an enabler to deliver the wider vision.A question we often pose to senior management and C-level executives is: “What will your CEO say to CEOs in other sectors?” This moves the conversation from technology to strategy. What she (probably) shouldn’t say is “We’re focusing on biometric sensors”. Doing so won’t get CEOs outside of her sector excited at a dinner party. What she should say is: “We’re on a mission to improve the management of chronic diseases by enabling a seamless transition to home-centric care”.

Fortunately, our client understood the importance of looking at the big picture, which gave us the privilege of being creative in our consulting process. We dove into macro-trends across the UK, understood emerging and growing value pools, market growth rates, market needs, and technology breakthroughs at the startup and academic level. Only then could we hypothesize on the problem we’re trying to solve – the vision.

The word ‘hypothesize’ is key here.

Learning 2: Leverage inductive reasoning - Generate and test hypotheses to innovate at speed

There is a reason why the phrase ‘analysis paralysis’ exists. With a myriad of potential entry points into new markets, it’s common for large organisations to get stuck for 3 months gathering and analysing data. From harvesting the depths of NHS data to keeping track of the dozens of new health and wellness apps launched each day on the App Store, we’ve seen many large corporates get stuck at this stage. Too much data. Too many opinions. Too little direction.

Declutter and move forward by hypothesizing vision statements. For instance:

  • We will enable the integration of healthcare and social care

  • We will power the move to personalized and precision medicine

A hypothesis is always on your side and informative. If validated, it will guide your market entry strategy. If invalidated, it will narrow your focus. In our projects, we regularly take a step back after gathering valuable market insights and hypothesize. It is integral to the innovation process. Go wide: gather data, generate hypotheses, then go narrow: prove the hypotheses right or wrong through in-depth testing in-market, to gather yet another layer of confidence. Think of the innovation process as a gradual build-up of layers of confidence through recurring hypotheses testing. Hypothesise. Test. Learn. Iterate.

Learning 3: Dig deep into customer unmet needs. Keep asking ‘Why?’ and distinguish between a functional pain point and an emotional unmet need

Customer-centric and human-centric testing provide a significant layer of confidence to build the backbone of new technology solutions in unfamiliar markets.

Let’s assume your hypothetical vision is to improve workforce and hospital productivity on a national level in the United Kingdom. 26,000 nurses are leaving the NHS each year, causing an array of problems - from over-reliance on external staff, to hemorrhaging healthcare costs and gaps in patient care. While each of these lead to sub-optimal clinical outcomes, what is really the problem here? What needs to be solved on a technology level to fix this issue?

The problem: 26,000 nurses leave the NHS each year, impacting workforce and hospital productivity.

The questioning:

  1. Yes, but why? Nurses are overworked. Functional Pain Point.

  2. Yes, but why? “I can barely deal with all the patients each day”. Functional Pain Point.

  3. Yes, but why? “I don’t have enough time between admin tasks and patient care”. Functional Pain Point.

  4. Yes, but why? “I have to look for equipment when I jump between patients”. Functional Pain Point

  5. Yes, but why? “Since the equipment is shared between nurses, it ends up all over the place”. Functional Pain Point

  6. Yes, but why? “Some nurses even hide the equipment so that they know where to find it”. Functional Pain Point

  7. Yes, but why? “If they hide it, I need to hide it, or else I don’t have time to take a break and take a breather”. Emotional Unmet Need

The research techniques that we use - surveys, one-to-one interviews, ethnographic studies - must be designed to describe customer or human unmet needs with a high level of granularity. While the previous questioning flow oversimplifies the process, the objective is to move from the rational, functional, pain points to the emotional unmet needs that influence behaviour. This, in turn, will highlight the areas where technology is likely to have the highest impact.

As a general benchmark, we consider customer or human-centric testing to reach a satisfactory level of insight when the results enter the realms of behavioural science and irrational human behaviour. The answer to Step 3 in the questioning flow is rational: “I don’t have enough time between admin tasks and patient care”. The answer to step 7 is irrational: “If they hide it, I need to hide it, or else I don’t have time to take a break”. Logically, the coffee breaks will only get shorter as more and more nurses hide equipment. The nurses’ behaviours exacerbate, rather than alleviate the issue - despite their expectations.

Thankfully, our consultants are highly mobile, social and can be deployed in a range of healthcare environments to gather this small data – hyper-local behaviour data that inform larger emerging trends, serving to validate or disprove hypotheses. By way of contrast, market research teams (either in house or agencies) will mistakenly stop at Step 3: “I don’t have enough time to manage admin tasks and patient care”. The logical technology solution to this pain point is a Workforce Management Solution. But implementing yet another piece of software in a time-and-resource constrained hospital environment will generate serious push-back. The technology addresses a pain point but not the underlying unmet need affecting daily behaviour.

A potential suitable technology solution to Step 7 (“If they hide it, I need to hide it, or else I don’t have time to take a break and take a breather”) could be to develop an asset tracking technology to locate hospital equipment in real-time. The solution can change individual nurse behaviour, leading to a more balanced distribution of admin time and patient care. A Workforce Management Platform is a potential solution down the line, but not a practical market-entry proposition. To account for sequencing issues, consider building a suite of staggered technology propositions which both addresses immediate unmet needs and collectively delivers the wider vision.

Learning 4: Understand your own technology assets and intellectual property with utmost detail

The solution could be in your own backyard.

Consider re-purposing existing assets, patents or other forms of intellectual property to enter and disrupt new markets. The chances of commercial success can be higher when degrees of uncertainty and complexity are reduced.

It’s not always easy to identify existing IP. Global corporates often have pockets of exceptional Intellectual Property scattered around the globe. We’ve seen this across our healthcare, medical devices, pharmaceuticals, and technology clients. Despite their technological prowess, corporates rarely connect the dots. These pockets of innovation might be siloed by region or sector, hidden in bureaucratic couloirs or camouflaged beneath a pile of higher priority projects. This results in disparate growth and innovation initiatives, which don’t capitalise on existing technology assets, IP, and R&D projects.

Our job as consultants is to lift every rock to understand which assets can be re-purposed. We then model the associated risks and rewards. Our client has a portfolio of exceptional healthcare technologies, which are dispersed globally. Here are a few gems around the globe we originally thought could be re-purposed to the UK healthcare market:

  • Spain: In-hospital software to predict patient substance abuse relapse based on the codification of electronic health records, overlaid with patient journey history, and demographic profiles

  • Japan: A novel artificial intelligence imaging system that can automatically detect abnormalities in fetal hearts (atrium, ventricle, valve and vessel)

  • Finland & Netherlands: an IoT healthcare solution that monitors patients’ rehabilitation remotely through wearables that track movement patterns and vital signs (+ 15 more)

We engaged with each team respectively to understand the maturity and transferability of the solutions into the UK market. The challenge is to match or re-purpose existing technology assets to an unmet need in the market of interest, all while understanding the local competitive landscape, right to play, and more importantly, right to win.

Learning 5: Know when to deep-dive into the startup jungle. The right partnerships can accelerate the route to first revenues

It’s daunting to enter unfamiliar markets. It’s even more daunting to do so alone.

Understanding and leveraging your own technology assets is a smart first step. But the speed of innovation in healthcare, pharmaceuticals and medical devices often requires technology players to partner with smaller, more agile startups to develop breakthrough market-entry propositions at speed. What startups lack in maturity, they make up for in focus and agility. Partnering with the right startups can jump-start a market entry, boost traction and credibility, and shorten the route to first revenues. The key word here is: the RIGHT startups.

In a crowded field, it’s easy to get distracted. Corporates are often part of wider startup networks, generating a strong pipeline of ideas, but little concrete direction.

The key is efficiently zooming in on the right targets to establish a mutually-beneficial partnership. Counter-intuitively, searching for the right partners shouldn’t start too early in the process of building a market-entry strategy. Too early, and it means risk of losing focus. Reverting to our ‘Nurse’ example, scouting startups at the third step of questioning: “I don’t have enough time between admin tasks and patient care”, would open up a realm of thousands of Workforce Management startups, each with their own agenda, technology, and target market. Scouting for startups at Step 7, once the unmet need has been identified, narrows the focus to a more focused set of startups: those that are tackling hospital asset tracking. Knowing when to deep-dive into the startup jungle will accelerate the search for top candidates.

After identifying several promising routes to market, we advised our client to partner with startups in the pharmaceutical space to develop breakthrough proof-of-concepts and pilots. These projects are currently funded and underway. We have regularly observed that corporates and startups don’t always speak the same language. Thus, designing the right partnership models to suit and incentivise both parties is critical. A range of mechanisms is available, from research collaborations, joint ventures, and equity investments. Another layer of complexity is the intellectual property: Who owns the IP developed? Is there exclusivity? What is the exclusivity period? The lack of frameworks to facilitate these corporate-startup relationships can unnecessarily hinder the implementation of fruitful deals. Bringing in an experienced partner like Sia Partners to broker these relationships can substantially reduce bureaucratic overhead and lower the risk of complications down the road.

From our numerous conversations with startups, venture capital firms, and corporate innovation functions, we are currently building a common framework for corporates and startups to facilitate the deal process, and start speaking a common language. More on this soon.

Quick recap: Here are our key learnings from getting tech. players in to healthcare:

  • Learning 1: Take a step back from technology, and focus on the bigger picture

  • Learning 2: Leverage inductive reasoning: Generate and test hypotheses to innovate at speed

  • Learning 3: Dig deep into customer unmet needs. Keep asking ‘Why?’ and distinguish between a functional pain point and an emotional unmet need

  • Learning 4: Understand your own technology assets and intellectual property with utmost detail

  • Learning 5: Know when to deep-dive into the startup jungle. The right partnerships can accelerate the route to first revenues