
Puzzles related to innovation: Most companies were at some point regarded as successful, but ten years later, they were in the middle of the pack. Why is success so hard to sustain? Why is innovation so risky? Everybody has been trying to figure out why healthcare is becoming more expensive and becoming less successful?
Models from Dr. Christensen’s research:Performance of a service or product over time: in every market there is a trajectory of improvement that customers can use. Pace of technology is growing faster than the performance that computers can utilize or absorb. Breakthrough improvements have the same basic purpose, what they’re trying to do is trying to sustain trajectory of improvement. Companies that lead their industries find themselves on top of the industry when the battles are over, no matter how technology difficult it is. They went to make better products for better products for their best customers. Disruptive innovation can show itself in a more affordable, not as quality of product. Usually an entering company comes in and kills the leaders. Who will win the battle of selling better products?
Define your battles. The odds of success when you’re starting at the bottom of the trajectory are high. By using disruption, the entrant is more likely win. Another example of this car industry. In the 1960s, Japanese Cars entered the market. Entered with small products, and the American car industry sent little cars, but saw more profit from their larger cars, so there was no reason to focus on a place where their revenue wasn’t large. Currently, the bottom of the market is Kia. Toyota isn’t defending the small cars, because they’re investing in their larger cars. This concept lies behind why Walmart and Target killed the department store. Everyone is being toppled for expensive profit, but another one bringing in an affordable but profitable for the consumers.
Players in industries are going to prioritize innovations by what is more profitable. For airlines, it’s the length of the route, and smaller independent airlines are thriving on the small routes. Same thing in the Pharma industry. Blockbusters are much more profitable than small market drugs. Emerging markets aren’t improving more revenue at the pace desired. As Pharma companies have gotten bigger, blockbusters have become a higher priority, and they’re unable to support priority on smaller market drugs. Molecules appear at unprecedented rates, but since they’re not blockbusters, they don’t have the resources to push them across the goal line. A lot of capitol is being lost because drugs aren’t going to make the blockbuster money. Each disruption brings a larger group of people a simpler and more affordable version of a product. As hospitals compete against hospitals, they drive the costs up. Sustaining innovation increases costs, it’s disruptive innovations that bring affordability and accessibility to the marketplace.
To translate this to the Pharma industry, we must drive the use of technology to patient clinics. We can begin by doing the simplest things, then bring technology to them to do more sophisticated things. They give technology to doctors offices and homes so they can progressively do the most simple things, so they don’t have to do the things that historically became a doctor. We must enable lower cost venues of care to provide the simpler procedures to introduce affordability back into the market.
Updated:
Here is a short clip from this keynote presentation
Updated:
Here is a short clip from this keynote presentation
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