Ask most medical device marketers about market segmentation, and you’ll get an earful about physician specialty (and subspecialty), hospital/facility size or type (academic, ASC, for profit, large system, etc), or adopter type (early adopters, followers, and skeptics). Unfortunately, these approaches rarely help companies identify customer groups that are differentially addressable – i.e. best served by different products or services, different price points, and/or different marketing channels and sales techniques.
Medical device firms can do much, much more to understand and better serve their markets. Even back in the 1980’s much more could be done. Let me explain how I approached market segmentation twenty-something years ago.
Medical device product development is justifiably hard. Innovative devices push technical and clinical boundaries. Before being used for patient care, new devices must undergo rigorous analysis and testing. It takes months or years to bring new medical devices from concept to reality. So it’s a big milestone when the last signatures finally authorize product release, and the first units ship to the first customers. Time to celebrate? Not so fast.
Your first customers decide if you should celebrate. Initial shipments are just steps towards the ultimate objective – satisfying unmet customer needs and building a great business. How well have you really done? A couple of weeks ago I wrote about the need for metrics to be customer-facing. Here are a few suggestions for quick-and-dirty customer-facing metrics to help you assess your product launch.
To pivot is to change one element of your business model to improve product/market fit. Iterating the business model via a series of pivots is easy to imagine in a software startup, where code is relatively mutable, but aren’t hardware timelines just different? Is the idea of a Lean Startup really applicable to medical device companies?
Having trouble getting your medical device startup funded? Most likely, you have picked the wrong problem to solve. Think about it this way: When you launch a new medical device, you are asking physicians, hospitals, nurses and patients to change medical practice. That’s a big deal. A really big deal. So get it through your head that medical practice will only change if your new device solves an important problem. That’s why the lean medical device startup defines its problem hypotheses first. That’s also why the lean medical medical device startup tests its problem hypotheses early and often. You need to make sure you are solving the right problem.
What does ‘testing your problem hypothesis’ mean? How do you go about testing your problem hypothesis?
To test your business plan at its earliest stages, you have to find early adopters. Early adopters are the potential customers who have the problem you intend to solve, have tried to solve it on their own, and are willing and able to purchase a solution if one can be built. For medical device startups, true early adopters also have experience shepherding new products through the provider process (e.g. hospital purchasing and CFO) and payor process (e.g specialty coding committee and Medicare). Consequently, only early adopters are able to provide value-added feedback to the lean medical device startup. How do you find them?
The confluence of cheap computing power, cheap memory, and cheap bandwidth has fueled the emergence of web 2.0 companies like Twitter, Flickr, Tumblr, and foursquare. Because software-based-products are inherently extensible and mutable, these web 2.0 startups have rethought the concept of the product lifecycle, enabling their web-based products to evolve new capabilities monthly, weekly or even daily. (Contrast that to the less-than-annual releases of Microsoft Office.)
In turn, this rethinking of the product lifecycle has spurred dramatic changes to the way these companies and products are formed, financed, and managed. The term Lean Startup captures the philosophy and practices of this new way of thinking. Despite the relative immutability and non-extensibility of most medical devices, we can find ways to apply Lean Startup concepts to medical device startups. In a previous post, I discussed the Lean Startup concept of Product/Market fit in the context of medical devices. Now that we have defined Product/Market fit, the question is “how do we get there?”