This post is the first in a series on the evolution of the medtech commercial model.
I facilitated a panel last fall at The MedTech Conference (formerly the AdvaMed conference) and have continued to think about it. Subsequent conversations with leaders have made me want write down a few thoughts from the day. The panel was called “Driving Growth Through New Commercial Strategies” with medtech experts including Tim Schmid, chief strategic customer officer at Johnson & Johnson Medical Device Companies; Joe Gasque, CMO for the U.S. and Canada at GE Healthcare; and Vince Wong, vice president of strategy and communications at Roche Diagnostics. This group packed the room, and in my humble opinion, the audience seemed pretty engaged.
Looking through my notes during my flight home, I more fully understood why. These guys concisely and compellingly stated some industry truths that a lot of my clients are dealing with as the healthcare landscape continues to evolve around them. Here are four takeaways from our panel discussion:
1. Changing your commercial strategy touches everything. Change always sounds easier in theory than it is in practice. There are so many variables to consider, and so many interrelated issues. In the panel discussion, we talked about taking cost out of the current sales team to pay for a transformation, working with customers to improve patient outcomes and satisfaction, the evolution of stakeholders, changes to decision-making governance, delivering one point of customer contact, building completely new data and analytics capabilities, aligning account plans for big systems, aligning the company value proposition to customer challenges, improving the talent across the organization, replacing half of the sales team, aligning incentives, developing team ways of working, evolving professional education and training, convincing the organization of the importance of change, and writing outcomes-based contracts—all while continuing to serve a very slowly evolving customer who, in many ways, also is resistant to change. It’s entirely understandable that many companies are hesitant to even think about transformation, but the evolving marketplace requires that they find a way to begin.
2. Don’t call it a transformation. It goes without saying that a change of this magnitude is difficult because it requires companies to rethink so many parts of the customer interface. But sometimes I think that “transformation” isn’t the right term here. It implies an observable end to this change, which isn’t what medtech companies are facing. The external environment is changing, but it’s doing so slowly. Tim Schmid used the phrase “a foot in both worlds” to describe the moment that we’re in now, and that is so apt. We didn’t wake up one day and find that everything had changed. We woke up to see that some things have changed: some customers, some business lines, some products. In other words, it’s as foolish to ignore the commercial stakeholder as it is to suddenly decide to ignore the clinical one. We need to think about the future without forsaking the past. Think about this evolution as a step change, not a mandate to suddenly blow up the current organization.
3. The organization is naturally skeptical. The very nature of the “slow burn” of change means that the mandate can be elusive. Those who prefer the old approach of focusing on the surgeon might not believe that pricing pressure and purchasing involvement are passing fads, but it’s still hard to convince them to change when no one knows how rapidly the power is shifting. Instead of pitting one against the other, the trick is serving both stakeholders. Vince Wong presented a novel approach to the group: We should help our traditional clinical stakeholders articulate their value to the rest of the organization. This is particularly important in the in-vitro diagnostics world where Vince operates because the central lab is often seen as a cost center. That makes it critical to help hospital leadership recognize the value provided by the central lab.
4. We’re making this up as we go along. At the risk of being disrespectful to our esteemed panelists and their sizable accomplishments, I couldn’t help but think to myself during the discussion that we’re breaking new ground. There was consensus among the panelists that we are on a journey, sometimes without a clear beginning or likely without an end. Joe Gasque put it best when he reflected on his seven or eight years of experience with rethinking the old clinical- or product-based model while also humbly asserting that there are still many things to improve and figure out.
Our industry has seen significant change from consolidation to integration and continued reimbursement reform. Neither change nor competitors are going to let up any time soon. Critical to maintaining a healthy business in medtech is continually adapting the commercial model at the pace of this change.
Special thanks to Tim Schmid from J&J, Joe Gasque from GEHC and Vince Wong from Roche Diagnostics for a very enjoyable and thought-provoking discussion and for ZS Principal Marshall Solem’s indispensable work to help make it happen.
Stay tuned for more insights on the evolution of medtech’s commercial model.