Technology development is often initiated based on a hunch, some implicit assumptions, and a vision of what a product could look like. The challenge is often viewed as executing that product and then seeing if it will sell (if I build it, they will come). For some technologies (e.g. web delivered products) where development cost is low and the ability to course correct after launch is high, this strategy (launch quickly and fix) can succeed. However, for most medical technologies the cost to develop is high and the ability to course correct after launch is low. Early attention to product design is beneficial but the temptation to focus on it exclusively needs to be resisted.
Advancing product design is innately satisfying and has benefits. Most initiatives coalesce around a prototype. A prototype can bring into focus what problem is being solved and how the technology enables a novel solution. It often serves as a great communication tool and an energizing call to action. Making progress on a design feels like real tangible progress and often it is.
However, it’s also easy for design activities to consume too much of the team’s mental bandwidth. Once a design is prototyped, it can take on a life of its own. Instead of investing time in less gratifying activities like, determining who the purchasing decision makers are and what motivates them, many are tempted to focus on accelerating the 1st design iteration into production. In no time, exploration is replaced with execution, a launch date declared, and the question moves from “does this product make sense?” To “when will we have it?”
Without deliberately deciding to, a team can effectively deprioritize defining the commercialization problem, before rushing to solve it. Consequently, customer feedback is often too little and too late. The value proposition, the price, the size of the amenable market and the investment required to achieve meaningful adoption, receive superficial attention. These are only confronted when investors refuse to invest without these questions be addressed. By then it is often too late.
What to do:
With medical technology, the time and cost to commercialize invariably dictate the problem be approached more as a marathon than a sprint. The primary challenge is one of risk management rather than product design, of measuring twice and cutting once. Specifically, it is helpful to frame the challenge as:
Identifying which of the critical assumptions pose the greatest risk if they are wrong, and
Figuring out creative ways to invest a little money to remove a lot of risk. For instance, before investing significant engineering dollars, invest in understanding how clinicians view the problem to be solved and how value analysis committees view the problem to be solved. These viewpoints are often distinct, but both must be addressed by the same product. Note, it is not uncommon during this customer discovery for the design to undergo significant revision.
Proactive management of risk should drive product design as opposed to developing a design and reactively managing problems as they are exposed.
How to do it.
Large companies commonly use phase gate methodologies to proactively manage commercialization risk. This is a series of structured reviews (called phase gates) during which the commercial viability of the product under development is assessed using a standard series of questions. These questions necessitate that a balance be struck between demonstrating both technical and commercial feasibility.
Startup companies may not require the full formality of a phase gate system, but by focusing on what needs to be done to achieve value inflection points startups can effectively identifying a series of phase gates. In many ways an investor pitch is similar to a phase gate review. Investors have a pretty standard series of questions and addressing them requires striking a balance. For this reason, it makes sense for startups to very much integrate investor requirements and mind set in their product development efforts. Rather than view fund raising as a “necessarily evil” required to support product design activities, fund raising can be viewed as a discipline which requires prioritization of activities to reduce commercialization risk.
One note of caution, embracing this risk management approach requires a high degree of mental flexibility. On one hand you need to be a tireless promoter and champion of the technology, particularly with external audiences. On the other hand you also need to be the technology’s most clear eyed critic, determined to get to the bottom of each critical assumption and ruthlessly dig out the truth and deal with it, even if it’s not the result hoped for. Embracing both roles simultaneously can be fatiguing.
However, successful teams manage this. My experience is that successful teams demand a higher level of proof from themselves than do their investors. They proactively adjust their activities to seek out and deal with risk and during due diligence this becomes apparent to investors. Not only does this provide good answers to investor questions, it gives investors confidence that the team is indeed competent and will be a good steward of their money.