By Mike Haynes, Sophie Riegel, and Haider Abbasi, PA Consulting
Deregulation, consumers’ prioritization of health, and interest in remote care have set the stage for innovation by medtech firms. Throughout the COVID-19 pandemic, regulations have loosened to quickly provide healthcare solutions to the shifting, now often remote, landscape; these include the expedited state licensure for physicians to practice in other states, increased Medicare reimbursements for providers, and relaxation of the Health Insurance Portability and Accountability Act (HIPAA) to name but a few. After over a year of doing more than we ever thought possible remotely, the interest in and acclimatization to remote services has grown. Along with looking for remote solutions, there has been a general reprioritization of health since the global pandemic. Taking cues from customers’ newfound interest in remote options and reprioritization of health can open the door for medtech companies to provide innovative solutions, not just now but for years to come, capitalizing on the growth opportunities and lightened regulation.
However, while medtech firms have had proven success with scaling and short bursts of innovation from special projects and acquisitions, these firms have struggled to achieve a steady stream of disruptive innovation. Most innovation from medtech firms comes from iterations on existing products, at an average output time of 18 to 20 months, due to the sector’s preference for the familiar over the radically new; for instance, a device to perform noninvasive surgery to treat acid reflux was snubbed for a more familiar non-surgical approach. However, there has been little improvement on this cycle time and medtech firms are challenged in sustainably generating new ideas in-house. There has been a reliance on directing cash toward special projects or purchasing innovative start-ups. While effective in some ways, this reliance on short bursts of innovation prevents medtech firms from establishing a lasting legacy and durable source of innovation. To capitalize on the post-pandemic growth opportunities, medtech firms should use Agile methodologies to cost-effectively drive innovation in-house. These will in turn give medtech firms the edge in an increasingly remote, consumer driven, and health-conscious world. The methodologies are threefold:
1. Consistently Create Time To Innovate
Consistent, dedicated time and resources are critical in fostering sustainable innovation and turning medtech firms into innovation hubs themselves. Specifically, medtech firms need to incorporate regular firmwide innovation iterations to take new ideas to proof of concept.
As PA Consulting was working on an innovative syringe, dedicated iteration teams were used to successfully build and deliver the new product to fight COVID-19. When working with a global pharma company, a temporary Agile in-house start-up was created to fuel specific projects. Having dedicated time and resources was critical in the development of these innovations. However, because they were one-offs, the solutions produced were limited to the scope of time allocated and specific problem to be addressed.
In contrast, innovation iterations were used across a third global pharma company. This dedicated time allowed employees to explore and present new ideas on a regular basis. Employees had an “innovation mindset” because they were always brainstorming new ideas for the innovation iteration. Medtech firms are not usually set up to provide for disruptive innovations from scratch, but rather they focus on iterations to existing designs. Designating time to explore completely new ideas through innovation iterations will allow for disruptive ideas rather than improvements on existing products that are typically a modest value-add. Additionally, firmwide alignment in designating time for innovation will relax medtech firms’ reliance on acquisitions and special projects and turn them into a sustainable source of innovation.
2. Set The Culture For Innovation
In addition to having the space to act upon innovative ideas, medtech leaders also need the right culture to promote generation of new ideas. Agile ways of working can provide cultural shifts that will make firms more organizationally equipped to embrace innovation, moving from fear of failure to a learning mindset, empowering employees, and embracing fast feedback loops.
Agile practices focus on short cycle times by having, typically, two-week iterations. Using these short short cycle times will reduce time investment risk, emphasize iterative improvements, and enable teams to “fail fast” by making decisions early on whether to continue with ideas. According to Clayton Christensen’s book The Innovator’s DNA, mistakes must have three characteristics in order to be productive: they are detected quickly, they are not too big to impact the name of the company, and they allow us to learn from the error. The use of short iterations will lessen the fear of failure and enable quick review and identification of errors on a small scale. The focus will shift toward a learning mindset. Specifically, openness to feedback and constant improvements will be prioritized through retrospectives and interactive demos. Having consistent time set aside to review the iteration’s output in an open forum and think of ways to improve will emphasize learning over failure. Increasing opportunities to review the solutions and provide input will be particularly relevant with medtech firms, as they primarily rely on improvements to existing solutions. In addition, having a culture that can quickly shift concepts and learn from feedback is critical in the development of net new innovations.
Moreover, to support innovation, employees must be empowered to pursue innovative concepts. In an Agile culture, companies provide trust and autonomy by deferring to employees’ expertise on the “how” of solving problems. With 63% of innovation happening in areas other than the C-suite or IT department, it’s important that the cultural shift and empowerment through Agile ways of working is firmwide. Agile is a critical pathway to embracing a learning mindset and giving employees trust and autonomy to innovate.
3. Innovate Purposefully
Lastly, an Agile approach can drive purposeful innovation that leverages customer insights, satisfies regulatory demands, and delivers to marketplace needs. Because the FDA’s Design Control Guidance for Medical Device Manufacturers includes the waterfall design process, regulatory requirements are often misinterpreted and seen as a barrier to adopting Agile. However, medical device manufacturers do not have to follow the waterfall approach. A certain order of operation does need to be followed for verification, validation, traceability, and other factors, but the cycle times and methodology are not mandated. Agile ways of working can easily be applied to fulfill these regulatory requirements in a faster and more efficient way. For example, usability studies and human factor assessments are now required by FDA and ISO processes. These are vital to obtain some of the most valuable feedback and can be incorporated continually in iteration life cycles, as opposed to later in a waterfall phase.
In general, Agile prioritizes heightened customer-centricity and feedback in alignment with regulatory demands. The product owner (PO) (a voice-of-the-customer role), as well as earlier integration and prioritization of customer feedback, will ensure that all efforts are directed toward value-add for customers. Shifting the focus to addressing customer needs and priorities through a PO and customer feedback will allow for more purposeful innovations.
Additionally, while customer needs and insights are continuously taken in and prioritized by the PO and in product demonstrations, understanding gaps in the marketplace can give companies a competitive edge. To appropriately prioritize work, POs may also consider what competitors aren’t delivering, focusing on more innovative solutions to problems that aren’t being addressed. Competitor analyses can also be incorporated into innovation iterations, for a more targeted approach to innovating that truly addresses customers unmet needs and provides for more disruptive innovations
For sustained innovation, and to take advantage of the recent market opportunities with health prioritization, deregulation, and interest in remote options, medtech firms need to embrace Agile. Building in consistent time to innovate, shifting toward a culture that will embrace those innovations, and approaching new ideas through the lens of customer needs and regulatory requirements will give companies a competitive advantage. Approaching innovation in this way, enabled through Agile ways of working, will allow them to innovate in-house and build a lasting legacy.
About the Authors:
Mike Haynes is an Agile delivery and transformation expert at PA Consulting. He specializes in shaping and implementing large scale Agile transformations as well as ensuring their long-term sustainability.
Sophie Riegel is an Agile expert at PA Consulting with a focus on healthcare and life sciences. She uses her Agile background to help businesses improve their ways of working for tangible impacts. Her expertise spans Scrum, Kanban, and SAFe.
Haider Abbasi is a life sciences expert at PA Consulting. He focuses on delivering innovative growth strategies to life sciences companies through an Agile transformation lens.