With digitisation, MedTech companies looking to stay ahead will have to rethink their approach not just to technology, but to their business models, talent, and transformation of mission and culture.
by Anupama Puranik, Wolfgang Bauriedel, and David Krahe
Digitisation has come (relatively) late to the medical devices industry, but it is here now. Building since the beginning of the last decade, breaking through with the crisis of COVID, the “resultant vector” of disruption will accelerate as we move deeper into the 2020s. The ultimate imperative is to have a leadership team in place that can leverage innovative technologies within the context of a broader strategic vision. Those stewarding MedTech companies will thus have to (and often radically) rethink their approach not just to technology, but to their business models, talent, and transformation of mission and culture.
Digitisation will inexorably separate MedTech companies into “winners”—those able to transform themselves internally to differentiate their offerings in a dramatically expanded market as they are able to become marketplaces with a suite of devices and a number of indication areas—and companies that are falling behind—ones that will either be acquired or forced into transactional portions of the value chain.
The key differentiator between market leaders and also-rans will be visionary technology-savvy leaders who can navigate a rapidly evolving market landscape. They will understand the organisation’s role in a shifting ecosystem that features new competitors, new stakeholders, and entirely new possibilities for connected health care, particularly vis-à-vis reengineering the experience of patients and leveraging their data to build stronger partnerships with patients, payors, and providers.
A Burning Platform for Industry Incumbents
The current market players are at a stark crossroads where survival will mean adapting to an industry whose accelerating velocity increasingly resembles that of the technology sector. MedTech CEOs are publicly committing to being among the first to complete this digital transformation, showing that they’re putting enough force behind it.
The current “core” medical technology industry as of 2020/2021 has an estimated sales size of US$400 billion. By 2030, the market is projected to double in size, along with all-but-inevitable new market entrants.
Many of these new market entrants will help the “core” MedTech companies transform successfully, even further differentiating the winners and fuelling the war for talent. Spurred by these ongoing disruptions, the flourishing companies will be those agile enough to navigate increasingly turbulent markets via five key capabilities:
- Tapping into an Expanding and Evolving Ecosystem: The MedTech landscape is changing around four themes—digital, patient experience, home care and hospitals as well as data monetisation. As the capabilities of the leading players in the MedTech industry expand, they will transform their relationships with key stakeholders, with opportunities increasing in tandem with expectations. Working with these stakeholders allows for synergistic learnings across relationships and channels. Companies that can leverage data for predictive/analytic capabilities are poised to identify value-add opportunities across their entire range of strategic partnerships. This begins with the critical step of improving patient outcomes/adherence to drive value to patients themselves as well as the health care providers that serve them.
- Shifting to a Connected-Health Model: Technological capabilities have reached a critical mass on multiple fronts, bringing a competitive advantage to any MedTech company that can effectively harness their data with a focus on data interoperability as well as leverage artificial intelligence or machine learning (AI/ML) platforms. While key market players have become adept at the “legacy” model of creating hardware and software products, many leadership teams will experience difficulty with the change management that is required to migrate to a frictionless digital business platform, accelerate products’ time to market, and build deep engagement across customers and business partners.
- The War for (Technology) Talent: Legacy MedTech companies face the classic “how to build the plane while it’s taking off” problem. The central element in any such solution is a transformed talent management strategy, usually placing a premium on external hires, particularly those with technical skills. Coming out of the pandemic, the market for technology talent is very frothy. Strong digital leaders receive daily outreach from recruiters. A key to attracting technology leaders is a public stance and commitment to the digital transformation of the business—not just of the organisation’s technology leadership. In addition, it is imperative to take advantage of the digital grounds in your own company and identify talent that can quickly take up these new technologies, business models, and engagements.
- Flexible “Buy, Build or Partner” Strategy: The optimal strategy for many companies is likely to be a hybrid model of in-house incubators and external acquisitions, either integrated or held at arm’s length from the legacy enterprise. However, it’s not just black or white with regards to organic and inorganic growth. It is equally important to build an effective ecosystem that surrounds the company. The edges of the company boundaries fluctuate and are becoming greyer as the number of partners of the organisation expands. The key to the strategy here is OpenAPI which will allow your ecosystem to add services on the platforms for better customer engagement and satisfaction.
- Digital Leadership: An Urgent C-suite Priority: Successful leadership teams will be those who are able to ask hard questions regarding their own capabilities. For many such teams, the key insight they will bring to this industry disruption is the recognition that they don’t have the entirety of the expertise required. This may be particularly true at the board level, which might need to diversify its knowledge base and actively seek out the “digital native” perspective in its deliberations. In the intensifying scramble for leadership talent, fast-cycling of succession planning/ finding “force multiplier” internal moves will be vital, but most companies will also have to aggressively look externally to seed their leadership with hires directly from (adjacent or otherwise) technology sectors.
In closing, organisations will need talent that is willing and able to challenge the organisation with the ability to break some glass to change the organisational mindset and culture. One individual will not be able to lead the transition alone—it needs to be a broad-based organisational reckoning and passion instilled from the top and driven by the board and C-suite. [APBN]
About the Authors
Anupama Puranik is a trusted advisor to international and regional companies for succession planning, leadership search and assessment. She is based in Singapore.
Wolfgang Bauriedel is a senior member of Russell Reynolds Associates’ Technology sector. He is based in Boston.
David Krahe is a senior member of Russell Reynolds Associates’ Medical Devices and Diagnostics practice. He is based in Dallas.