Car manufacturers, cable companies, and banks all stumbled as disruptive newcomers beat them to market with digital products. During his thought leadership keynote at the very first BrightInsight Ecosystem Event, Dr. Kal Patel, President of BrightInsight, highlighted these companies’ past mistakes and pointed to ways biopharma and medtech companies could avoid similar pitfalls. The content below includes excerpts from Dr. Patel’s presentation, Lessons from the Inside: How to Accelerate Digital Innovation Within Big Biopharma and Medtech.
The automobile industry’s built-in GPS investment
For a full decade the automobile industry invested hundreds of millions of dollars to create their own GPS products. This was the number one customer-facing software investment for carmakers at the time. Today, built-in GPS comes equipped in nearly every car, but globally, less than 5 percent of people use these systems. Carmakers made GPS a high priority, but it was not successful.
Unfortunately, carmakers were innovating at the pace of their underlying product. They were shipping their software innovation at the same pace they shipped new cars. It takes seven years to develop a new car, so by the time the car with the GPS built-in ships, the user experience, the content, everything about the software was outdated. The car buyer cycled through seven iPhone models in the meantime.
The automobile industry also made the mistake of developing their product in a silo. They did not consider how somebody would end up using their built-in GPS along with their smartphone, for example. Most people lookup directions on Google Maps of Apple Maps before getting into their cars. Having to lookup directions again using the built-in GPS once inside the car just creates unnecessary mental friction. Carmakers failed to approach the problem from the driver’s perspective.
Cable companies focused on incremental digital innovations
The television industry, cable companies especially, have made similar mistakes.
During the past seven to ten years, cable companies rest assured that they were shipping a lot of disruptive innovation. Cable companies increased their offerings from 40 channels to more than 100. Their set-top boxes allowed viewers to record not just one but many shows at the same time. You could even pause a show in one room and then continue watching it in another. Cable companies thought they were driving meaningful digital innovation. Once Netflix streaming came along, however, it became obvious that cable companies’ innovations were just incremental.
Netflix did not focus on adding more channels. It viewed the problem from the subscriber’s perspective and focused on making sure the viewer could watch that one show, out of the thousands of pieces available. Cable companies also could not shake the mindset that their product is used when you are sitting on the sofa. Netflix made it easy to watch content anytime, anywhere, and on any device.
Banks’ apps failed to take an ecosystem approach
One final example from the banking industry emphasizes the importance of an ecosystem approach.
About 10 to 15 percent of people use their bank’s app to send money even though these apps have poor user experiences that require the receiving party to sign up and link their own bank account to receive the money. Venmo recognized that banks failed to take an ecosystem approach. So, the startup decided that their app would allow anybody to send money to anybody. And they would make it easy to do so. A Venmo user only has one point of integration with their own bank. Venmo takes care of the rest.
The company’s success is clear: With 40 million users, Venmo’s user base has quadrupled in the past two years and it remains one of the largest drivers of PayPal’s valuation.
Lessons learned for biopharma and medtech
Forward-looking biopharma and medtech companies will forge digital strategies that will help them avoid the mistakes that carmakers, cable companies, and banks have made in the past decade. Best-in-class digital health products will take an ecosystem approach. Biopharma and medtech companies should recognize the perils of developing technology solutions in silos and understand that integration is paramount to achieving scale and driving value.