Big Company Looking for Innovation? Try the Garage

Innovation. Yes, there’s that word again. Simply being innovative (and since when was true innovation really simple?) doesn’t guarantee success in today’s healthcare market. Is a company’s technology a true game-changer? Does it save the system money as well as save lives? That seems to be the true judgment of its value these days. But where do you find innovation? How do
medical device companies today foster it? Do start-ups hold the key? Do larger companies grow pioneering product development internally or do they acquire it? So many questions.

Hunter Thurman has the answers—some of them anyway. He’s the founder of a Cincinnati, Ohio-based company called Thriveplan, an innovation lab that helps large companies with product development and branding. He also is the author of a recently published book, “Brand Be Nimble: How Big Brands Can Thrive by Innovating Like Start-Ups,” that outlines a process for achieving disruptive brand innovation in corporate America.

In the book, Thurman urges large companies to take cues from garage brands—the freewheeling, often-bootstrapped start-up brands born amid yard tools and bicycles. Start-ups often have an innovation edge because they are nimble, flexible and move quickly. Though big brands have more resources, they can suffer from legacy processes, red tape and what Thurman calls “paralysis of choice.”

“In the garage, things move fast. Ideas are born, vetted and pursued or retired in the course of a day,” said Thurman. “The cost of failure is relatively cheap, but for big brands this isn’t the case, and a brand marketer is handcuffed by scale. The key is to adapt nimble entrepreneurial techniques so they work on a big scale.”

But changing big corporate mind-sets and behaviors isn’t easy. Thurman knows this. That’s why—one of the reasons at least—he wrote his book. He told Medical Product Outsourcing that the days of medtech firm innovating solely through buyouts are dwindling.

“What I’ve observed is that you end up only buying things because they’re a good business. If not managed correctly, you can end up with a pretty complex portfolio,” he said. “You acquire a smaller device company, and with it comes the know-how, the sales force and maybe some R&D capability, but after a while that’s not a terribly sustainable model because you end up with a bit of a casserole. You find yourself in lots of different categories, becoming more of a holding company than a device company. What’s fostered that is that [the medtech market] is such a complicated space in terms of regulatory and sales cycle. Not to mention, you have users, choosers, patients and sometimes three or four other stakeholders that have a dog in the fight. “

Thurman also noted that the deal-making climate of years gone by contributed to the “hodgepodge” of acquisitions.

“The space is more mature than it was just a few years ago and when there’s a good acquisition, everyone else knows about it,” he told MPO. “There are no ‘deals’ anymore. Ten years ago, companies felt like they could still scoop up new technology and M&A (mergers and acquisitions) was almost a point of differentiation. Today, anything that’s worth it you are going to pay for—and pay a premium.”

That’s when companies decide to innovate from within. But, for large companies, that can be like “staring into the abyss,” according to Thurman. And this is where challenges are consistent with a company making breakfast cereal and one making knee implants or infusion pumps. Executives from both industries are asking: How are we going to grow our business? Here’s where large companies can get paralyzed; they have so many brands, products and stakeholders. Choosing a path is tough. 

“It’s like 8th-grade algebra,” Thurman explained. “If you have the equation X+Y+Z, you can move the variables around all you like, but you’re never going to solve it because there is no constant. The way to empower the organization is to pick a constant—and one it knows the most about. “ He outlines three important considerations in his book. Does the company know more about the audience, the “felt need”—what kind of space the product falls into, or the “design DNA” (i.e., the technology)?

“If they can hone in on one of these, they can pivot from that constant and solve for the others,” Thurman said. “If you have a device that has a certain piece of technology, focus on that and research the other benefits that technology could create. So, you’re pivoting from a position of strength to find new opportunities.”

Before finding that core constant, companies that are mired in one way of thinking or aren’t as oriented to acting nimbly need to be more willing to look broadly at their business and slow things down just a little, Thurman advised.

“The biggest assumption is that if a company is going to shift to a more agile and innovative culture, it has to be like ripping off a Band-Aid—a top-down system change that will dramatically uproot business,” he said. “But, in reality, if you look at how a small tech start-up can teach lessons to large companies in terms of how to innovate, start-ups don’t say,‘Hey, we’re going to go and spend $5 million and develop a huge piece of technology, take it to a huge scale and change everything overnight.’ In Silicon Valley, for example, MVP doesn’t mean most valuable player; it’s the minimum viable product. Start-ups enter the market small and build. Clearly, that’s tough in the medical device space because of the expensive regulatory pathway. So, the mind-set has to be adapted. Start small and move  slowly. Get creative. For example, find a channel where you can partner in unique ways to vet product or service ideas with stakeholders.”

Clearly, the healthcare market isn’t business as usual, and medical device companies and the firms that supply them are looking for ways to reboot and add value. Maybe it’s time to head to the garage, back the car out, pull a chair up and start thinking small(er). I’m sure Thurman could recommend a book to read while you’re there.