Or, the Incredible Immutability of the Gartner Hype Cycle
From Editor Donna, her take on the ‘mega-trend’ of 2014
This Editor expected that her ‘trends for next year’ article would be filled with Sensors, Wearables, Glasses, Smartwatches, 3D Printing, Tablets and Other Whiz-Bang Gizmos, with splashes of color from Continuing Crises like Healthcare.gov in the US, the NHS’ 3million lives plus ‘whither UK telecare’, various Corporate ‘Oops-ses’, IP/Patent Trolls and Assaults on Privacy. While these will continue to spread like storm debris on the beach, providing continuing fodder for your Editors (and The Gimlet Eye) to pick through, speculate and opine on, what in my view rises above–or is under it all–for 2014?
We are whipping past the 2012-13 Peak of Inflated Expectations in health tech…
…diving into the Trough of Disillusionment in 2014. Crystallizing this certainty was a discussion thread on LinkedIn‘s huge Medical Devices Group (202,000+ members) posted by group leader and device consultant Joe Hage called ‘Insolvent With A Great Idea’. To summarize his points, even the best product is not likely to last long enough to gain both its market and the financing to win, much less revolutionize healthcare, without the best financing and the best marketing. (Touché! To see the discussion post and thread, it’s necessary to join this LinkedIn group, but it is worth the effort). I added an early comment:
Yes, but we still have among apps and device developers/company founders several unrealistic mentalities, all of which as a long-time observer I’ve seen and heard.
- ‘Better mousetrap’ syndrome (as in ‘the world will beat a path to your door’, a/k/a ‘Field of Dreams’)
- “I’m not in it for the long haul…my goal is to sell this for big bucks to (fill in big pharma, device mfg. name; Khosla or Soon-Shiong) and sail for a year off Fiji.
- “Not my money…I’ll get angels and VCs to finance me”
- “How it fits in ‘workflow’? Not my problem–let whoever buys this figure it out.”
- “Who needs marketing? I can get some interns or grad students to tweet/FB about us and man the booth. And strategic marketing? I have all the strategy I need!”
- “Protecting my IP? That’s so 2000s. And patent infringement damages? I don’t have any assets. And what’s a patent troll?”
Happily, I’ve seen a turn in this attitude in the past year, where developers and founders now realize the reality is the opposite of every point made above.
Comes the dawn and sobering realizations
You look back for leading indicators, and the big one in the rear view mirror is the mHealth Summit, probably the single largest gathering of the mHealth/health tech crowd in the world. Lois Drapin’s articles which appeared here [TTA 23 Dec, 10 Dec] were a scherzo in a minor key: the hundreds of millions of VC funds going to relatively few companies that have yet to turn a profit, one of which (23andMe) was stopped dead in its marketing USP by FDA and a class-action lawsuit; investment capital jumping in, out and sideways; the ‘velocity of big’ as seen in the ‘industrialization’ of health data represented by IMS Health; the ‘big boys’ laying train tracks into this Wild West town of mHealth (ignoring those flying arrows and the black hatted gunslingers). Other observers sounded notes of a lack of focus, energy and, in private remarks, lack of excitement and fun compared to previous Summits. There seemed to be from reports no hit device, no buzzed-about app–and the floor talk was the big ‘oops’ of Happtique’s app certification missing checks for info security.
We’re seeing the lag time in changing attitudes and a new atmosphere of uncertainty.
We’re past the exciting stage of potentials, possibilities and presentations-to-the-adoring, into the cold business world ruled by Mr. Market. Developers have succeeded in their developing–perhaps not to the visions of The Two Erics (Dishman, Topol), but to where there is now have a multiplicity of overlapping, converging devices and apps (examples: Fitbit, Jawbone, Shine, Nike) still finding their markets. But the downside of answered prayers has been rapid obsolescence (Zeo), flameouts (O2, Healthrageous, WellAware, Wellcore, Diversinet)…and whatever happened to the notion of ‘killer apps’? Back looking in the rear view mirror, much of what your Editors wrote in 2013 has been prescient on exactly these points, including Is it Hope? Hype? Or just the Same Old Struggle? in February, ‘Leading the charge in wireless health’–to where? in March and Editor Charles’s three-part dissection of the O2 Big Fail [23 July, 25 July, 8 Aug) as a manifestation of the failure of telecare to mainstream in the UK market. The closing paragraph of ‘Leading the charge…”:
It’s not enough to have a better mousetrap and whiz-bang tech–it’s developing a business model that integrates into present systems and finds its way into people’s lives/wallets. It will help the tech that’s working here and now, which is desperately trying to gain funding, customers, providers and provider buy-in–and transition. It will guide future developers, who need to get their heads out of the theoretical, the QSers and into a business model of getting a job done for the customer, as well as being attractive, easy to use and low in cost–in other words, true disruptive innovation. Only then will the customers–physicians, other clinicians and provider groups, especially long-term care housing, and the end users–really start getting on board.
Coping with the reckoning going forward
Returning to the discussion in the Medical Device LinkedIn group, Joerg Schulze-Clewing, electronics design consultant, had what I thought was a set of smart ‘must answer’ queries for any developer, entrepreneur or funder in the development or financing process. Mr. Schulze-Clewing’s experience is in highly regulated ‘traditional’ medical devices, but it applies as well here to the ‘kid brother’ of less regulated health tech. Simply, to win you have to be better in a highly significant-to-the-market way. Is it positioned to solve a problem, to do a job to be done?
The “better mouse trap” path is very normal in medical devices. The main reason for this is regulatory approval. Anything brand new or revolutionary requires PMA [FDA Class III premarket approval, the most stringent type–Ed.] and that is too onerous and time-consuming for almost anyone except very large medical device corporations. Smaller players can only go the 510(k) route or become acquired. What’s key is that the device is not just better in the eyes of the designers or their investors but truly in the field. [Ed. emphasis] It has to fulfill at least one of these requirements:
a. Be easier to use without costing more than contemporary solutions. Only doctors can truly says whether it is.
b. Be substantially lower in cost, resulting in lower procedure cost without compromising performance.
c. Achieve a much better longterm clinical outcome, in which case it can cost more per unit. But if it does cost more it will be a long and thorny road with expensive clinical trials.
Medical is usually a zero sum game. There is a fixed amount of money available and your better mouse trap can only be a success if it pushes some other fairly popular mouse trap out of the market at a fast clip. Not easy to grow an existing market in overall size.
In other words, if you can’t fulfill the above, you are at ‘Do Not Pass Go. Do Not Collect $500’ in the Monopoly® of the Market.
Does this mean that the ‘swell stuff that can transform the future’ comes down to Earth, sorts itself out, and into our lives? Will some of it fall into the mud or spectacularly into the ditch? (Of course it will, and to be expected.) Will the ‘trough’ be deep or shallow? The Magic 8 Ball says, ‘outlook cloudy’, but these pages will chronicle the 2014 chapter of the continuing story.
We hope you’ll be with us.
We wish all of our readers a happy, healthy and prosperous New Year!
Editor’s Note: Mr. Schulze-Clewing’s comment above is reprinted with his direct permission. The reference to Mr. Hage’s discussion and the Medical Devices Group on LinkedIn is also with his consent.