New Product Launch Planning Topics for the Medical Device Market

The Set Up

Over the years I have been privileged to launch or direct the launch of nearly 100 medical devices. With that experience I have learned that launching a new product is not a marketing function. It takes an integrated team with an integrated mind set. I have assisted a number of clients in designing their new product launch plans. Several long-time colleagues have recently asked me to provide a thought check-list for their less experienced team members to aid in launch planning.

So I have decided to share that check-list with everyone. I caution that this is a list of decisions or thinking that should occur as you are designing your launch. Following this check-list doesn’t gaurentee success. So much of the success comes from the quality and deepth of thinking you put into the topics. So with that cautionary note here is the check-list. A conceptual thought that might make this clear to you is to think about the topics as section title slides for the Launch deck.

The Intent with an Integrated Launch

The way I have always thought about a product launch is parallel to a rocket launch. Planned well (correct trajectory to achieve the proper orbit) you apply a tremendous amount energy (time, resources, targeting) to a launch and once you break free of Earth’s gravity (market resistance to change) you fly along at a speed of 17,500 miles per hour with no fuel being utilized at all.

 

 

 

The Thought Check-list

 Launch Summary

 Product vision

 Elevator pitch regarding the launch, not the product

 Market Understanding

 Therapy understanding

 Technology understanding

 Macro segmentation

 Competition defined

 Market drivers determined

 Key success factors identified

 Product Understanding

 Product definition

 Product description

 Positioning statement

 Value proposition

 Health-economic story

 FAQ

 Trouble shooting guide

 Allowed claims

 Competitive comparison

 Portfolio revelance

 Launch Strategy

 Launch goals/objectives

 Financial

 Revenue

 Profit

 Share shifting rate

 Non-Financial

 Quality

 Complaint

 Close success rate

 Compliance to targeting

 Business process metrics

 VOC

 Customer satisfaction product

 Customer satisfaction service

 Customer targeting

 Channel considerations

 Customer profile

 Customer engagement strategy

 External communication strategy

 Launch Tactics

 Launch structure (Controlled, Limited, General)

 Launch campaign development

 Team membership

 Launch calendar

 Sales process (Controlled, Limited, General)

 Product sampling plan

 Evaluation process steps identified and facilitated

 Pricing (Controlled, Limited, General)

 Reimbursement

 Demand generation plan

 Sales pipeline projections (1-12 months)

 Demand/Supply plan

 Revenue projections

 Share penetration rates

 Service plan

 Sales training progression plan

 Messaging Mix Development

 Message development

 Collateral development plan

 Video

 In-service video

 Promotional video

 Testimonial video

 Digital

 Print

 Promotion

 Trade show plan / calendar / collateral

 Poster and Potium plan

 Advertising plan / calendar / collateral

 PR plan / collateral

 Social Media Use plan

 Launch Controls

 Team dashboard

 Mgt. dashboard

 Quality dashboard

 Sales detail dashboard

 Product Claims

 Current claims

 Desired claims

 Gap analysis

 Clinical evidence collection plan

 Regulatory strategy

 Multi-generational Product Portfolio Plan

 Launch budget / spending plan by quarter over 12 months

Guidance

Not every launch will require all the check boxes to be checked. However, I strongly recommed that you think through the inclusion and exclusion of content from the list, defend the “in” and “out” decisions.

The higher the complexity of the technology / product / launch process the more likely it will be that you need to address each and every thought.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com. Contact The Experia Group for a free 30-minute consultation to determine if 30-years of experience can contribute to your success.

© 2017, The Experia Group, LLC

VOC Input for Product Requirements Development

The Set Up

Regardless of how you package or communicate the Product Requirements for a new product there must be a customer input process that precedes finalizing of those requirements. Collecting the Voice Of Customer (VOC) is critical to the success of new product creation.

The Double Diamond Process

Sometimes a picture is worth 10,000 words. The chart shown to the right is the way I explain the approach to building that VOC into a fully validated set of requirements.

The key in the progression of confidence as you move down the double diamond. As you move through each section you gain the understanding and confidence in the data to which you need to apply your insight to.

Caution

If you want to assure the greatest chance of success don’t skip a step or stop early.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com. Contact The Experia Group for a free 30-minute consultation to determine if 30-years of experience can contribute to your success.

 

VOC Input for Product Requirements Development

The Set Up

Regardless of how you package or communicate the Product Requirements for a new product there must be a customer input process that precedes finalizing of those requirements. Collecting the Voice Of Customer (VOC) is critical to the success of new product creation.

The Double Diamond™ Process

Sometimes a picture is worth 10,000 words. The chart shown to the right is the way I explain the approach to building that VOC into a fully validated set of requirements.

Caution

If you want to assure the greatest chance of success don’t skip a step or stop early.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com. Contact The Experia Group for a free 30-minute consultation to determine if 30-years of experience can contribute to your success.

© 2017, The Experia Group, LLC

High Level Product Requirement Creation for New Medical Devices

The Set Up

After the series of blog posts relating to portfolio planning it only make sense to take the next step. New Product Requirement planning. This will be a tough series to write. So once again the goal will be to provide an awareness of the process and provide a couple of tips regarding “How To”.

If you gain nothing more than one “aha” out of this series then it was well worth reading.

There are three or four approaches to requirements planning. All of them can work. The process I layout for you here is a straight forward practical approach.

The big caution is reflected in the adjacent cartoon. To avoid the mis-communication take your time creating the Vision statement, Business problem statement, Clinician problem statement and ultimately the initial Product positioning and Value proposition statements.

The High Level Process

Recognize a New Product Opportunity

From the portfolio planning process we have identified that we are vulnerable to collateral share loss in one specific area of our portfolio. Our market scan produced the realization that we don’t have a product in a fast growth segment of the market, perhaps more importantly three of our key competitors do.

Write the Business Problem Statement(s)

Write the problem statement(s) using general language. Note that you may have two or more problem statements. That’s cool. You could write it as a business problem, a portfolio problem, and /or a risk problem. A good start. Eventually you need to write it as a customer problem. Capturing the un-resolved issues that the fast growing segment is resolving.

Conduct a Qualitative Market Scan

Before you write the solution hypothesis you need to gather additional input from the market. At this point in the process I would urge you to collect structured well document qualitative data; don’t skip forward to conducting statistically valid market research just yet. I have spent as little as $25,000 and as much as $1.4 million on market research to determine a winning product definition. It is too big of a financial investment to dive right in without a little background work first.

Now is the time for a little sleuthing, search the MAUDE data base for complaint histories on all three competitive products. Categorize the complaints by type.   I typically will capture the categorized data in an excel table.   Obtain product specification for each of the three products (sale literature, IFUs from the website, 510k applications, general web search). Next, interview a couple of your top territory managers who have reported competitive activity in their hospitals. Have your sales force poll their accounts to determine who is using this new products. Identify which of your friendly accounts have committed to purchasing the new product (try to interview at least one representative account for each of the three competitive products). Arrange personal one-on-one interviews with each of these committed friendly accounts. The typical product marketing questions should suffice at this point:

  • What is/are the challenge(s) you are/were trying to overcome by using this new product?
  • How did you try to meet these challenges before you had the new device?
  • Why do you believe that this type of product will meet your needs?
  • What do you like about the product?
  • What don’t you like about the product?
  • What type of proof and metrics would you need to see to believe that the product will meet your needs?
  • What are important features or attributes of this type of product? (try to get this input prioritized, at least ranked and rated)
  • If there was one aspect of the product you could improve what would it be?

Write the Clinical Problem Statement 

At this stage the problem statement can be several pages long. In general, the contents of a good problem statement should include:

  • A re-statement of the original problem statement that the competitive products were design for,
  • The residual un-met needs for each of the three product solutions (gap assessment),
  • A summary of the MAUDE database review,
  • A summary of claims made in the regulatory filings,
  • A summary of warnings and cautions from the IFUs,
  • A summary of the clinical trial data if any were required,
  • A summary of any editorials or press announcements regarding the products,
  • Competitive metrics: share, growth rate, revenue, ASP, archetypal description of customers

Caution: don’t become so focused on the gaps or potential solutions for the gaps that you forget to use fresh eyes on the original problem.

The discovery process that has been described can be done in as little as a couple of weeks or it could take a few months. The creativity comes from you as to how you do the work economically or efficiently. Just don’t skip this step.

Now you have enough information to define the problem. This will be the vision statement for your R&D team as well as management. A problem statement post will also be a part of this series.

Quantitative Market Research

Hopefully, your vision statement / problem statement has been compelling enough to warrant a further investment by Sr. management to execute a formal VOC process that will include additional qualitative and your initial quantitative research.

I will go into great detail is a subsequent post regarding how to do the quantitative research. For now lets focus on the output. For me the most effective way to look at the output of the initial quantitative research is in a stacked spider /radar chart. A spider/radar chart produces a geometric picture of the shape of possible solution sets for the un-met needs.

Description of a Radar/Spider Chart

Each of the axis of a radar chart represents a benefit/feature/attribute of the solution set. These are the most critical aspects of the product to the customer.The scores are a reflection of how well the product meets their needs. The scale is arbitrary, I typically will use 0-10. The end product in this scenario would have five (5) separate geometric plots.

  1. The ideal or perfect scores for the general market
  2. The ideal or perfect set of scores for your chosen segment
  3. Competitor 1 scores
  4. Competitor 2 scores
  5. Competitor 3 scores

In the example provided you can see that the two series of data have markedly different shapes. The ideal solution for this general population would be the connecting of all the highest scores of each axis. This would provide you with a third geometric shape. By looking at the differences between the first two series and the newly created third one you get a feeling for the gaps. You can plainly see that the red series has a biased solution that delivers on the left axis and the blue to the right. Knowing this and combining it with the balance of what you learned from your competitive analysis you can determine what your new product strategy could be. There will be several biases that you can select from.

The big watch out here is to use the qualitative research to make sure your axis are the critical ones for success of your new solution. Your ultimately success with this new product will be directly linked to how well you determine the critical success factors or axis to plot.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com. Contact The Experia Group for a free 30-minute consultation to determine if 30-years of experience can contribute to your success.

© 2017, The Experia Group, LLC

New Years Action Item for Product Managers: Perform an Annual Product Performance Review.

The Set Up

Following my own advice, I perform a year-end Annual Product Performance Review (APPR) which revealed some startling results.   Even after 30 years of managing medical device product lines my APPR revealed that I was spending a disproportionate amount of time working on non-business imperatives. To optimize your contribution to the company imperatives you need to periodically ask yourself, “How am I doing?”

It is easy to take advantage of opportunities and correct issues once you discover them, but if you never look, oh well.

So as obvious as the need for APPRs are, a number of my fellow marketers aren’t doing them. Why? They would go ballistic is their supervisors failed to do an annual performance appraisal on their own performance.

If you are a serious Product Manager you will have already set up monthly metrics to keep track of your new products (those less than 1 year old). Have you looked at your entire portfolio? No? I am willing to wager that if you do you will discover some amazing things that if acted upon will increase your portfolio performance in 2017.

Annual Product Performance Reviews

I call this maintenance activity an APPR. As a product manager we have to care for our product lines, particularly when they have been on the market for a while and the excitement of the launch has worn off. Spending one day a year, on each of your product lines is a minimal amount of your time invested that could prevent you from being shaken from a good night sleep by an overlooked issue. What kind of an issue? Quality shifts, pricing slip, share slip, new competitive entry, shifting sales force focus, slipping gross margins, resurgence, increasing complaint levels all these potential issues are leading indicators of critical times for your product line.

The APPR can be done anytime of year. At its core, is a year-over-year comparison of key metrics. The more years you have data for, the more likely you are to see a trend. It is good to partner with finance or IT the first time you conduct this type of analysis to make sure your data sources are complete and comparable. For some product lines a monthly review may be more appropriate.

Each APPR took a day and included a review of the following metrics

  • Units, total
  • Unit, mix
  • Average selling price (ASP)
  • ASP by mix
  • Complaint rate by type or category
  • Manufacturing yields
  • Gross margins (GM)
  • Revenue
  • Revenue distribution my geography
  • Revenue distribution by sales territory
  • Number of active accounts
  • Number of accounts that went inactive over the past 12 months
  • NEW! As accurately as you can estimate the amount of time you are spending on the various products in you portfolio.

These metrics are all loaded into a simple excel file, which automatically did the year-over-year trend comparison and some simple charting. The output was the APPR dashboard. Often this dashboard pointed towards areas that needed my attention and a bit of investigative work.

Today, I have created custom dashboards in salesforce.com that provides real time comparisons for new product launches, after one-year the dashboard changes to a periodic based trend analysis that has taken the place of the APPR dashboard. The important thing is to monitor the product lines you are responsible for and take nothing for granted. This is a good application of the, “productive paranoia” concept that Jim Collins discusses in his book, Great by Choice.

Career Building Opportunity

Once you have performed the review, packaging a “winners and losers” list is a great way to communicate to Sr. Management about the performance of their products (keep it simple – see example to the right). Everyone who doesn’t pay as close attention to your portfolio as you do would view this as a valuable tool. Now the challenge is that you are then compelled to act on the findings. Plan out 1-3 communications prior to publishing the list.

  1. Information
  2. Reflection
  3. Recommended action

Make sure your supervisor knows what you are doing and why.

If any one in your organization thinks that publishing a well-done Annual Product Performance Review is a bad thing; take a look at that and ask are the reasons political, personal, or other. You can’t change what you don’t measure.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com. Contact The Experia Group for a free 30-minute consultation to determine if 30-years of experience can contribute to your success.

© 2017, The Experia Group, LLC

The Problem Solver Dilemma™

The Set Up

After attending a personal development seminar, I am a huge believer in continual learning, a realization occurred to me that would have been great to discover when I was managing large teams. So, I thought I would reveal my discovery in the hopes that someone out there will benefit.

The Dilemma

I discovered how much of my sense of “selfworth” was tied up in solving marketing problems in the Medical Device space. I sometimes actually refered to myself as a “marketing engineer” . Solving problems is what has lead to many of my successes, so I don’t discount the value of solving problems. I now realize that defining myself as a problem solver is self- limiting and can cost valuable time solving irrelavant problems.  Knowing how to solve problems is a powerful skill to have. That is why I call it the “Problem Solver Dilemma”. Solving the right problems, at the right time, in the right way, for the right reasons is a boundless way of receiving contributions to your self-esteem. When you are caught in the “Problem Solver Dilemma” it doesn’t matter if the problem solving is contributing to the business imperative or not. A solved problem reinforces your self-definition whether it is the problem that can make the greatest contribution to the larger mission or not.


The deck chairs probably were a mess and needed re-arranging. But having orderly chairs would not save the ship or the passengers.

Reflecting back on my work history, my significant contributions came from seeing an opportunity to serve the larger mission (business imperative) in a new and creative way.   Creating a vision surrounding that “new way” and effectively communicating the “new way” to others, who could help achieve the “new way” and then executing it regardless of opposition. I call this the “Vision Realization Loop”.

So how did I, or perhaps you get caught up in this “Problem Solver Dilemma”?  We forgot to ask several fundamental questions before we solved the problem.

What to do

Once you have become aware that you, or one of your employees are caught in the “Problem Solver Dilemma” here is what you can do. Problem solvers need to be monitored closely. Why? They won’t ask permission to solve a problem, they will just start solving it. When this happens it doesn’t take long for a series of non-focused solutions to make a key resource in-effective with respect to their contribution to your greater vision or mission. They will experience a series of satisfying experiences that will lead them to believe they are being very valuable when the truth is that they are not contributing to the team effort. A disconnect that if not dealt with, will create a personnel problem in the future.

So how should I avoid the “Problem Solver Dilemma” before it becomes a problem. As this is a discovery that has just entered my conscious thought processes; I don’t have a tested answer for you. But here is what I am going to do differently.

If you sense that you are solving a problem, stop. Ask yourself the following questions:

  1. First, does this problem need solving right now?
  2. Does solving this problem serve me or the greater mission that I am trying to support?
  3. Am I solving this problem because I don’t want to solve the real problem that would move us toward accomplishing the greater mission?

I have scheduled weekly meetings with myself (or perhaps with other team members) to monitor the problems that are being solved. I open each meeting by asking, how is the work I or You have worked on over the past week directly supported the goals of the company? What else have you worked on?   If the answers are not aligned with the assigned goals that directly impact the imperatives of the company, department or project then you need to, honor the work, repaint the grand vision , guide them to understand how their effort, though valuable, do not support the goals.

It will be natural for you or them to make an argument that it does. Almost any problem that is solved can be indirectly related to the goals, however you are looking for a direct linkage. Listen carefully, they may be right. Either way the discussion needs to end with a clear commit to re-align their labor to support the bigger goal.

Weekly reflection time (weekly monitoring agenda)

  • Review the “imperatives”
  • Ask for a loose accounting of the preceding weekly effort
  • Ask for a loose accounting of activity
  • Honor the effort
  • Check on alignment
  • Repaint the grand vision (if needed)
  • Let them or your inner self connect the Vision to effort
  • Restate the future alignment

As perfection does not exist this re-aligning process is not a one time thing. That is why a weekly opportunity for reflection is important for everyone.  Apollo 11 was off course 90+% of the time.   Many small corrections allowed it to reach its destination successfully.

The Key Learning

The difference between the Vision Realization Loop and the Problem Solving Dilemma is that you are aligning your work with efforts that are serving the grander mission. If you can convert from just a problem solver to a problem solver who spends their efforts on moving the mission forward you will realize dramatic career growth.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com. Contact The Experia Group for a free 30-minute consultation to determine if 30-years of experience can contribute to your success.

© 2016, The Experia Group, LLC

Minimum Viable Products (MVP) in the Medical Device Market, take II

The Set Up

I recently attend the VIVA2016 conference held in Las Vegas. I ran into a number of marketing wizard there. Several of them challenged my opposition to using the MVP product strategy for medical devices.

So I will be breaking into the chain of Portfolio development topics and take this post to re-frame some of the points that I made regarding MVP.

Clarification

Let me be clear, I am not opposed to the use of the MVP concept. It can be very valuable. My concern is in how it is used by those who are not well schooled in the device word. I have found with many inventor / entrepreneurs (brilliant people all of them) that they latch on to these concepts at a superficial level and could be setting themselves up for failure or worst yet, hurting people.

What is Meant by MVP?

When Eric Ries used the term for the first time he defined it this way: “A Minimum Viable Product is that version of a new product which allows a team to collect the maximum amount of validated learning about customers with the least effort.” Nowhere in this definition does he mention commercial viability. For the device world this may well be represented by a clinical trial.

The Caution?

We have to be careful when extending management (marketing) concepts across markets and industries. While there is a huge opportunity to learn from concepts formulated in other markets, sectors, industries and disciplines we can’t assume that they can be directly applied. We have to be good Marketers and review all the assumptions and environmental consideration and then apply them in our context.

We have seen where the application of Software or App development thinking has failed in the medical device space. How one manages the risk of failure is very different when the result is death or serious injury vs. being disappointed. MineCraft, the now very popular video game was launched commercially after only 6 weeks of development and was barely functional. It was however a great application of MVP. It served as a proof of concept. It offered a complete game, just not a very finished one. The risk of failure in MineCraft did not include death or serious injury to a real human.

One example (not a perfect one) of this is Theranos. They produced an MVP that failed to offer complete clinical utility (clearly an over simplification, but illustrative none-the-less).   We will leave the why to others. Great concept, great story, great funding but the product just didn’t offer a complete clinical solution to the problem.

But a great quote from the reporter that broke the story that appeared in Vanity Fair’s article on Theranos, …Carreyrou was simply emboldened. “It’s O.K. if you’ve got a smartphone app or a social network, and you go live with it before it’s ready; people aren’t going to die,” … “But with medicine, it’s different.”

The MVP Concept, modified for devices

In Medical Device Development (MDD), the V in MVP is huge and unyielding. In today’s world the term Viable is getting bigger. It could be expressed as:

V = ƒ(V,S,R,CCU,C,$)

V = viable

S = safe

R = regualtory cleared or approved

CCU = offers a complete clinical solution

C = the promise of Cost neutrality

$ = a pathway to reimbursement

What do I mean when I say “complete clinical utility (CCU).” Once you get to the clinic you need to offer “complete clinical utility”. You must completelydoughnuts example (minimally) solve the clinical problem that you were attacking. If you don’t you have delivered no real value to the clinician. By all means leave the sprinkles and glaze off, but give them a whole doughnut.

What I do find helpful is the idea of “fast to failure” referring to prototyping, at all three levels: concept, feasibility, and design. These prototypes can be partial, abstract, bread boards through Verification testing samples, but they don’t get near a patient.

A Different Way to Think about MVP

Fully integrated multi-generational product planning. A documented, data driven, customer focused pathway to delivering 100% customer satisfaction in steps. This type of plan can span decades as with the Left Ventricular Assist Devices (LVAD). Or, it can take just a few years as with the SMART Stent.

Slide1

Call it what you will, MVP, CCU, multi-generational planning, doesn’t matter.   Whatever you do, make it safe.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com. Contact The Experia Group for a free 30-minute consultation to determine if 30-years of experience can contribute to your success.

 

© 2016, The Experia Group, LLC

Goals and Objectives in Product Portfolio Planning for the Medical Device Market

The Set Up

This post is number three in a series of five or six posts related to Product Portfolio Planning (PPP). Once you have the market risks identified and scored [from the previous blog post] you must then set a revenue goal. This post will deal with revenue goal setting and R&D budget setting. These three elements make up the end game for your product portfolio plan. As a reminder the goal of the PPP is to hit target revenue, at target cost levels with risk that is harmonized with your risk tolerance profile.

PPP Goals

The source of these Product Portfolio Goals (PPG) should come from a strategic plan (SP) that matches the time frame of the Product Portfolio Plan. If there isn’t a SP, then the source of your goals needs to be the CEO, President or VP of Gobal Marketing.

For larger corporations there will most certainly be either a SP or a policy intention. Something to the effect that by 20XX, XX% of our revenue will be provided by products launched within the last 5 years.   Not too difficult to get to a number.

Illustration

So lets say that your company launched their first product in 2000 and in it’s first year it produced $20 million in sales. You had a steady release of new products and achieved $500 million by 2005. You had nothing in the R&D pipeline and there were significant shifts occuring in the market with innovation, competition and consolidation. Your CEO announces at a staff meeting that you need a continous flow of new product introductions such that you achieve $750 million in profitable revenue by 2013.

You get back to your desk and do some quick calculations and prodSlide1uce this chart.

You realize that you need $250 million dollars of revenue output from this new PPP within the next 7 years. It takes between 2-5 years to commercialize a product.

In that same staff meeting the CEO indicated that he was willing to invest more than the industry average to achieve that goal. You know from a industry survey and quick review of the competitors Shareholder reports that, on average, companies invest 7-10% on R&D. Taking your CEO at his word it looks like you would have 12% of revenue to invest each year. As sales continue to grow the R&D budget would grow in real dollars as well.

You are feeling a little better now. You know the revenue goal, you know the typical turn time for product development (based on the performance of the nine products that you have launched so far).

But Which Investments?

Where do you place the $60M worth of R&D dollars to guarentee that you reach $750M in revenue? There are two approaches to determine this list of development projects. Top-down or Bottom-up. I suppose there is a third, which is a combination of the two.

For me, an evironmental scan of your market is in order. As a quick starting point a Monte Carlo approach to determine the risks and opportunities in the market (as described in the most recent post).   If there is a recent strategic plan (SP) document you could start there to discover the growing segments and review the SWOT anaylisis. If there isn’t a SP, start from scratch.

In parrallel, you take a look at what is being worked on in R&D currently. You discover that there are currently 18 projects under development. It appears that in the absence of an agreed to PPP every pet project has emerged and been funded. This is natural and is exactly why you need a portfolio plan.

So you ask yourself how many projects should you have?

You do a bit more analyis of the current performance of your products and project that same level of performance forward and you see from your chart that Slide2you need around five. You feel that you have a good start but realize that you are going to need a group effort to actual develop the plan. You report out your findings to the CEO and are asked to share your finding with the general staff next week. You do. The CEO then announces that you are now in charge of developing the PPP and that everyone is expected to provide their full cooperation.

The following week you get your team together, R&D, NBD, Finance, Marketing and Operations. The big realization that comes out of the organizing meeting are three very fundamental issues. First, that the market has been shifting for a long time, very slowly and now that you stop to look at the impact of those changes they look huge. Secondly, that R&D does not have a standardized method for comparing projects. If you are going to make a decision about which current and future projects to fund, it is critical that you have a very consistent way for comparing them. Third, that none of the 18 projects are fully funded or are driving toward a commercialization date.

So NBD and marketing head off to get a handle on the market and the market trends. R&D, finance and Ops head off to develop a method to compare projects (investments). You have all agreed to comeback in two-weeks with a status report. Meantime you have one of your Product Directors working on the market Risk assessment.

Two weeks later you gather again and there is good progress.   R&D, Finance and Ops have come up with a model that scores cost, time, head count, technical risk, and capability. What they have not yet factored in are revenue potential, profitability, market acceptance risk and commercialization costs.

 

R&D variables

Market variable

·      Utility delivered to end user

·      Development cost

·      Time to regualtory clearance

·      Head count requirements

·      Technical capabilities

·      Technical risk

·      Un-met market need

·      Revenue potential

·      Profitabilty (price target)

·      Market acceptance

·      Commercialization costs

·      Time to commercialize

Discount factor due to combined confidence of success

Marketing and NBD report back that they have priced out several market research projects that would provide all the information they need. The price and lead time seem reasonable for the need, however there is no allocated budget to cover the $2M dollars and the six-month time line seems too long for the sense of urgency the CEO has around this project.

You assign a second Product Director to work with R&D and Finance to round out the balance of the project assessment method. You and NDB develop a survey (discussion guide) and make appointments with ten key opinion leaders, luckly 8 are attending a conference over the week-end and you will be there. While at the conference you speak with a total of 20 physicians and have what you think is a pretty good handle on the market needs.

Your next meeting with the extended team is a half day working session. Everyone reports out their findings. You now have a method for comparing projects, you have a feel for the market trends, you have a risk map that was developed [which your CEO, and all geographic experts, internal experts and two external market expert have scored].

During the half-day session you develop a table that organizes all the relevant information.

Risk or Trend Source Importance / Size Project Outcome

 

This chart is critical. It will provide a narrative surrounding the “as is condition” of your portfolio. The format and style is less important that the content. For me I would use 11×17 paper in profile.

What should become obvious from this charting process is the list of projects that are ongoing in R&D that have no bearing on the market reality that you are dealing with. Also, where the large holes are that need to be filled.

The Next Steps

  1. Envision projects that would fill the holes
  2. Rescore the Market Risk Assessment based on these new projects
  3. Re-score the projects using the consistent methodology
  4. Rank the projects using 1) discounted revenue potential, 2) pay back period 3) positive impact to market risk reduction. You can also use NPV or IRR calculations.

Chart the Rankings by Project

Project number

Project name Expected revenue Payback period Risk reduction impact Combined rank scores Combined rankings

1

2

3

1 6

1

2

3 5 4 12

2

3

5 7 6 18

3

4

1 2 3 6

1

n

Prioritize the list of projects by combined rankings and then pour the R&Dpancakes-syrup budget over the top letting it drip down until it is gone.

Hint: Never partially fund a project. Dry pancakes are just not satisfying.

More about Product Portfolio Planning in future blog posts.

Make sure you are signed up to receive personal notifications for future post relating to this subject.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com. Contact The Experia Group for a free 30-minute consultation to determine if 30-years of experience can contribute to your success.

© 2016, The Experia Group, LLC

Market Risk Identification in Product Portfolio Planning for the Medical Device Market

The Set Up

Recently I mentioned using a Monte Carlo approach to determining market risk that you should address with your Product Portfolio Plan (PPP). I thought I would take a minute to describe the approach. As a reminder this post deals with only one of three key dimensions of setting your goals for your Portfolio Plan. The PPP should maximize the impact that your new product investment has on your companies performance in the Market.

I developed a tool as a way of garnering agreement with senior management that we were trying to solve the right problem with our Portfolio Planning Process.   So that when we started the Portfolio Planning process we had a revenue target, a resource allocation budget and a risk profile projected forward over the 5-8 year period of the Portfolio Plan. The three dimensional aspect of budget, revenue goals and risk profile will help focus your Product Portfolio Plan on the right targets. With out clear targets you can’t optimize the plan. Don’t underestimate the challenge of garnering agreement on the targets.

Einstein indicated that if he were given Albert 55an hour to solve a problem he would spend the first 55 minutes making sure he understood the question.  Using this methodology will make sure that you understand the question.

The tool is the application of the FMEA methodology into a Monte Carlo method for determining the current assessment of risk in your market, or product segment.

What is a Monte Carlo Approach?

In general, a Monte Carlo approach is used when you have insufficient data to make a definitive decision. But, you need to get started, so you are better off polling the true experts in a field and after their consideration of the issue or problem you accept their consensus recommendation or finding as fact.   Validate and adjust your actions from that starting point. Long-term experience suggests that you will be 80% correct, at least this is how I think about it.

A Monte Carlo method is not taking a WAG with three of your buddies. The preferred approach would be to spend a bunch of money, do a ton of research and take several years to figure out your portfolio plan. For companies that are resource constrained or time restricted a Monte Carlo approach, as describe here, is a great first step.

When applying a Monte Carlo approach in determining market risk I have adopted the Failure Modes and Effects Analysis (FMEA) methodology that is used through out the industry in product design.   Using a specific and well understood method will help in documenting the process and the findings.

So when applying this method to determine the consensus beliefs about market risks you follow the steps below:

Conducting the Modified FMEA Process

Step 1: Identify industry experts (internal and external to your company)

Step 2: Have them write down the issues that give them pause, cause worry or keep them up late at night, etc.

Issues should be as specific as possible.  An example of an issue is:  Competitor X will launch their version of your new product Z; x number of months before you.

Step 3: Compile the issues lists and combine where duplicates appear. If you get over a dozen you might want to think about re-writing them to combine a few into a boader category.

Step 4: Create a table that have the Issues listed, any description for clarification purposes and two blank columns titled Impact and Probability of occurance.

Step 5: Assign a 1-5 scale for Impact and a 1-5 scale for Probability of occurance. These scale definitions are critical and a bit tricky to develop.

Step 6: Have the same panel of experts score the issues with the two scales. Each issue is scored 1-5 for impact and 1-5 for probability.

Step 7: Compile the results. Distributions and means. With the issues that have bi-modal distributions you need to go back and have a discussions to ensure that the issues was well defined.

Step 8: Once you have one pair of numbers, impact and probability it is time to plot them on a chart that has impact on the y-axis and the probability of the x axis. Let say that you had 11 major issues identified by your panel of experts. The 11 issues would be plotted as shown below. Note this is an illustration only.

Slide1

Step 9: This chart will give you your market risk profile. Anything clearly in the red needs to be addressed by some aspect of the Strategic plan and if appropriate the Product Portfolio Plan.

So the three issues that are plotted in the red box, 5 x 5 must be addressed, failure to do so would be catastrophic.

Step 10: Reflect each issue that is in the red, back into the portfolio planning process. This will produce a mitigation plan.Slide2

Step 11: Have your expert panel re-score the issues taking into account the mitigations (how you changed the plan or added to it). Plot the new scores. You now have a before and after market risk profile.

Step 12: Once you are satisfied with the new profile, rank the impact that each product program produced. You may have 5-12 product programs that are required to mitigate the risks. Each program could impact multiple risk factors. These impacts should be additive in your prioritization scoring.

Example: Let’s say the issue is an emerging trend toward minimally invasive surgery (MIS) [issue number 2] and you had no products in the pipeline that addressed this emerging trend, currently rated a 4,4 risk score. You added a new product development project to the plan that moved [2] to a 4,1 risk score you have reduced the aggregate risk of this issue by 12 (16-4) a reduction in risk by 12 points. Let say that issue 9 was a lack of product innovation with respect to market leadership. The vision for the MIS project also helped reduce that risk issue as well moving [9] producing a risk reduction of 12 points. When ranking the product dev projects the MIS project would receive 24 risk reduction points.

This ranking will provide one of the three key elements for prioritizing the Portfolio for funding. In the end you will use three ranking scales to rank make your investment decision.

When the portfolio plan is completed you need to make sure you have updated the Market risk profile to reflect the final map based on what was ultimately funded.

Seem complicated? It is at first, once you have done it then you will see the simplicity and logic in it. That is why you must be disciplined in this approach.

Caution: The first time you use this approach do not try to do it alone. There are multiple tricky aspects that might lead you down the wrong road. Call me for one on one coaching or to sign me up to consult you through it.

Make sure you are signed up to receive personal notifications for future post relating to this subject. Download the excel workbook at www.theexperiagroup.com to make your learning a bit easier.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com. Contact The Experia Group for a free 30-minute consultation to determine if 30-years of experience can contribute to your success.

© 2016, The Experia Group, LLC

What Potential Acquirers Want Today in the Medical Device Market

The Set Up

Over the past two-years I have had the good fortune to work directly with five medical device start-ups. Through my mentoring volunteer work I have also spent time with seven other start-ups, mostly medical devices.

A key observation for me is that being an entrepreneur is a spiritual journey. It is a calling that you can’t hide from. It is also a journey that you can’t take alone. No matter how broad your background is in all the disciplines of commercializing medical devices you still can’t know it all.

Why? Because time marches on! The experience you may have gain in sales or R&D or mfg. will grow stale with time. The advice you may be getting could be dated. I want you to succeed, so here is what I think you need to realize.

What Has Changed?

From a start-ups perspective, in most cases, the days of bootstrapping a finished product are gone. The need for high energy, high impact launches, and the rocket lift-offcapital to execute them, all but exclude slow rolling the post-launch of a new product. Why high-energy, high-impact launches? It takes tremendous energy to break through the noise of the big players. Similar to the launch of a space rocket, it takes tremendous energy to break free of Earths gravity.

Take a look at the following chart to see how acquirers have changed their expectations of potential device acquisitions over the last six decades.

Slide1

A simple story is not enough, a product is not enough.  In the decade of the 2000’s potential acquirers want all the risk removed. They only want to have to apply money and their high-powered sales channel to scale success. This means that you have to be prepared to take the device all they way through to commercial success. Commercial success does not mean that a few pioneering physicians have made it work. It doesn’t mean that you completed your clinical trial. It simply means that you have a validated “equation” for successfully selling into the early majority, proof that you have leapt the chasm.

Chasm

What are the components of the “equation”?

  • Strong messaging (connects on an emotional level)
  • Sales process that works (80% of the time)
  • Believable value proposition
  • Routine clinical success (utility is delivered w/o a lot of hoops or work-a-rounds)
  • Clinical and economic evidence packaged professionally
  • Satisfied customers who are re-ordering

What Hasn’t Changed?

Over the past six (6) decades almost every aspect of commercializing medical devices has changed. The aspects that have not changed are the core principals that I have referred to before.

  • Engage with you customerSlide2
  • Safety, safety, safety (no short-cuts)
  • Quality, quality, quality (no short-cuts)
  • Deliver complete utility with hard value
  • Make the regulatory bodies your friend
  • There is no single formulae for success, only guidelines

Take a-way

In today’s world of medical devices, entrepreneurs and inventors need to have a longer-term vision for their companies. The days where a patent, or regulatory clearance will trigger an exit are all but gone. Too often the big players have not realized their hopes for gains from an acquisition. Often because the “equation” wasn’t thoroughly validated in the real market.

The deeper you go into the commercialization process the more help you are going to need. You can’t do it alone. You need a team with skills that are current and relevant.

“Experience is what you get, right after you need it most.”

Make it a great day,

Tim Walker

Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com. Contact The Experia Group for a free 30-minute consultation to determine if 30-years of experience can contribute to your success.

 

© 2016, The Experia Group, LLC

30 Years of Lessons Learned