ABOUT THIS EPISODE
Healthcare innovations play within a multi-sided market which adds a layer of complexity and difficulty a lot of other industries don’t have. What are some of the unique features of healthcare that innovators have to navigate? How do entrepreneurs balance between enthusiastic optimism and the realism of how the market works? What strategies can you use to beat the odds and maximize your ROI?
On this episode, I’m joined by the founder and CEO Health Innovation Partners, Paulo Machado who shares on his multiple level experience with commercialization and how to decrease the 95% failure rate of healthcare innovation.
3 Things We Learned
- Healthcare innovators often have tunnel vision on their creation which is a mistake
- It’s so important to have the ability to pivot
- The difference between decision making in consumer and healthcare products
A successful healthcare innovation has to work within the massive healthcare system that exists. Innovators tend to oversimplify the problems and facets of healthcare, and come up with specific point solutions as a result. But if you neglect the larger ecosystem, your innovation won’t be good enough, even if it’s really amazing. Remember, healthcare products aren’t a normal good and you don’t just sell to one consumer. You sell to multiple stakeholders, who aren’t always aligned in their goals. Always design your innovation with the whole system in mind.
Episode · 3 years ago
SHARE THIS EPISODE
Episode · 3 years ago
How to Understand the Ecosystem Around Healthcare Innovation w/Paulo Machado
ABOUT THIS EPISODE
3 Things We Learned
- Healthcare innovators often have tunnel vision on their creation which is a mistake
- It’s so important to have the ability to pivot
- The difference between decision making in consumer and healthcare products
Welcome to Coiq and first of its kind video program about health innovators, early adoptors and influencers and their stories about writing the roller coaster of healthcare innovation. I'm your host, Dr Roxy, founder of Legacy DNA marketing group, and it's time to raise our COIQ. Welcome back to the show, coiq listeners. Today I have Paulo Machado with me and he is a twenty year veteran, tons of experience launching and commercializing healthcare innovations, and we're going to get his take on what why some health cannovations succeed and why some fail, and he's also going to share some strategies of how you can overcome and beat the odds of success and maximize your Roi. So welcome to the show, Polo Roxy. Thank you very much for having looking forth that in the conversation with the absolutely so. For our listeners who don't know you just yet, tell us a little bit about your background and what you're doing these days. Sure started off my career in the financial world and a couple of trained us with solemn brothers shift it into the healthcare space, working pharmaceuticals for a number of years and then in two thousand and eight went ahead and decided to start up mount consulting practice, focusing in on our development and design. Is this model development and design and health organizations of every sort of the cross the spectrum, from payers and providers to retailers to emerging tech companies. On NBC's you're out how to basically develop innovasions are going to have a positive impact on our healthcare delivery system and, more importantly, on the health and will view of individuals. It's great. One of the things that I think is really interesting about having your perspective on the show is you've not you've worked both in turtle in in the nuances of that and then you've also worked as an external consultant, and so I think that that kind of gives you a multilevel perspective to bring to our audience. Absolutely cut my teeth on the entrepreneurial side, excuse me. Starting off on the financial world. I was always a person who was very intrigued by large scale innovation projects in the organization, even back in the financial services days when we were launching new business units and Asian Latin America, and follow that through IMS in the pharmaceutical world, launching new business models, new products, excuse me, in the US and brought awesome. So the first question that I have for you is what how would you describe writing the roller coaster of healthcare innovation? Wow, the broad question. How would you describe it? I think it really depends on the individual. For some people absolutely terrify, other people's incredibly exhilarating. Yeah, everything in between. So it depends on where you are in the right I'm getting ready for the moment of anticipation when there's the big drop. Yeah, just believe that you made it through the drop. It really depended on your framework, your experience set and the amount of dopamine rush that you enjoy. Yeah, and I think you know, entrepreneurism is not for the faint of heart. So we probably have quite a few listeners that have high levels of dopamine that find, you know, the wild ride pretty exhilarating. So, but that's the case. Yea. So one of the sets I talked about often, and you and I have talked about as well, is this fail your rate, this alarming statistic that ninety five percent of innovations that are brought to market fail to reach any adequate level of acceptance or profitability. So so love to get your take on it. Why do you think some healthcare innovation succeed and why some fail? Why? Range of reasons. Sometimes it let's kind of start with the basics, understanding the market place and really truly understanding the need. There's a quite a few people have been entering into the marketplace and health care, and I've been involved in health crinovation for twenty years now across the spectrum of payers...
...and providers. I'm helping consumers figure out what their needs are, so to speak. And healthful isn't a normal good. It's frankly a but I think of as a negative good. It's not something that most people want to seek and concern consume. It's a wide range who seems more a lot of people to have avoidance around and it is a system, so to speak. It's been designed for fee for service. Historically, when we're in the process of transforming from that to m be much more focus on value based care. And what's happens is with this massive healthcare system that exists in quotes, is there. Basically people come into it, look, look making, I guess, oversimplifying the problems and trying to come up with its very specific point solutions. But that point solution sits within a larger ecosystem and addressing on a specific issue may not be enough and there's a tremendous amount of behavioral change and needs to go. So software is not the solution and every case, frankly, frequently it's not the solution. Is just an enabling if people come in and look at it though, that's a simple problem. We can make that happen. But the real challenges ends up being on because it is not a normal good and you can't always go direct to consumer effectively. With health and well being behavior modification. It's the system. It's very hard to have systemic level change with simple software point solutions. So you see a lot of organizations come in not understanding what is involved making significant change. That's not to say that you can't make money solving a small problem in selling into another organization's going to make it partner broader offering. Frequently, I think what ends up happening is on my experience in being out there and working with a startups for well over a decade now, is that you fail to estimate truly the adoption rights and the inertia in the system that exists, the piloting and the testing, in the proof that needs to be developed before becoming the threadily adopted. We don't have a system, so to speak. It's not like you make decisions somewhere and everybody just adopted. If you want to sell something the hospital, you have thousands of hospitals. You have to go a convinced. If you want to sell two ensures, you have hundreds of maturity weren't events. If you want to sell the doctors, forget it. Sales Force to go out there and convince one doctor the time. If you want to sell consumers, even more challenging because you have to sell consumers in the context of how their decision making fits in the context of all the other stakeholders. Of Well, I think there's a massive, most over US overly optimistic estimates around how adoption will look and the effort it takes. It's not just building the solution, it's then getting it to be adopted, even if it's the best solution. I think some unbelievably amazing solutions with the doctrines. Takes too long. you run out of mine. So what kind of conversations do you normally have with you, with those innovators, to kind of help balance this optimistic enthusiasm that's really like fuel to keep on going with this reality that we all live back? Yeah, I think that that the great question for that. I think the reality. You don't want to squash the optimism because you said you that that is the fuel is going to keep people going through the night, and I think what ends up happening is you need to really get people to focus on the system, what is involved and wing to try to understand what is the problem you're trying to solve, and not just what's happening with that user, but every layer surrounding that user. So over time, with the end of seeing if it's it's a direct to consumer, if it's a product I think Sumer has to use. How does that effect the their doctors that are surrounding Nepos? If you're trying to get up front of the weight management program out there were filing many companies that are doing that. Diabetes Management. Yeah, there is actually in the ecosystem of all the stakeholders are also trying to get that same consumer to do something similar. So typical bad that it has a wellness...
...company reaching out to them, they have their insurance in church and over them, that an employer program of some sort, that insurance company reaching out, that the doctor reaching out, they can be doing something on their own. So they're just a barrage of solution being thrown with them. As a consumer. That creates confusion. It's a not a great experience. So having people think about and design solutions that are not just product focus without man sign work, but business model development, design work and understanding how it fits into how those two interact, I think really up so from likely that they're to be successful because they're going to understand the business model on the context for which the specific point solutions are in existent and, of course, the last pieces financially. Who Pays for this stuff? That's quite frequently what happens is there's this lack of understanding around the basic issue of most products and normal world, that nonhealthcare world. If I'm going to buy a phone, I'm the person who decides what that phone is, I'm paying for that phone and I'm as also the user of that phone. So all three of those primary functions sit in one person and frequently in healthcare goes three decision points, those three roles exist in different stakeholders, with misaligned financial sentence, to understand who's going to pay for WHO's in the sidebook gets used and who's actually going to use it or to be very different issues that need to be addressed, and you have to think about that red product design and figuring out how the cash flows through the system. So it's not just the user experience, but it's a financial flows, it's the operational flows, and has to touch it, and it's the information flows, who has to be aware of what's happened. Yeah, I mean you touched on it. You know, it's a it's a multisided market that I think adds a layer of complexibility, complexity and difficulty, you know, to commercialization. And I find, like you, that this is something that healthcare innovators really struggle with. Is, you know, even just looking at a business model canvas and and really mapping that success late with all market sides of the equation, you know, taken into consideration. Yeah, I think it's important to keep in mind. It's being aware of all these sides and tacking the one that you can tackle success to them say okay, I can now go raise some capital, or I can go from a you go from a pilot to a a scaled program for a phase one kind of launch with an organization and just iterate and learn and continue and fail. And failing, by the way, isn't necessarily a bad thing. There's a trance not to be learned from failm sure, more from from success in many ways shifting form, but it kind of keep that continuously evolving, iterating and keeping your eye bigger picture of what am I doing, how is it affecting other stakeholders and who's going to be blocking me? So, for if I'm done launching whatever diabetes management program of some sort of am I fighting that patience if I'm going to direct the consumer in through his employer or whatever channel, or sure is that something that's at odds with the program that his doctor has him trying to do? How does it? How do you overcome that challenge? Hmmm, so when you're what you know, when you're working with a healthcare innovator, where do you normally start in that that sequence of decision making a VAT? Of course it's going to vary to a certain degree of where they are in that commercialization or launch process. But you know what, if you found to be best practices around that decision tree that has to be made. Yeah, I think it's a great question and typically refer back to the is model cameras and value procamists and they have kind of walk them through what is their understanding what they're actually trying to sell for, and they understand what's happening at the market level. They understand the value proposition that's involved that at the various stakehold levels and see where they may be missing something and not considering that there's some maybe you're not pick considering where the money's coming from. WHO's how difficult...
...it will be to get somebody who pays for something to buy in, not just a consumer to use. The consumer wants to use and the player doesn't want to pay. We see those happen frequently in the marketplace. That all being said, what's fascinating now that I've been doing this for very long time, it's the markets involved tremendously. It has become much more mature about it self. Awareness and yeah, off to these organizations that are have these various roles of providing care or paying for care and the conversions of those who, because seeing a lot more pay buyers out in the marketplace and going much more vertical stack on driving and the limitation they were trying to get rid of, the friction from the system at the provider, player and consumer level, and you're seeing much more maturity in terms of how these organizations are thinking about the problems more holistically, but don't our processes because of issues of safety and security of data and really being focused on a quality product. It's behind their brand, but they remas are large organizations and they have brands and they just can't necessarily shoot from the HIP and not worry about failing because they have to worry about failing effects the bans. Their cautious and they'll tell you it'll take three, six months, nine months, a year and a half before a program can get to a point of skill through all of the hurdles they put there for good reasons, but typically you need a large worchest. This is where you know and the maturation, by the way, also I'm thinking about the investor community. If you think back ten, fifteen years agoing to start getting involved in this marketplace, the investors we spot, we're not aware of what's going on and there was just a lot of money throwing just ideas, and then they realize, wait a minute, this is like you taking two years until we getting kind of rever out of this. What happened? It's a tech play. Right, I'll come. It's not flipping me at you know, twenty months and in eighteen months, right, in eighteen months hot. I think that that is changed the back. The majority of investors are, I engaged by their very aware what's happening in the market. They understanding the holes. That being said, and they having lost your shirts on quite a few of those ninety five percent gold. Yeah, there's quite a bit more black called risk intolerance and much more evidence the things and the things are working for they throw money behind it. There's less true risk capital in the market place. So it's interesting the large that they found in the revolution. And sure, you know, depending on what type of innovation you're bringing to market, you know, you could be talking about a clinical trial, you could be talking about, you know, some pilot studies. You know, we've talked about this before, this whole idea of death by pilot and kind of getting stuck in pilot purgatory. When you're working with innovators, you know, kind of share some insights with our audience of you know, what do they need to look for or to be mindful of when they are first negotiating that pilot agreement to make sure that they get the success or the results that they're looking for at the end? Yeah, so that's an unbelievably important series of the city. Is that needing to make in Franklin? Choosing the wrong pilots depends on how des Pretty are, what your word chest the moment looks like. Of course. Yeah, we have some time. Picking the right first pilot or qu or absolutely essential and frequently you'll find people just don't think through what it's going to take and what their hurdles will be those first couple of piles stuff and running these do any pilot and the first part more question. They won't be able to do anything else and know go under try and get one pilot on. So having the pilot partners and the first is absolutely critical. And just asking my questions, I'm on alignment of expectations, timing, resources, roles, communications, cash with involved. Frequently US multi billion dollar orgivations going to do a pilot of tiny company and they're basically something I don't...
...want to pay anything. That's really painful for an organization that has very many capital to not at least have their fast card. Yeah, and it's also a proofpoint to investors, and these guys aren't even want to pay for a pilot, much less a scale. So it just becomes challenging. So most the checklist of questions and having very open communications. I'm also very into creating up significant onlinements around the fact that where you are in your life, semple with the product, are you in co creation mode and you're looking for the high stakes gamblers and people who drive and want to do that co creation with you, and that's part of what? Part of their ethos? Yeah, or the organization that only does pilots and later adoptors. They're not really running a pilot. They're running a first stage of something that's are improven. So really feel good program and that's okay, you want to it's a different kind of pilot. It's not a CO creation pilot. That case is just picking the tires between that organization's missed the verse and the specifics that I may need to Manu show within my program may it may need to find tune to fit your organization. That's more of a customization, of of onboarding a program versus a pilot. A true pilot, in my mind, is when you you're not sure what to results are you have a hypothesis. Who want to test you found somebody who wants to test it with you and literally going to learn from this with you and they're in for that. You know, understanding what it is that we're actually doing together. True pilot is critical. If you're just basically saying hey, my, my, I've now proven as I've got white papers and everything else is with I want to do a pilot, I don't think of that as the pilot right. In that case, all you're doing is customizing the program before you go full latch. Yep, Yep, absolutely. You know, one of the things kind of, you know, taping off of what you're said, was that you know, a lot of times health innovators think that, oh, I'll just use Cleveland Clinic, for example. Cleveland Clinic said Yes to my pilot like that's like the Holy Grail, and I think that sometimes, you know, it seems as though that that might be the right pilot because of the brand recognition it kind of gives you some Kudos that you might be able to put on your website and you know your pitch deck and and whatnot, but you know it in the conversations that I've had and in my experience, that can actually be a death sentence. And it's not Cleveland clinics per se, but it's more of you know, some of the more prominent, bigger organizations that can be just a real resource string kind of like you described, and I might have more success with some of the smaller, no name entities. What are your thoughts about that? Yeah, I clearly branding matters. If you're going to go out into some of the big brands that are out there in the healthcare system, in the healthcare world and say we did a pilot with X, Y Z and somehow you survive the gauntlet of getting it come all right, everybody knows what that means. That doesn't mean you can't hit a lot of signals and doubles that have a higher risk tongues and appetiting, frankly, can move a lot faster and they're more focused on co creation with you. Not that the large organizations can't have that CO creation mindset. It just takes a lot longer, typically in my experience, to go from Oh, we had the first conversation, so we get a result. It's been marketable somewhere else. I'm working with those organizations. Frankly, they also are very savvy as it relates to a well, do I really want to launch this and get this to put be in my competitors hands and it it brings up more complexity and the design of the pilots, exclusivity and things of that sort of start to get kicked into the conversations, which it can be very enticing for somebody's coming out of the gate when they hear a big brand say, Hey, would you consider to be exclusive, with me not thinking okay, well that, what does that really meet from a fine mess. And, by way, a lot of this is just not really relevant if you're talking about people who've been around the block and built organizations and experiences themselves. We can have for a second or third tour of duty in that case. You know, basically, you start start up in healthcare is like mainline and crap. For these people.
You're addicted to it and they can't stop even though it's incredibly painful process because there are a lot of rewards. You're right. Help well, right in that makes a big difference and that's what I find is concredibly rewarding for innovation and healthcare, using a much larger influx of people and to healthcare and some times twelve years ago, into the innovative side and building organizations up from scratch that we're not in healthcare before. And they say they didn't have purpose behind innovation. They had before. See, what you find in healthcare is people come in and they're they talk to me about this is so different than my own job, my owd job. I was doing X Y Z and I went home and as it didn't really matter. And here people feel like they're on a mission and you notice quite a few organizations innovating is because I had a personal thing that occurred in situation in your life and they're driven in fuel by wow. That shouldn't be that way. Is there's something I could do? M Doesn't happen in most other industries. Yeah, I think you're so right. So kind of speak to let's say you had three, three recommendations or suggestions around strategies or tactic, you know, best practices or lessons that you've learned along the way. Number one is find the right people to go on this adventure with. So a team is absolutely critical. People have to trust your has been work time with these people than anybody else in those early years of getting this up and running. So alignment of values, got alignment of vision, alignment of everything that matters. It really is the working with somebody. Can You have fun together? Can Seri or can you? Can you work to what's common goals and objectives? Because if that happens, if this is happening internally, there's conflict internally, it just dramatically recursion reduces the like ahold of successfully. So that's one bnch of cofounders and initial small pot of people who are on on a mission. Yep. The second is really be really clear and Aligne on what's your initial mission out of the block and make sure the whole team jetson. You understand the problem, the scope of it. How large is the market potential? What are the issues you're trying to address and marketplace understanding? WHO's addressing those issues now? who were the blockers? Who's the direct competition trying to solve it now, versus those are going to just block it by their inertia and being the market place in what you're doing affects them. Between clear on that, on that compelling bat and, Frankfully, not being stuck to it, because the reality is, once you get in you're going to learn that, hey, that's not really exactly what we thought it was going to be. How do I pivot? So being willing to have that curiosity and being mindful of the fact that we may not have the right hypothesis, we for testing in the marketplace and pivoting and getting up there. I just want to pause for a second because I think that that is a huge point and you know, we just cannot share that message frequently enough the you know that we kind of really have to let go of our static point of view and position around who, what, how, when and why if we want to be able to have a successful business. You know, a lot of times people ask me, you know, why do you think that failure rate is so high, and I think what you just described is one of those top reasons. Interesting I was think of we're so okay with minimal Bible products and in already around the product level, but at their company, team and other levels, individual level, we struggle with that as a concept. M It's, I'm a cognitive bids and what we know is true. But if it's not working, then how do you put it and still still remain true to your value? It's right, yeah, arm with your iterations. You have to kind of make that trade off. So ideally, you have a positive impact on the health care, the delivery system, everything else that's needs to be addressed, and nothing to justital crisis. Not all right, right, yeah, some of the things that I...
...think you're describing really to me, kind of bleed outside of what might think of as like commercialization strategy and go to market strategy and really kind of bleed into more like the leadership realm and discipline. And you know, I think that's something too that sometimes I come across innovators that think about, like oh well, that's like a stage two, stage phase three thing, you know, like I'm really I can't focus on building in my culture and, you know, communicating values and mission right now, like I really just need to get this off the ground and I needed, you know, get those first customers and in really not understanding that the culture is being created, whether they do it intentionally or not. Right, culture is created, yeah, by design are not body lie by the fault and along the issue of culture, it's also not just your internal team. But how do you pick the right external partners and customers? BECA is that there's quite a few organizations which you can get wrapped up and that aren't aligne necessary with where your values are, and that's really important. Not, ever, all customers are not billions of difference. Yeah, you know, that kind of makes me think of, you know, that idea of are we a fit? And, you know, again kind of like what you were talking about before. I'm a I'm an innovator, I'm an early stage company. I'm so hungry. Every seems like everyone seems like it's a fit and instead of really having like that criteria of you know, kind of like the first date scenarios, is this partner, is this comple you know, customer? Are they really a fit for our organization? And being willing to say no and obviously easy to say the realities. It's totally depends on how long resource you are. You're gonna lot more desperate if you haven't found that the right partner of customer the year and you got six months of burn right back. Sure, sure, I just got a bunch. I just got a bunch of money I got two years ago, so you can be a little bit more discerning. Sure, it's being keeping in the back of your mind and just making sure you understand the tradeoff, because clients can take the product down a path you don't want it to go. Yep, absolutely. Also, very big risk is to making sure that their clients don't don't take the product of place we don't you're not comfortable taking too. Yeah, absolutely, where it's just overdeveloped in that particular customer loves it, but but it's not viable for anyone else. Yeah, and I think just having a clear strategy where we had an understanding how the tactics build and building metrics to show that these tactics are the right ones. But sometime we have a hyposit. These metrics are the way ones and show I'm heading the right direction strategically, and the realities they may not be. HMM. Again, not being stuck with the metrics that you have in place, but some of them may not be the right indicators and maybe car late success and it may not be causably when us to success of attempting sure, yeah, absolutely so. We were. We were talking about lessons learned and you shared two of them with us. What's the third one that you want to share with our audience? Yeah, the other is I'm just being really aware of selfaware yourself and the founding team. How long you want to be in the game, like, what is your real objective? Are you looking to build a company and flip it? And knowing yourself well enough to not have the ego in place where I have to take this from the beginning to end, because it's understanding what's my role in this, and my the idea person, and my Miss Guy who gets a team together, and my the guy gets a funding by the guy's going to see it all the way through to IPO, and frequently what you find these people hang on too long. HMM. Well, they shouldn't have and ego gets in the way, so to speak, and just understanding what is my role in all of this. What am I trying to accomplish? Am I trying to build a big company? Is this a lifestyle company? Is this company? It's something I want to start and all the way through IPO and just being very clear with yourself and checking your yourself as okay, am I limiting the success of this organization...
...and I see some founders are great but stepping into different roles as the other times. It's a real battle and it really truly in peace the progress of organizations. So called self reflection, self awareness and understanding that your role may need to evolve as organizational needs evolved. HMM, the all thing is having it three year, having a ten person start up, is not the same as scaling to a thousand person company's different still sets, different experiences and things of that. Yeah, absolutely. You know, I think that's a real hard one. A group. There's very few people of my experience have a self awareness of where they fit in, where they still sets are, and many, we believe you can take it all the way through. Very few can have the skills that are blog enough to do all of it right. Right. Yep, absolutely well, thank you so much, Paulo, for sharing your wisdom with us today. For those of the our listeners that want to maybe get ahold of you, that have some additional questions for you, what's the best way that they can reach out to you? Yeah, Linkedin, follow James Shot Up is prob the easiest place to find email addresses. People shadow sixty sets of Gmail. That the awesome. Well, thank you so much. Until next time. Thank you, rocky, for taking under well. You got it be well. What's the difference between launching and commercializing a healthcare in avation? Many people will launch a new product, few will commercialize it. To learn the difference between launch and commercialization and to watch past episodes of the show, head to our video show page at Dr Roxycom. Thanks so much for watching and listening to the show. You can subscribe to the latest episodes on your favorite podcast APP like apple podcasts and spotify, or subscribe to the video episodes on our youtube channel. No matter the platform, just search coiq with Dr Roxy. Until next time. LET'S RAISE OUR COIQ.
In-Stream Audio SearchNEW
Search across all episodes within this podcast