The digital revolution has forever shifted the balance of power in the world of business innovation. Large enterprises were once viewed as the most innovative companies in the world, but in recent decades, startups have developed a reputation for their ability to out-maneuver established companies. This is particularly true in terms of data-driven innovation, where easy access to sophisticated analytic solutions mean that the usual obstacles have never been easier to overcome.
Even in the healthcare market, where startups face significant barriers to entry, modern companies that start as side projects in garages, dorm rooms, and coffee shops are using data to build groundbreaking new technologies at incredible speeds. Despite having none of the advantages or resources of their enterprise competitors, healthcare startups are fast-forwarding their way to the top. It’s no surprise that tech industry leaders are inching into the healthcare space.
In most industries, and in healthcare in particular, innovation is fueled by a thriving analytic apps economy, a bustling marketplace in which companies develop proprietary technologies to extract actionable insights from the data they create. Today, we see numerous examples of how executives, business leaders, and Chief Data Officers are leading the way in generating new value and revenue for their customers with analytics products and services. Companies that aren’t taking advantage of this trend will be left behind.
Healthcare enterprises can win the analytics app economy
The biggest edge that startups have in terms of analytics innovation is their remarkable speed to market. Enterprises tend to build slow, complex processes around innovation, incubating it behind mature businesses and using the wrong metrics to assess its success. Once the enterprise is able to solve for those challenges, the startups lose their advantage, and the enterprise becomes much more capable of driving analytics innovation at scale.
Startups may have speed on their side, but they also face numerous obstacles of their own. Let’s explore the various challenges that startups deal with, and take a closer look at how established companies can gain a competitive advantage.
- Finding customers. Without an established track record or a robust network of contacts, startups are fighting an uphill battle in accessing the decision-makers of their industry. Enterprise companies have an established brand and install base, along with existing master agreements, and hence much greater access to potential buyers. However, this is only true when the enterprise focuses their story on compelling, specific outcomes—for example, “let’s reduce your claim denial rate and save money,” or “let’s augment patient throughput per modality and optimize your asset utilization.”
Recommendation: Enterprises should focus their initial analytics effort on their install base.
- Customer proximity. Startups rarely have a fully established sales organization. Enterprises, by contrast, can instantly scale their footprint by activating existing sales channels, and equipping them with new value propositions. Analytics is a try-and-learn practice. Innovation doesn’t come from a single brilliant idea, but rather from a structured process that allows teams to experiment with many ideas and surface those that drive the most value. Having access to a larger customer base will enable your company to try more ideas, faster, on a centralized platform.
Recommendation: Leverage existing sales channels and make multiple bets at the same time.
- Domain expertise and growth opportunities. Startups usually have founders with deep domain expertise in a specialty (i.e. the founder may be a former radiologist, or a clinician) and can instantly build trust with their peers. However, by default, this expertise will be concentrated in one healthcare domain. This ultimately limits the startup’s innovation opportunity in a way that might not deliver the greatest outcomes. Enterprise leaders may not share the same professional background as their prospects, but they have a great deal more experience working with professionals across a range of disciplines.
Recommendation: Empower product leaders and work cross-P&L.
- Analytics infrastructure. Infrastructure might be where startups have the greatest perceived advantage, given that they have ready access to the most advanced micro-services technologies, and little to no technology debt. Startups also have cloud offerings from several cloud vendors at their fingertips, providing progressive pricing and reducing the upfront investment required. The good news for enterprises is that they also have access to those technologies. The key is that to be successful in building an analytics business, businesses have to be extremely agile, and they have to dramatically reduce the cost-to-try.
Recommendation: Centralize infrastructure decisions and empower businesses and functions to leverage it while focusing their energy on value creation via their domain expertise.
- Speed to market & market fit. As mentioned above, startups have tremendous advantages here. However, enterprises can compete by setting up the right infrastructure and empowering leaders from all functions and businesses to try new ideas at a low cost. Once this is done, they’ll be able to establish a platform and applications ecosystem of ongoing, inexpensive experimentation. More importantly, once a high profile application has been identified, the enterprise can scale fast by leveraging its large existing customer base.
Recommendation: Establish an organization to manage the platform and your new innovation factory.
- Access to Data. Last but not least, one must consider access to data. Startups will find it challenging to access enough data to develop their analytics offering and perfect their algorithms. Enterprises have direct access to enormous stockpiles of data—so long as they have good data governance and strong data.
Recommendation: Consider partnering with existing customers and updating terms and conditions to acquire more data rights.
Think big. Start small. Start now.
Healthcare enterprises have all the ingredients to win in the analytic apps economy. They are much better equipped than startups to repeat and scale successes within their existing markets and even more equipped to enter new ones. Enterprise leaders who wish to embark upon a journey of data innovation should not try to predict the next 100 high-value questions around which they can build solutions. Instead, they should focus their efforts on establishing an organization and an infrastructure that will enable them to answer the next question fast. If you’re embarking on this journey, consider what types of new value you can create for your customers, your suppliers, and your end-users. Then deliver on that value and get a share of the outcome.
Final tip: Have fun on the journey. It’s been amazingly rewarding for my teams, customers, partners to unleash new value from existing assets.