Archive for business models
The Long-Tail of Innovation: Customizing Health Care Based on Patient Genetics
Posted by: | CommentsOne of the hottest trends for modern innovation is customization of products and services to meet the unique needs of individuals. Classic examples of business model innovation based on customization include Dell computer, who developed a suite of patented supply chain advances to assist in rapidly delivering customized computers at low cost, or Netflix, whose supply chain and Internet-based services allow users to select from vast numbers of movies that could never be housed in a local brick and mortar store. Now IT-related businesses including eBay and hundreds of others are increasingly taking advantage of Internet tools, database systems, cookies and other ways of tracking customer preferences and patterns to provide customized offerings to appeal to the unique needs and wants of individuals.
The next frontier for innovation based on customization will be health care. Some think this is already happening now that health records can be electronic and advanced diagnostic tools and databases can be applied to meet patient needs, but in reality, much of health care is still based on old models of “one or two sizes fit all.” What is the right medication for a patient? In what dose? Body weight, age, and gender may be considered in writing a prescription, but there are many other factors that need to be considered, including genetics. Understanding the relationship between drugs and individual genetics represents an important frontier for innovation in medicine. Today I’d like to highlight one important example of successful research in this field.
Recently in Singapore, while speaking at an Innovation and Enterprise Week, I met keynote speaker Dr. Michael Hayden of the University of British Columbia’s Center for Molecular Medicine and Therapeutics. (Not the same Michael Hayden who was a director of the CIA.) Dr. Hayden was recently named Canada’s Researcher of the Year. In his speech, Dr. Hayden spoke of his quest to understand the mysteries of disease and to reveal their genetic roots to thereby develop better approaches to treatment for patients. One exciting breakthrough that he mentioned, arising from collaboration with others at UBC and beyond, is the discovery that the terrible side effect of deafness that strikes many cancer patients on chemotherapy can be predicted with DNA testing. The popular and highly effective drug, cisplatin, is the problem. By understanding the relationship to genetics, high-risk patients can be identified and alternate medications can be prescribed. Finding genetic links to adverse drug reactions is a major step forward toward treatments that really match the unique nature of each patient.
A week after my encounter with Dr. Hayden in Singapore, I was in Mexico City’s large international airport, standing in a line, when I overheard the man behind me telling someone about his clinical work with cancer patients, and the discovery that genetics played a role in determining whether the patient would be at risk for deafness. My curiosity was aroused, so I couldn’t resist the temptation to interrupt and ask the man if he was from the University of British Columbia by any chance. Yes, in fact, he was. This was Dr. Bruce Carleton, a peer of Dr. Michael Hayden whom Dr. Hayden had mentioned in Singapore. What a small world it can be when I pay attention and reach out to others! We discussed his work briefly and I expressed my excitement at what they are doing. Today he kindly sent me a copy of his recent publication on the cisplatin work, published in the prestigious journal Nature Genetics. The publication is “Genetic variants in TPMT and COMT are associated with hearing loss in children receiving cisplatin chemotherapy” by J.D. Colin, Hagit Katzov-Eckert, Marie-Pierre Dubé, Beth Brooks, S. Rod Rassekh, Amina Barhdadi, Yassamin Feroz-Zada, Henk Visscher, Andrew M. K. Brown, Michael J. Rieder, Paul C Rogers, Michael S Phillips, Bruce C Carleton, Michael R. Hayden & the CPNDS Consortium, Nov. 2009. Here is the abstract:
Cisplatin is a widely used and effective chemotherapeutic agent, although its use is restricted by the high incidence of irreversible ototoxicity associated with it1. In children, cisplatin ototoxicity is a serious and pervasive problem, affecting more than 60% of those receiving cisplatin2–5 and compromising language and cognitive development. Candidate gene studies have previously reported associations of cisplatin ototoxicity with genetic variants in the genes encoding glutathione S-transferases and megalin6–8. We report association analyses for 220 drug-metabolism genes in genetic susceptibility to cisplatin-induced hearing loss in children. We genotyped 1,949 SNPs in these candidate genes in an initial cohort of 54 children treated in pediatric oncology units, with replication in a second cohort of 112 children recruited through a national surveillance network for adverse drug reactions in Canada. We identified genetic variants in TPMT (rs12201199, P value = 0.00022, OR = 17.0, 95% CI 2.3–125.9) and COMT (rs9332377, P value = 0.00018, OR = 5.5, 95% CI 1.9–15.9) associated with cisplatin-induced hearing loss in children.
Watch for genotyping of patients coupled with extensive research on genetics and drug performance to become a pillar for health care innovation in the future. Customization of care at many other levels can be expected as well, as long as incentives for innovation in health care remain healthy.
Congratulations to Drs. Carleton and Hayden and their partners for outstanding work that will drive further innovation in how patients are treated.
The Beautiful Palm Pre
As I began writing this post, my wife was in a car a thousand miles away with a brand new smart phone. I received a call on someone else’s phone informing me that my wife’s smart phone had quit working completely after following the instructions she received from tech support to fix the GPS system in her phone. The GPS had quit working that morning after tech support had her do another set of procedures to fix another problem. Now she had no GPS and also couldn’t make or receive calls. The problem would later be resolved. I’m still not sure how much of it was due to network trouble (the black hole effect I describe below), hardware trouble, user error, and questionable tech support, but after almost 3 weeks of experience, I can say two things about the Palm Pre: 1) It is a terrific and beautiful phone with many innovations, and 2) Palm is doomed. Doomed, I fear, unless they make some changes in their business model and better consider the harmful long-term impact that some short-sighted decisions may have. The exciting work of the innovators within Palm may be destroyed, in the long run, by Innovation Fatigue Factor #5, “Flaws in Decision Making and Vision”(the subject of Chapter 9 in Conquering Innovation Fatigue).
The problem, in a nutshell, is that Palm and Sprint (the only network for the Pre) apparently have decided to focus on getting the limited production of Palm Pres into the hands of as many users as possible, rather than letting tech support staff have them. The quality of customer service is being deliberately sacrificed to grab more market share and get more buzz among consumers, but this may backfire and create negative buzz due to some compounding factors. Some users may be happy with what they can figure out on their own and never need tech support, but I think many Palm Pre users are likely to need support. I say this because users are not given the Palm Pre manual and the manual in PDF form is not provided on the Palm Pre, cannot be downloaded from the Palm Pre, and even if loaded onto the Palm Pre, cannot be read by its PDFView application without crashing the phone. It’s a painful irony that makes aggressive users rely more than they should on tech support, and yet tech support is in the dark. When you call 888-211-4727 for support, you will be speaking with someone who has never used the phone, perhaps never even seen one. You can usually get to a human in under three or four minutes, which is wonderful, but simple questions can take far too long to be answered, if an answer ever comes. If uncorrected, this will drive consumers away from this phone and toward the many alternatives that can do many of the same things.
Here’s an experience that illustrates the problem of using inexperienced tech support instead of people familiar with the phone. I had a problem with a disappearing icon. There are five icons across the bottom of the screen for a newly installed phone: one for dialing, one for contacts, one for email, one for the calendar, and one that brings up a directory of apps and services. On day two of using my phone, the email and calendar icons disappeared. I’m still not sure how. There were suddenly just 3 icons, not five. I was able to still find email by navigating through the apps, but wanted the convenience of rapid access to email that the icon provided. So how does one get it back? Nothing in the skimpy guide given to new users addressed the issue. So I called tech support.
After being escalated through three levels of tech support over the course of an hour, I still hadn’t found anybody who could answer that question, so I gave up when, mercifully, the signal dropped. The top-level person didn’t call back. The next day, when I had to call again for another issue, and while talking to a rep, I asked this new guy if he knew the answer to the icon puzzle. He put me on hold for about 60 seconds, and then came back with the simple solution: press any icon in the apps window for several seconds until it glows, then drag it into the row of icons at the bottom of the screen and it will stick. I was delighted. “Wow, that’s great. Do you mind if I ask why you were able to help so quickly when three levels of tech support yesterday all searching for the answer couldn’t help?” “Oh,” he said, “there’s another guy over here who owns a Palm Pre. So I asked him and he was able to show me.” Ah, someone with experience – someone with a phone!
Because the person I reached knew someone with experience, he was able to reach out to his local value network and get the knowledge I needed, and he could do it in 60 seconds, compared with a fruitless hour of my time and Sprint’s when talking to people without experience. My wife and I have been contacting tech support a lot– far too much, but usually out of necessity–and nearly everyone I’ve talked with didn’t know much about the phone at all. Thank goodness one person had access to someone who had one.
By going for short-term market share by getting more sets into the hands of the public instead of into the hands of your own support staff, Palm is taking a huge risk and incurring costs that may well outweigh the benefits of the accelerate distribution to the public.
Branding Only Works on Cattle: Observations on the Evolution of Private Brands
Posted by: | CommentsOne of the more enjoyable business books I’ve read recently is Jonathan Salem Baskin’s Branding Only Works on Cattle: The New Way to Get Known (and drive your competitors crazy) ( New York: Business Plus, Hachette Book Group, 2008). Drawing on his decades of experience in marketing, Baskin takes an iconoclastic approach in exposing the folly of modern views on marketing and the illusion of branding.
Baskin challenges the mystical notions of branding in which consumers are supposed to develop deep emotional associations with products beyond the logic of utility. Commercials aimed at merely creating associations or “brand awareness” ultimately fail to drive sails. Like the troubling Burger King mascot with a crown, many of the images used to promote brands do nothing but waste our time and corporate dollars. “Most branding is a waste of money,” he insists (p. 14). “Branding is based on an outdated and invalid desire to manipulate and control consumers’ unconscious. It looks good and feels food to the people who produce it, but it has little to no effect on consumer behavior” ( p. 14).
He argues that rise of branding occurred during a brief era in history after the rise of network TV and other centralized media, when consumer information really was tightly controlled through a few major channels. During that brief era, a few major channels of information dominated what we learned about products and left us at the mercy of advertisers. But now, as we return to the way things almost always have been, with many fragmented sources of information based upon people’s experiences with products (think the Internet, instant messaging, and the return of other less centralized ways of interacting), what matters most – once again – is not our metaphysical relationship with a brand at some subliminal level evoked by exposure to abstract and often meaningless ads, but the performance and value of the products.
“Consumers don’t interact with brands. They buy stuff, and purchase real things.” p. 15
And now most of us already live without branding. Branding is dead. Facts, experience, word of mouth, and value are what matter. Enter the rise of private label “brands.”
Private brands (in store brands) have been with us for years, but it is only recently that they have really mounted a massive assault on established brands. Major manufacturers are learning that they must work harder than ever before to offer differentiable products that justify the premiums they want or need to charge. Some retailers have foreseen the power of private brands and have worked aggressively to form the partnerships and skills needed to bring private brands to a new level.
In the news now, we see Safeway offering some of its private brands to other retailers, a wonderful example of innovation in business models and of magnifying the profit potential of unique skills and value chains that have been developed.
We see Wal-Mart announcing bold new plans for expanding their already extensive private brands, a move which may have many old-school marketers of national brands trembling. We also see 7-Eleven announcing the role out of over 100 new in-store products that will compete with national brands.
There planets are shifting in the retail solar system, with bodies orbiting around a new gravitational center in the cosmos of consumer products: private labels. This is not to say that national brands are dead, but the pressures and threats are evolving, and they must evolve rapidly to avoid death nipping at their hills. We will see interesting new coalitions between national brand manufacturers and private label manufacturers, and perhaps an increasing emphasis on non-commodity aspects of consumer products such as improved packaging, novel dispensing, novel functional ingredients, and new business models for co-packaging, cross-promotions, and other ways to add value and meaning to threatened national brands.