Medical device, pharmaceutical and health services companies are experiencing not only upheaval and disruption in the new digital era and with the shift from a product focus to an outcomes focus. They are also encountering incredible opportunities to achieve greater agility, profitable growth and competitiveness.
Med tech executives recognize that their operating models can help enable growth, but few have strong confidence that their current models can support the change needed to move beyond a traditional product focus at an enterprise level. As the marketplace continues to shift to an outcomes focus, new business models, operating model efficiency and agility will be even more critical.
Our survey of 35 medical technology executives analyzed the challenges and opportunities they face with creating competitive operating models and reinvesting in growth. The research unveiled three key areas of opportunity:
Med tech executives recognize that their operating models can help enable growth, but few have strong confidence that their current models can support the change needed to move beyond a traditional product focus at an enterprise level. As the marketplace continues to shift to an outcomes focus, new business models, operating model efficiency and agility will be even more critical. The survey shows:
Most med tech respondents (86 percent) somewhat or strongly agree that advanced operating models are enablers of strategic growth.
Just 23 percent strongly believe or have the highest confidence that their company’s operating model is aligned to strategic growth initiatives and can support these activities across the enterprise.
Only 26 percent have complete confidence that their operating model is able to rapidly respond to changing market conditions.
Most companies have been slow to take full advantage of digital technologies to improve the customer experience, increase flexibility and reduce operating costs. Executives acknowledge digital’s critical role in helping achieve those objectives and they see digital investments as a priority for advanced operating models and growth:
Most respondents (89 percent) said that digital strategies—including insights-based, real-time, customized and scalable—are enablers of advanced operating models.
Almost as many (82 percent) said that digital business is an enabler of strategic growth.
Fewer than half (46 percent) listed digital as a priority area for reinvesting cost savings.
Human capital and company legacy
People-related challenges were frequently listed as barriers to advancing the company’s operating model. Top hurdles included:
Finding the right talent.
Handling change management.
Replacing or integrating with company legacy models.
To increase their competitiveness and drive profitable growth, we recommend med tech companies take three steps:
Create advanced, flexible operating models.
Use digital fully.
Develop a people plan.
As new performance and value-focused business and operating models emerge, and digital and technological advances converge, industry executives need to effectively navigate the operational changes that will be essential for success in the new healthcare environment.
To learn more about the research findings, read: Injecting new agility into the medical technology industry.