We all know that digital is disrupting industries—from retail to entertainment to travel. However, the pace and scale of change has increased. Exponential technologies are enabling innovators to rapidly launch products and services that are Big Bang disruptions—innovations which are simultaneously better, cheaper and more customized than current offers—and they’re putting major players out of business. Since 2000, 52 percent of companies in the Fortune 500 have either gone bankrupt, been acquired or ceased to exist.
Exponential technologies such as social, the Internet of Things, mobility, analytics, genomics and the cloud are bringing change to the fore in healthcare. The industry has historically remained unaffected by the transformative impacts of exponential technologies, given heavy regulation and reliance on expert labor. But now, even the most regulated industries are vulnerable to the effects of Big Bang disruption.
According to the Accenture 2016 Technology Vision survey, US business and IT executives believe the healthcare industry will be one of the top three industries to face the most digital disruption in the next three years.
Signs of change
Change is already impacting many parts of the healthcare value chain in different ways, making it difficult to predict major disruption. At the same time, market experiments are on the rise, collectively signaling impending change. For example:
Uptick in startup funding – The continued increase in digital health funding is fueling a high volume of market experiments aimed at the heart of healthcare incumbent businesses.
Zombie startups – Accenture research estimates that more than half of digital health companies funded between 2008 and 2013 are not likely to survive, creating opportunities for incumbents to swoop in and give these investments new life.
More mergers and acquisitions – A tidal wave of mergers and acquisitions is fundamentally reshaping the US healthcare landscape.
Preparing for transformation
No one can pinpoint when disruption will occur. Therefore, the best way to prepare for change is to establish foresight to anticipate where markets are heading. Here’s how:
Open innovation. Explore new pathways to innovation. This may mean creating innovation labs that encourage employees or collaborators outside of the organization to contribute ideas and insights. Connect with the outside world through open innovation to explore new models and create better, more cost-effective healthcare technologies or new value linkages.
Mergers and acquisitions. Assess strategic growth opportunities holistically across three dimensions—horizontally, vertically and digitally—to determine how to best diversify and differentiate.
Corporate venturing. Bet on a portfolio of experiments and do so early enough to own a significant piece of the eventual winner.
Platform experimentation. Identify parts of the business that are most vulnerable to attack by disruption from new platform-based business models from incumbents and startups inside and outside the healthcare industry.
Ecosystem collaboration. Identify potential digital platform partners and ecosystem scenarios in three categories: existing business partners becoming digital platform partners, new digital partners within your industry and new digital partners outside of your industry. Plan and launch a pilot to either join, partner or build a digital platform ecosystem.
Surviving the Big Bang
The healthcare industry is changing. Those who heed the warning signals and build the foresight to anticipate where markets are heading will be among the survivors throughout the disruptions.