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From Pitch to Purchase in HealthTech-DRAFT

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From Pitch to Purchase in HealthTech

I’m pleased to share a new book series called From Pitch to Purchase that looks to improve startup best practices across a variety of disciplines. The first book in the series focuses on HealthTech Startups.

The catalyst for this book was a meeting with an early stage startup that was getting classic Lean Startup advice which works great (in theory) but the reality is that Lean simply doesn’t work out-of-the-box in a Healthcare context. We’ve come across this many times now, so this book is our attempt to set the record straight.

You can buy From Pitch to Purchase in HealthTech on Amazon and read an introduction to the topic below.

Buy From Pitch to Purchase in HealthTech

Lean Startup and HealthTech

The Lean Startup methodology, popularized by Eric Ries, has become a go-to framework for building businesses and products worldwide. Its core principles—rapid iteration, customer feedback and validated learning—have transformed the pace of innovation and new product introduction. However, when it comes to B2B HealthTech, a sector with enormous complexity and regulation, applying these principles can be fraught with challenges.

This doesn’t mean sacrificing the agility and customer-centric focus that Lean promotes; rather, it involves a thoughtful integration of these principles with the rigor and precision demanded by healthcare customers. Let’s take a closer look.

The Regulatory Roadblock

One of the most significant challenges in HealthTech is regulatory compliance. While the Lean Startup methodology encourages the rapid development and release of a Minimum Viable Product (MVP) to gather early customer feedback, HealthTech products must often pass rigorous regulatory approvals before they can reach the market. For instance, medical devices and software that impact patient care typically require FDA approval or CE marking in Europe. This process can take months or even years, making it difficult to iterate the Build-Measure-Learn cycle quickly or release an MVP.

Lengthy Sales Cycles: A Patience Game

The sales cycles in B2B HealthTech are notoriously long, often taking months or even years to close. This is a stark contrast to the Lean Startup’s emphasis on rapid feedback and quick pivots. In healthcare, the decision-making process involves multiple stakeholders, including clinicians, IT departments, procurement teams and compliance officers. Each of these players has different priorities and concerns, further complicating and extending the sales cycle. The delay in receiving customer feedback hampers the iterative process, making it difficult to validate learning and make timely decisions.

The Complexity of Decision-Making

In most industries, the Lean Startup methodology encourages close engagement with end-users to refine the product based on their feedback. However, in B2B HealthTech, purchasing decisions often involve a complex web of stakeholders. Each of these stakeholders—from doctors and nurses to IT administrators and compliance officers—has a say in whether a product is adopted. This complexity can lead to mixed signals and unclear feedback, making it harder to validate hypotheses and pivot when necessary. The intricate decision-making process can obscure clear signals from customers, complicating the validation process that Lean Startup depends on.

High Stakes, High Risks

The Lean Startup methodology celebrates experimentation and even failure as essential components of learning. But in HealthTech, the stakes are significantly higher. A product failure could result in patient harm or legal liability, not just a dip in user engagement. This high-risk environment forces HealthTech companies to be more cautious, often opting for thorough testing over rapid iteration. The risk-averse culture in healthcare makes it challenging to take the iterative risks that the Lean methodology advocates, leading to a more cautious approach to product development.

Evidence-Based Adoption

HealthTech products often require substantial clinical evidence to support their efficacy and safety. This evidence is typically gathered through pilots and clinical trials, which are time-consuming and expensive. While the Lean Startup methodology favors quick market entry and learning through customer feedback, HealthTech products must first build a robust foundation of clinical evidence before they can be widely adopted. The need for clinical trials and evidence-gathering slows down the iteration process, requiring significant upfront investment before market entry.

Integration Challenges

HealthTech products don’t exist in a vacuum. They must often integrate with existing healthcare IT systems, such as Electronic Health Records (EHRs) and comply with specific interoperability standards. This need for seamless integration complicates the rapid deployment and iteration process that the Lean Startup methodology promotes. Integration requirements can delay the release of an MVP and slow down the feedback loop necessary for quick learning and adaptation.

Customer Development Constraints

Lean Startup encourages constant customer engagement to refine the product. However, in the healthcare sector, accessing healthcare providers and patients for testing and feedback can be challenging due to ethical concerns and privacy laws (e.g., HIPAA, Privacy Impact Assessments, Security Threat Risk Assessments). As a result, gathering direct customer feedback is often more complex and time-consuming. Limited access to end-users restricts the ability to gather direct feedback, making validated learning more challenging.

Pricing Models and Reimbursement Complexities

Pricing in HealthTech isn’t as straightforward as in other industries. Often tied to complex reimbursement structures and value-based care models, pricing can be difficult to test and iterate on. The Lean Startup methodology encourages flexibility in pricing and business models, but in HealthTech, these elements are often constrained by existing healthcare systems. Testing different pricing strategies becomes more challenging, complicating the application of Lean principles to pricing and revenue models.

High Development Costs

The Lean Startup methodology promotes low-cost experimentation, but in HealthTech, the costs of development can be prohibitively high. The need for R&D, research studies, clinical trials and regulatory approval requires significant investment before any revenue can be generated. High upfront costs and long timelines contrast with the Lean principle of starting small and scaling based on customer feedback.

Navigating a Risk-Averse Culture

The Lean Startup methodology thrives on a culture of experimentation and acceptance of failure. However, the healthcare industry is inherently risk-averse, with a strong focus on patient safety and regulatory compliance. This conservatism can inhibit the adoption of Lean principles, as there is often resistance to iterative development and the associated risks. The conservative nature of healthcare organizations can slow the pace of innovation and the application of Lean principles, leading to slower product development cycles.

– – –

The Lean Startup methodology, if applied directly to healthcare, will be met with stiff resistance, but it’s not insurmountable. By understanding the unique demands of the healthcare industry, HealthTech innovators can strategically adapt Lean principles to fit their context. This doesn’t mean sacrificing the agility and customer-centric focus that Lean promotes; rather, it involves a thoughtful integration of these principles with the rigor and precision required in healthcare.

With persistence, creativity and a willingness to iterate within the constraints of the healthcare environment, HealthTech companies have the opportunity to revolutionize the industry, bringing transformative solutions to market that improve patient outcomes and drive sustainable growth.

The journey may be complex, but the rewards—both for patients and for the companies that serve them—are well worth the effort.

You can read the full book, packed with actionable insights and without the fluff.

Advice is the easy part. Turning it into action and applying it intelligently to your unique situation is where things get tricky. That’s where the Evidology Group can help. Contact us at info@evidologygroup.com or click here.

Buy From Pitch to Purchase in HealthTech

More To Explore

Customer Discovery: Do You Pitch, Use a List of Questions, or Follow a Script?

In an earlier blog post, we covered the five major elements of a Customer Discovery Conversation Plan. One of the elements was a Conversation Script. Our clients tell us this script has more value than they ever imagined prior to creating and using one. What exactly is a “script” and why is it needed? Isn’t a simple list of questions sufficient? Briefly, our version of a customer conversation script for concept validation has: A framework of topic areas and their planned order in the conversation Statements to set the context, for discussion, and to transition between topic areas A list of specific questions to be asked under each topic Sure, you could just make a list of questions but here are three reasons why you should consider creating a script: The context you set, the order in which you explore topics, and the way you ask questions can make a huge difference in the relevance and quality of information collected This approach is more likely to foster a true conversation, rather than a transactional Q&A exchange, and one that could become the first of many conversations with that individual Conversations easily go in directions never imagined. Suddenly your time is up and call goals have not been met. A script containing a framework or roadmap makes it easier to keep your goals in mind. So for this post, let’s focus on the starting point – a general-purpose framework you can adapt for conversations based on the evidence you need to collect from each target persona. For each persona and set of conversation goals, develop a targeted script by keeping the topic sequence but removing non-relevant topic areas, adding/deleting/altering the number and type of questions in each area, and updating how you transition from one topic to the next. For example, when talking with end-users about simulation-based training you’re more likely to focus on their priorities and problems: how they do things now (simulators being used), and what capabilities deliver value for them. And when talking with department heads (budget owners) about the same subject, the focus will be on their priorities and problems: how they do things now (how simulation-based training fits within the curriculum), and how they fund and buy these types of things. With that in mind, here’s a master framework you can adapt to your own needs: 1. Conversation Expectations At the outset, you want to take a minute or two (literally) to set up the conversation for success. You want to demonstrate professionalism, establish credibility, and show respect for their time. This section is primarily statement-based where you: Introduce participants on your end and their role in the call (conversation leader, notetaker, observer, etc.) Restate the reasons and objectives for the call to reinforce prior communications leading to this moment Tell the customer what to expect during the call (you’ll make statements, ask a series of questions, etc.) and how their feedback will be used Confirm the available time 2. Customer Profile In this section, you ask questions to understand the scope of their role and responsibilities, about their team – its size and structure, how long they’ve been in that position and/or the industry, etc. Your goal is to understand the basis of each person’s perspective and what might be shaping their feedback. Equally important, you want to be able to identify common characteristics about them and their organizations for creating segment profiles when looking across all conversations for patterns or trends. Additionally, this information informs a more granular Ideal Customer Profile. 3. Problem Importance & Change Motivation Next, start collecting the evidence needed to answer the critical questions driving your conversation plan. We like to start with validating whether the problem you’re trying to solve exists in their mind and where it fits relative to your customers’ perceived priorities, problems, and their urgency to solve the problem. You want to know: The order of magnitude of this issue; is it a 5-out-of-5 burning issue or a 1-out-of-5 nice-to-have? How they measure the impact of this problem being solved or not being solved; the KPI or performance metrics impacted Whether solutions to problems like this get funded 4. Current State Once you know how your target problem fits in their world, it’s natural to shift the conversation to how they do things today, dig a bit deeper into how the problem manifests itself, and what current plans or projects exist to solve the problem. In this section, you uncover critical information such as: Existing tools, systems, and processes Competitive options with associated strengths and weaknesses Current economic impact if not covered earlier Solution compatibility considerations Change management challenges General background for interpreting responses in the next topic area 5. Solution Value Drivers & Differentiators Now with an understanding of the problem from their perspective, how things are being done today, and what’s being considered for the future, the conversation easily shifts to getting feedback on your proposed solution. This part of the conversation is about getting their thoughts on each major capability that makes up your solution. Does each capability have value, how much value, how is that value measured, and which capabilities are more important than others? You want to know the “why” behind their answers and dig into what they believe to be meaningfully different and better than other available options. 6. Future State. After receiving feedback and creating an understanding of your proposed solution, it’s time to probe a bit more on its relevance and overall value by assuming your solution – plus their view of the ideal solution – has been implemented. You want to further uncover the impact on their business, objectives, and goals. 7. Buying Process After validating the target problem and proposed solution, it is critical to gain an understanding of how customers buy. What triggers the buying process, who are all the stakeholders, what decision-making steps do they go through, where does funding come from, how does that process work, and how long does it typically

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October 22, 2020

How do you ask someone you don’t know for a “discovery conversation”?

You developed a product, have one in development, or have a dazzling vision described in PowerPoint. You understand the need to validate your plans and ideas by talking with potential customers and others who can offer critical insights. Scheduling a conversation with friends and colleagues can be easy. It’s not so easy to ask someone who doesn’t know you for 30-45 minutes of their valuable time. How do you ask in a way that increases the likelihood of getting a “yes”? First, what are some reasons people wouldn’t talk with you? They: Don’t have time Don’t care about the topic Have no idea who you are or unsure if you’re dodgy Think you’re trying to sell them something Second, what are some reasons people would talk with you? They: Have an interest in the topic; it’s relevant to them Like to share their opinions with others Want to be helpful Comfortable they’re not getting a sales pitch This brings us to an example request which we’ll deconstruct after you read it. Note there is no one “right way” to do this but there are many “wrong ways” to make the ask. And you will need to experiment with the structure and wording based on responses or lack of responses. Here we go: Subject: Asking for your feedback and advice Hi, I found your blog post on quality control really interesting. Your point about using AI and machine learning to identify automation faults stood out for me. Given your quality control knowledge, your help would be appreciated. Briefly, I’m developing a next-generation QA software tool that automatically processes production line plans to identify the optimal QA process overlay. The goal is to dramatically reduce QA planning time to speed time-to-market and reduce QA rework to increase cost savings. To help confirm I’m creating something of value with the right feature set, would you mind spending 30-45 minutes on the phone with me to get your thoughts? To be clear, this is not a sales pitch. I’m seeking real-world feedback to guide product and go-to-market plans. Please let me know if we can arrange a call for next week. Thanks, Alice CEO/Co-Founder, Acme Co. Now let’s break it down:   Make your email as short and concise as possible, certainly no longer than the above example. On a closely related point, use short paragraphs. Reading a big block of text takes too much work; it needs to be easily scanned.   The subject line should clearly state the “ask” using a friendly and personal tone. If the recipient likes to share their opinion and likes to be helpful, they will continue to read.   In the first paragraph, connect to that person. Why are you asking for help from them? You may have seen their name on a website, read about a talk they gave at a conference, read their blog, or scientific paper. You may have found a tidbit on their LinkedIn profile. Maybe someone they know mentioned their name to you. Failing all those scenarios, simply refer to their role/position and likely interests as being the point of relevance.   In the second paragraph, succinctly describe what your product does and its value proposition. You should also provide context by stating your status. Are you designing, developing, or redesigning, for example?   In the third paragraph, state your end goal (e.g. validate your value proposition and supporting functionality) and the specific ask (e.g. time on the phone, meet for coffee, etc.)   In the third paragraph, state what you are not going to do and reinforce this message by saying how what you learn will be used.   Close by asking when they might free for a conversation. Take a somewhat open-ended approach while creating a slight sense of urgency. Asking “can we talk tomorrow at 10 am” makes it more likely you’ll get a “no”. That’s too urgent and likely a booked time. Similarly, asking for “sometime in the future” is too wide open and doesn’t create any sense of urgency.   There’s lots more to be said but let me provide a bit more guidance before letting you get back to your day. Starting with, don’t just send the email and forget about it. After a suitable pause anywhere from three to five business days, send a polite follow up. Forward your original email with three or four sentences saying something like, “I hope you don’t mind that I follow up from reaching out to you last… As mentioned earlier, I am seeking… Your feedback would be appreciated. Are you able to join me on a call…?” In fact, it may take a few follow-ups before you stop to avoid been labelled as a spammer or you get a response that says: “Hey, thanks for your follow up. I was really busy. I’m interested in helping and can talk next Tuesday at 3 pm.” Don’t be discouraged by a low acceptance rate. If 8-10% of the people you email agree to a conversation, you’re doing fine. Should you encounter a lower rate, carefully review how you present yourself: why you contacted them, how you describe what you do, and what you’re asking. Even with a decent acceptance rate, I encourage you to constantly review these items and experiment. If someone is curious, likes being helpful, or possibly flattered by this request, they will read your email and offer their assistance. You’ll be on your way to increasing your customer knowledge. Good luck! For more information, please contact us at the Evidology Group. We’ll share a guide on how to structure effective customer conversations. Of course, if interested, we would be happy to learn about your business, share our experiences, and discuss whether we may be of assistance. You may also wish to read Ash Maurya’s book, Running Lean, which contains lots of practical advice on finding prospects and testing your ideas.

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June 29, 2020

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