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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

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Ready to Hire Your First Salesperson?

Many technical founders I’ve met with are either getting ready to hire their first salesperson or they’re frustrated with what feels like a revolving door of underperforming salespeople. What gives? Perhaps one of the most fundamental mistakes that technical Founders make is to focus on evangelizing the vision and building the product. Then, when the product approaches MVP-ready, the Founder hires a salesperson to bring in the customers. DON’T MAKE THIS MISTAKE. Sadly, this usually ends in frustration, lost time, poor employee morale and degraded investor confidence. It is one of the most common downfalls of many promising new businesses. Just as any new product goes through a beta phase followed by a production phase, I strongly encourage a phased sales process. Phase 1:  Partnership During the partnership phase, an individual (usually the Founder, CTO, CEO or perhaps even a Business Development person) is responsible for ongoing engagement with prospective customers from the concept validation phase onwards. This person is responsible for learning what’s important to the customer and how they would buy/use a new solution such as yours. You’re also freely sharing your company’s expertise with your partner to help them solve an important problem. Most importantly, this individual is responsible for closing initial customers and learning how they buy. Phase 2: Sales Armed with several happy, reference customers and a basic understanding of the buying process, you’re ready to hire a professional salesperson who is responsible for accelerating customer acquisition, learning more about how they buy and building a repeatable sales process. Only when that process is understood and you have good product/market fit, should you grow your sales team to scale. Of course, there’s a lot to unpack in these two phases, and we’ll do that in a series of upcoming blogs. Whether you’re in the Partnership phase, getting ready to hire your first salesperson or you’re frustrated with disappointing sales traction, contact us and we can help get you back on track.

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April 8, 2020

Customer Discovery means talking to customers. Do you have a plan?

In a prior post, we looked at what makes a good Value-Positioning Statement where we suggested using this classic template in a powerful new way – using it to guide a more rigorous thought process and as a starting point for customer discovery. By taking this approach you can articulate a hypothesis to be validated, as well as create a living document for internal alignment, product and go-to-market planning, and investor pitches. Ok, so let’s skip ahead. Now that you have a solid Value-Positioning Statement that describes your business concept, it’s ready to be tested. What’s next? It’s time to have customer discovery conversations with stakeholders in your target market. Before reaching out, however, it’s important to have a call plan. What answers do you need? How are you going to ask them? How are you going to put the “customer” at ease, get them open up to you, and have a meaningful conversation, not just a transactional question/answer session? Sure, conversations rarely go as planned. It’s impossible to know in advance what direction it might go. BUT, if you want to increase the odds of gaining critical insights, collect valuable evidence, and establish a connection for what could become a future customer, there’s a systematic approach you can take. Here are four major elements that should be included in each Conversation Plan. They are: 1) Key Questions to be Answered – What are the 3 to 5 highest priority questions that need to be answered? What are the fundamental unknowns that are critical to your Value-Positioning hypotheses? Be sure to make the distinction between what answers are needed and what/how questions are asked to obtain the answers (creating those questions comes later in the Conversation Script). 2) Target Personas – Who can likely answer those questions? Who are the primary personas to contact? Identifying those personas and getting their agreement for a call or meeting can be tricky, so for more guidance have a look at these two posts: Who/Where/How Do you Recruit for Customer Calls? and How do you ask someone you don’t know for a “Discovery Conversation”? 3) Conversation Script – This is the heart of the plan. Each conversation must be tailored to the questions you need answered, the domain knowledge of the persona being targeted, and how much time is available for the conversation. You need to consider things like: How are you going to frame the conversation? What questions are you going to ask and in what sequence? How will you phrase questions without injecting your views? How will you cover everything in the available time? How are you going to make this an open and flowing conversation? In concept validation discussions, we like using a “challenge statement” approach. In this scenario, you make a statement about the problem or the proposed solution. That statement may be slightly provocative to elicit a response but not to the extent to potentially impact your credibility. An example challenge statement would be: “The process of scheduling meetings with people in other organizations wastes my time, is a significant source of frustration and must be improved.” Once that statement is put forth, the stage is set to obtain an initial reaction. First ask for their immediate thoughts from which you can ask probing questions to peel back the layers. Your goal is to see the world through their eyes and specifically as it pertains to the answers you need. There is both an art and a science to developing a good conversation script so ask your company advisors for assistance if they have experience in this area or feel to contact us at the Evidology Group for a copy of our detailed Conversation Planning Guide. 4) Logistics – Every good plan has well thought out logistics to ensure your call goes smoothly and objectives are achieved. Who will be on the call from your team and what are their roles? Are they leading the call, assisting, taking notes, or just observers? What is the exact timing for everyone gathering on the call (don’t be late!), exactly how long is the “customer” available, and if using web/video conferencing, what’s the plan for dealing with technical issues? While working on your plan here are a few other important things to keep in mind: 1) Be flexible – Having a plan doesn’t mean being rigid. As mentioned above, conversations rarely go as planned. Think of having a plan as giving yourself a framework: a clear understanding of the questions that need to be answered, the preferred order you wish to progress through the conversation, and a set of specific questions. Having this framework in mind you can more easily adapt as the conversation unfolds. 2) Do a post-call debrief – Get back together with the participants from your team right after the conversation while it’s still fresh in everyone’s minds. At a minimum, discuss the following questions: What were the key learnings and their significance? Were there any missed opportunities for learning? What adjustments, if any, are needed for future conversation? 3) Constantly iterate – Employ a highly iterative process. With each conversation, the Key Questions List and Conversation Script will evolve based on learnings, the need to cover different topics in various degrees of detail, for different Target Personas, and of course tailoring for each individual person. I hope you found this blog useful and invite you to contact the Evidology Group. We would be happy to provide a copy of our detailed Conversation Planning Guide with instructions for creating a Conversation Script, best practice tips, and other practical information.

Read More »
August 10, 2020

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