We’re living in an increasingly digital and analytical world, driven by data, smart algorithms and instant, automated decisions. Many industries, from airlines to pizza delivery, have optimized their products, operations, pricing, customer support and more using data and statistics to gain an edge over human intuition. Companies have been transformed in the process. Domino’s now describes itself as “a technology company that sells pizza,” and UPS claims that it has “evolved from a trucking company with technology to a technology company with trucks.”
Medtech CEOs can see that the same transformation is already under way in our industry. “We must connect precision diagnostics, therapeutics and monitoring to generate insights for better patient outcomes. We must embrace AI to empower caregivers and improve the patient experience,” wrote Tom McGuinness, president and CEO of GE Healthcare’s imaging business, in a recent op-ed for the UAE-based news outlet Gulf News, and we see similar aspirations from many medtech leaders.
But many medtech companies are still behind the curve. And that’s despite hefty, sometimes multimillion-dollar investments in analytics. The problem is that these companies’ investments are misplaced. What we see almost everywhere is a tendency to spend time and money on technology and data scientists but then to neglect the necessary organizational and process changes. In short, many companies spend on tech but ignore the human element.
An analytically driven organization may have a data lake and smart reporting and analytics models, but that’s not why it’s analytically driven. In such organizations, no decision is made without looking at the data. There’s an expectation across all departments that teams will relentlessly optimize their operations—whether it’s customer targeting, messaging, pricing, inventory or manufacturing quality—using statistical analysis, comparing ways of doing business through A/B testing, and measuring every result. It’s not just leadership that’s analytically driven; every employee understands the limitations of human intuition, and uses data and analytics to confirm or reject every hypothesis for every business decision. All processes and transactional systems are built to collect data that can be used later to analyze and optimize themselves.
Such changes can’t be achieved with a mere technology investment, just like becoming an elite runner isn’t a matter of buying the best running shoes. Becoming an analytically driven organization requires a change in how the organization operates. Leadership has to convey an expectation that data will support every decision, and actively dissuade analysis based purely on experience and instinct. People in an analytically driven organization have to care about the integrity of the data that they create and collect because they understand how vital it is to every decision that’s made. Creating such an organization requires patience to help the people in the organization adapt, reskill and upskill. It requires hard thinking on how to act on certain insights and a willingness to experiment to find answers.
If a complete organizational transformation seems daunting, keep in mind that companies don’t achieve this kind of change all at once. It’s a cumulative journey made up of small, iterative transformations over the course of years. That’s not to say that it won’t be difficult. It certainly will be, but the transformation will be well worth it.
Because of companies like Amazon and Walmart, we’re seeing a dramatically transformed retail industry full of winners as well as faded icons of the past like Sears and Borders. This should remind us that embarking on this journey may be a matter of necessity. But Walmart also should remind us of the opportunity that lies ahead. Think about how it started from a typical big-box store, with competitive advantage mostly built on volume. Over time, the retailer has learned to predict and optimize not only customer behavior, but also shipping, warehousing and procurement in hundreds of product categories. Despite its razor-thin margins, it has invested in becoming analytically driven, and unlike Sears, it’s still here to compete with digital natives such as Amazon.
Becoming digital took a lot from Walmart. It involved teaching leaders digital trends and teaching employees to be cross-functional and agile. It also meant giving people tools for hundreds of on-the-job decisions and insisting that they adopt them, setting each employee on a path to become a “knowledge worker.” Will your organization become the Walmart of medtech? Start your journey off on the right foot, and anything is possible.