BUSINESS PLANNING & TECHNOLOGY DEVELOPMENT

Internet Strategies for 2000 and Beyond

Tomorrow's market leaders need to think differently about their approaches to technology today.

Teri Louden

In more ways than we can imagine, the Internet and related telecommunications technologies have altered and will continue to alter the way the world does business--and that includes medical device and diagnostics companies. Today's executives must answer critical questions: How can medical device companies most benefit from Internet applications? What Internet strategies and tactics should be employed? How much should and will companies invest in Internet-related initiatives? What Internet-related risks and rewards exist?

Rapid advances in technologies are challenging the more-traditional ways of thinking about and managing businesses and resources. "Thinking differently" is required not only to keep a company alive today, but also to ensure it can thrive in the high-speed information age and the ever-changing world of healthcare.

Consider the phenomenal anticipated growth of on-line business: Forrester Research Inc. predicts healthcare e-commerce sales will rise from their 1999 level of $6.4 billion to $370 billion by 2004. (Business-to-business sales would account for $348 billion with business-to-consumer sales completing the balance.) Forrester also estimates that by 2004 12% of physicians' offices will make all of their purchases on-line (as compared with just 0.2% who did so last year).1

Keeping in mind these staggering numbers, medical technology executives need to think very broadly about their companies' Internet strategies. The Internet is not just about e-commerce or Web sites. Today's technology affects every department in an organization—marketing, sales, R&D, manufacturing, recruiting, employee retention and benefits, investor relations, distribution, and more—as well as customer and market communications.

While e-technology is hot now and a focus at many companies, smart managers will stay centered on their business's raison d'Ítre: meeting customers' needs. There's a big difference between implementing the latest, greatest technology for the sake of being on the cutting edge and determining how best to use new technology to most effectively meet and exceed customer expectations.

Make Success Happen

To ensure customers' needs are anticipated and met most efficiently and productively, and to grow their business, savvy executives must continue to look at how they can incorporate new technologies into their business plans. As Peter Drucker, one of the great business strategists of our times, says: "The best way to predict the future is to create it!" Here are 10 ways to think differently about your organization's Internet strategies and create its future.

1. Put Someone in Charge. By now, most medical device companies have created the requisite Internet task force, committee, or department, and invested weeks on the "Internet data dump." But simply gathering information on Internet companies and resources and putting current communications on-line isn't a strategy. Such practices lead to a highly fragmented, diversified approach, with each department, and even individuals within departments, moving in separate directions. Without some type of coordination across divisions and departments, companies can quickly end up with non-user-friendly Internet activities and an expensive duplication of efforts.

Senior managers should therefore appoint one department to serve as "information central" for the business's Internet strategy. This group will coordinate all other departments within the organization to ensure that companywide Internet efforts are leveraged and cohesive.

Determining where to house this coordinating function is the first step. Departments of information technology (IT), management information systems, strategic planning, or other new functions reporting directly to the CEO are all logical choices to house this new function. The name of the department isn't as important as the type of people who work there. The right people will be well versed in current advances in information and communications technologies as well as with companywide activities and goals. The following activities should be among the team's responsibilities:

Some businesses choose to create a companywide Internet task force rather than designate a department as being in charge. Task forces have their pros and cons. On the one hand, teams bring diverse thinking to the table and help identify different priorities and ideas. However, individuals tend to champion their own ideas and often aren't very familiar with what technology is available and what it can do. Without a "buck-stops-here" decision-making authority, task forces can spend lots of time negotiating rather than implementing strategies--a poor approach in today's changing-by-the-second marketplace.

2. Set Priorities. Once project managers and a decision maker are in place, it's time to develop and execute an Internet strategy that meets today's business needs while accommodating future expansion. While it can be tempting to try to do everything at once, no company has the human or capital resources necessary to tackle (or fund) all of its possible Internet-related initiatives simultaneously. A good plan will outline broader future objectives and provide a timeline for a phased-in approach.

To set priorities, the Internet group must meet with senior managers to list all of the possibilities, develop screening criteria, and then agree on which areas are most important and in keeping with the organization's mission, the phase-in plan, and checkpoints along the way. Executives must think seriously about the screening criteria. For example, Internet strategies that address the needs of current customers (e.g., targeted clinicians) may take precedence over developing ways to reach a potential future customer segment such as the consumer. While companies may lose some ground by not entering the popular business-to-consumer (B2C) market now, they'll be able to learn from mistakes made by others in their B2C efforts while focusing on protecting their base business.

Senior managers can consider screening criteria in various ways, asking questions such as:

3. Partner Up. Being an expert in medical technology may be one of a company's core competencies, but that doesn't necessarily mean that it has, or can develop, the in-house talent and resources needed to address all of its Internet opportunities. Partnering with other companies should be a key strategy for expanding a business in the new millennium.

Executives should think carefully—and think big—when considering potential partners. Whether outsourcing Web site development services or other Internet consulting services, developing exclusive arrangements with portal partners, or joining forces with other medical device manufacturers, the decisions made today will determine tomorrow's success.

Companies should first evaluate what potential partners can do for their company as well as what their company can do for its partners. For example, many new Internet companies (the Clicks) lack significant customer relationships, which are a major resource of more established players (the Bricks). But Bricks need to be careful, too, as they align with Clicks, many of whom have made big-splash entrances into the market but could have questionable staying power.

Don't rule out competitors as partners in today's upside-down world. Consider what has happened with the automakers, airlines, and now large medical device manufacturers and distributors. Many companies in these industries have banded together to develop their own business-to-business (B2B) enterprises rather than deal with the newer dot-com start-ups. Recently, 10 medical technology companies—including Johnson & Johnson, Becton Dickinson, Boston Scientific, and GE—formed the Global Healthcare Exchange, an electronic marketplace designed to streamline purchasing and other processes. Similarly, in recent months a number of distributors have joined forces to create their own alliance, called the New Healthcare Exchange.

Medical device companies should also think creatively about ways to partner with select customers as they, too, come on-line.

Finally, senior managers must understand and agree with the analysis and rationale for various partnering strategies, and be active in drawing up agreements and creating contract terms with which they're comfortable. Partners appreciate that top management is interested and involved, and are likely to take a more serious approach if they know senior leaders support the relationship.

4. Think Globally. While the U.S. economy currently leads the Internet and telecommunications race, medical device companies' biggest opportunity may well be the ability to conduct global business much more easily and quickly than ever before. How can medical device companies take advantage?

5. Redefine Your Product Line. For years, medical device companies defined their product lines in terms of market niches such as diagnostics, surgical equipment, capital equipment, home care, medical supplies, and so on. While some of these terms will continue to apply to existing product lines, the Internet world—and its accompanying hordes of better-informed consumers, easier-than-ever-to-distribute-products portals, and other innovations—changes the way medical manufacturers have traditionally thought about their product lines.

Now it's essential to listen to consumers' needs through a second filter: how can your company fill needs with information technology as well as with medical technology? Could consumers plug in devices to the Internet for readings from a local or faraway hospital or clinic? In what new ways will consumers want to be treated as they become increasingly familiar with on-line and wireless technologies?

How might you think differently about your product lines?

6. Use the Internet to Enhance Business Operations. The Internet offers many ways to streamline business operations—even if your medical product line remains the same. We're living in amazing times, so few ideas about the future are too far-fetched to ignore.

Among the many business functions the Internet is already changing are the ways companies sell and distribute products, respond to customer requests and questions, and educate customers about products and service offerings. (Quick hint: Combine healthcare information, education, and entertainment to capture the largest audience; many consumers grew up watching television and consider it the model for visual communication.) Does your company buy and sell products and supplies on-line yet?

Think about how your company can take advantage of on-line business functions as well as what role technology may play in educating sales reps, clinicians, and other audiences on-line. The whole area of distance learning has huge implications for healthcare and has barely been tapped.

7. Become a New-Economy Company. Workplace rules are changing at an incredible pace but, no doubt, we ain't seen nothing yet. Casual wear now replaces business suits at many companies. Businesses are eschewing offices in favor of open-space environments and telecommuting. Some firms now offer flexible hours and work arrangements, or creative perks such as bring-your-pet-to-work day or yoga classes, based on each person's interests.

Can "old-economy" cultures of rigid office hours, prescribed dress codes, and more-structured job functions hold on to talented employees and survive? With the advent of the Internet, overnight express mail, cell phones, and laptops making work a viable option at all hours of the day and night, the real question should be: How can companies build and maintain workforces that thrive in the new economy—yet don't burn out?

To a degree, the answer lies in becoming a new-economy company. This is a difficult time for many senior managers, who must change their notions about company cultures, work rules and roles, dress, hiring, compensation, and motivation.

A new-economy culture spotlights communication: companies tell employees the firm's values and goals, but the employees have a say in the decisions and directions the company sets. Innovative firms will use multimedia technologies to have real-time chats with employees. Companies also need to ask employees what they like about the culture and what they would change—and then make changes based on that feedback.

New-economy players are also more flexible and family-friendly, recognizing that many employees have both children and older parents to care for as well as life-balance issues to address. So more businesses offer flexible hours, job sharing, and telecommuting options. Companies should also strive to make the most of the growing virtual workforce of talented independent contractors who can add major value without incurring major overhead.

And to ensure both on-site and off-site workers can function well as a team, smart organizations facilitate interaction among workers from different divisions and backgrounds. At General Electric, young talent who "live and breathe" the Internet work alongside older, more seasoned executives so they can learn different skills from one another.

8. Set E-Mail Strategies. Managing and perfecting companywide e-mail strategies should be a priority for all medical device companies. While e-mail can streamline and speed a company's communications with both internal and external audiences, it can also distract professionals from other priorities. How much productivity is currently being wasted across your company due to the inefficiencies created by the Internet e-mail communication revolution? How much time and energy should top managers and other employees spend on responding to and addressing e-mail communications rather then being out in the field actually talking with and developing relationships with customers?

9. Communicate Your Plan. No matter what a medical device company's type or size, one thing is certain: question number-one from employees, customers, investors, and board members is likely to be: "What are your e-technology strategies?"

Unfortunately, medical device companies have lately been very slow to respond with anything new on the Internet front. To be fair, Medtronic recently announced a major investment and exclusive arrangement with WebMD.com, and a variety of the major medical manufacturers and distributors are planning joint B2B initiatives. But the great majority of companies haven't set Wall Street abuzz with any exciting Internet plans.

So medical device companies' first priority should be developing an Internet strategy. The second priority is developing a corresponding communications plan to ensure that employees, customers, investors, board members, and potential partners are not only aware of the company's most-recent product developments but also of its progress in relation to global information technology, company and product-line identity and branding efforts, and consumer-directed healthcare.

Ideally, a company would have resources to communicate its desired messages to numerous audiences, including investors, employees, priority customers, "next-in-line" and potential customers, distributors, suppliers, and so on. In reality, most companies can probably afford only a very targeted communications plan. The key, then, is to determine which audiences a company most needs to reach, with which messages, and with which communications vehicles, since certain audiences respond more favorably to some media than to others.

One mistake companies make is continuing to develop and use traditional communications materials and strategies across multiple market segments. In these days of growing multimedia technologies, consider diverse avenues to reach customers. Instead of running the same broadcast ad across an entire state, for example, a company might consider whether a newspaper insert, banner ad on a particular Web site, or broadcast fax message might reach certain parts of their audience more effectively.

10. Remember the Core Business and Workers. As many changes as the Internet is bringing to the business world, there are still some practices it simply can't address: quality control problems, major backorder problems, and so on. Nor can it create new, exciting medical products. While technology and IT professionals are in the spotlight now, remember that your company was built on medical technology innovation, and that is where the focus should stay. And workers in this core area should be reminded of, and recognized for, the high value they bring to the company's bottom line.

Fast-Forward: 10 Ways to Think Differently About Your Company's Internet Strategies

1. Make sure the buck stops . . . somewhere. One department in an organization should be appointed "information central" for the business's Internet strategy to ensure that Internet efforts are leveraged and cohesive.

2. Rome wasn't built in a day. Develop an Internet strategy that meets today's business needs, but beware of unrealistic short-term expectations.

3. You need a little help from your friends. Partnering with (the right) other companies and organizations should be a central part of a business's Internet strategy.

4. Think globally. Medical device companies' biggest opportunity may well be the ability to conduct global business more quickly than ever before.

5. Redefine your product line. Smart companies now try to fill customer needs with both medical technology and information technology.

6. Envision the impossible, and believe it will happen. The Internet will enable companies to enhance business operations in ways that may seem far-fetched today. Go ahead: dream!

7. Forget the old workplace rules and focus on: "I want to be viewed as a new-economy company." New-economy companies approach corporate culture, workplace responsibilities and roles, and employee relations very differently from their old-economy counterparts.

8. Manage and perfect your companywide e-mail strategies. E-mail can radically streamline operations—or it can become overwhelming, cutting workers' productivity.

9. No news is bad news. Communicate, communicate, communicate the company's Internet strategy to employees, customers, investors, board members, and potential partners.

10. Stay focused. As amazing as the Internet is, it will likely never replace your core business!


Be a Leader

Ready or not, the Internet and the related revolution in communications technologies are moving at lightning speed, affecting every industry and every company. Medical device companies that forget they are operating in a new economy are likely to miss opportunities that will be available as the new economy develops and matures.

References

1. EW Boehm, Sizing Healthcare eCommerce (Cambridge, MA: Forrester Research, 1999).

Teri Louden is president of The Louden Network (San Diego). She can be reached via e-mail at connect@louden.net.