Here’s how leaders can avoid this…
Over the past 15 years, MedTech has entered a more volatile and demanding era. Hospital systems face mounting pressure, Chinese competitors are reshaping the market, non-clinical decision-makers have greater influence over purchasing, and global supply chains are increasingly complex and vulnerable. The assumptions that supported growth in the past are no longer reliable.
One thing that has not changed, however, is how often companies build their growth strategies on false assumptions about their customers. Compared with 15 years ago, medtech firms conduct more customer research, have access to more data, and equip their employees with more readily available tools, including AI, to gather information about customers.
So why do many companies still end up making major investments and critical decisions on the wrong foundations?
In work spanning over a decade, we have helped a stoma-care provider redesign their products to cater for the diversity of real bodies, as opposed to a singular, ideal body type. The consequence was a strategic shift away from a pipeline of marginal product improvements towards a new growth platform built around fit. It created value across the care ecosystem while giving the company a stronger basis for differentiation and growth.
We have also worked with a hemodialysis provider that built sophisticated machines for experienced healthcare professionals, even though many of its users around the world had extremely limited medical education. Our research – which highlighted the practical consequences of this mismatch – gave the company confidence that investing in one global platform could do more than reduce development and operating costs. By guiding non-expert users through safer, more intuitive treatment, it could increase relevance in the largest growth markets and give the company a distinctive basis for competing with rivals in a way that resonated with its ambitions.
Once real-world insights have surfaced, a new growth strategy can emerge… an original strategy that stays in sync with customers, not only today but in the years to come.
What we observed is that it is not helpful to view this work as the responsibility of one person or one function. It is the result of a much more complex interplay of factors: the company’s founding story, past success stories, central functions that are removed from the everyday realities of customers, competitors that often make similar assumptions, and data points that, whether intentionally or not, are used selectively to confirm and reinforce existing beliefs about what good looks like and what is true for customers.
This is also why it can be so difficult for companies to escape their echo chamber. It requires coming face to face with a reality powerful enough to reawaken people to a new truth. It requires a new understanding of customers that adds layers of meaning and explanation. And it requires a process for surfacing the difficult tensions, conflicts, and sources of misunderstanding among leaders.
We recently worked with a global medical technology company on exactly this topic. The leadership team realised that it had built its growth strategy on idealised assumptions about what customers prefer and want. The team immediately recognised the gap between this ideal world and the real world when the insights were held up in front of them like a mirror.
One of the executives put it eloquently: “The insight that we had designed for the ideal rather than the real really hit me. It dawned on me: it is not them who have to change. It struck me how deeply rooted my assumptions, and our assumptions, have been. It also explained why we have so many internal conflicts. We design products and solutions for the ideal world, but our territory managers operate in the real world, trying to convince customers to choose us. We are caught in this tension between the ideal and the real.”
Once real-world insights have surfaced, a new growth strategy can emerge. One that is more focused and easier to execute, that rallies people from different functions and markets around the same idea, that drives faster results, including in the next quarter, one that is difficult for competitors to copy and delivers more durable results. In other words, an original strategy that stays in sync with customers, not only today but in the years to come.
Many struggle to deliver on the growth commitments they have made to investors because the underlying assumptions were wrong. At the same time, they miss new opportunities for growth, opportunities with greater potential for differentiation, because many competitors are trapped in the same echo chamber.
It is no secret that medtech is under pressure. After a decade of acceleration between 2012 and 2022, industry growth, margins and return on invested capital have largely plateaued, while medtech’s share of the S&P 500 has fallen by more than half in four years. Novel product approvals have also flattened for seven years, making growth harder and more costly to achieve. Yet earnings growth is still forecast at 9.6% annually through 2029, suggesting that the opportunity remains, but companies need better strategies to capture it.
So, the next time you enter a strategy review meeting or begin preparing for your next strategy cycle, ask yourself: Is your growth strategy built for the ideal world or the real world?
