Sunday, September 27, 2015

"Deflationary Economics" and Medical Technology Commercialization

About five years ago, venture capitalist Mark Suster posted a blog titled The Amazing Power of Deflationary Economics for Startups, which applied Clayton Christensen's disruptive innovation concepts to the success stories of the internet.  To summarize (see chart above):  initially lower quality products/services that do one or two things really well at ridiculously lower prices for underserved customers displace overpriced, full-featured competitors that try to please demanding incumbent customers.  Hence:  Amazon, Craigslist, Skype, etc.

Healthcare innovation is just beginning to catch up, as addressed in Dave Chase's recent Forbes article The Amazing Power of Deflationary Economics for Health Ventures.  This perspective is aligned with a key message in our MIN-Corps Lean Launchpad workshops: adoption is much more likely if your product/service is a WHOLE lot better at one or two things that REALLY matter to target customers, in a way that drastically reduces their costs vs. current alternatives.