How does Innventure get customers to embrace change?
When introducing disruptive technology into the marketplace, the biggest challenge is to compel the customer to stop using the solution that they have been used to and switch to something different. While consumers may try something novel like pet rocks or hula hoops, businesses need a quantitatively compelling reason to switch gears.
At Innventure, we have evolved to a model based on ICQVP – Immediate, Compelling, Quantitative Value Proposition. Here’s an example to illustrate. Prior to Innventure, some of our current leaders were working on a project together. That team created an automated microscope that could systematically search through anything that you could put on a slide (e.g., blood) looking for the proverbial needle in a haystack. Their task was to automate and dramatically improve the ability of a pathologist to find a few cancer cells against a matrix of millions of normal cells. As is common knowledge, earlier and more reliable detection leads to earlier treatment resulting in savings for the healthcare system – yet, human pathologists can misdiagnose sometimes. In short, the team was able to reduce the diagnostic process from hours to minutes with nearly 100% identification – a leap forward in cellular diagnostics.
Initially, when introducing this disruptive solution into the market, the team planned to sell instruments that would materially reduce the life cycle cost of patient care. They quantified this benefit to insurance companies and demonstrated that if the company bought a machine for a few hundred thousand dollars, they could save many millions of dollars in a few short years. However, the team quickly learned that the insurance companies would not pay for a system upfront that may yield a larger economic benefit to patients that could be in someone else’s insurance pool by the time those savings would have been realized.
That roadblock led the group to a business model that provided an immediate benefit to the payor while reducing the risk– a redesigned value proposition that provided the instrument to the payors for free but that included a revenue share for any new incremental dollars that the instrument was able to produce. Every time the instrument ran a reimbursable test, the team received a third of the revenue, and the client received two-thirds. This fundamental change in the business model is designed for rapid adoption and creating more value while significantly reducing risk for the clients. The benefits to the market were:
Immediate – Money received for every test that was run on the instrument
Compelling – Limited capital risk as it required no up-front investment
Quantitative Value Proposition – If reimbursement for a given test was $3,000; the client received 2/3 or $2,000. The client was motivated to use this instrument as this was new revenue that was previously outsourced to reference laboratories. Additionally, the ability to identify cancer cells with significantly improved accuracy meant immediate savings for health care systems because it saved them the cost of follow-on treatment for false positive patients. In essence, they had been treating people who did not have disease.
That lesson learned 25 years ago is now embedded into our business model, known as “ICQVP”.
