Understanding Your Customer Is Crucial

KenDrazan

A trained organ transplant surgeon and past Stanford surgery professor who led several biopharmaceutical companies and founded a venture capital business, Ken Drazan is now head of the Johnson & Johnson Innovation Center in Menlo Park, Calif. His goal there is to catalyze early stage innovation and bring transformative medicines, devices, and consumer products to Johnson & Johnson by identifying, shaping, and on-boarding the most promising science and technology opportunities from universities, academic centers, and technology and biotech companies.

TEDMED: What’s the most remarkable innovation you are seeing in health tech or medicine, and what is driving it?

Drazan: In health tech, it’s the marriage of high-performance cloud computing with wearable devices. In essence, a wearable device can sense data from one individual, aggregate similar data from among a group of individuals, and draw conclusions relevant to one person. Wearables could be devices that a physician would use in the diagnosis of a patient, or that a physician prescribes for use at home by the patient.

This technology is already being used, for instance, in electrocardiograms, the diagnosis of ear infections, and the detection of skin cancers. An image from a single patient can be compared over the cloud with a database of others’ images. I propose that this approach will go mainstream and become a way for all ambulatory-based physicians to gain the kind of peer input that only happens regularly in academic medical centers today.

An important trend driving this is that connecting to the Internet and doing cloud computing has become a commodity. It’s no longer expensive and anyone can access that technology at any time.

Another innovative use of technology in a disruptive business model is Theranos’s reinvention of phlebotomy. They have developed the ability to draw one-tenth the volume of blood that a lab would typically draw and integrated it with a microfluidics technology that enables the study of hundreds of disease biomarkers. A patient’s blood sample can be compared to thousands of others’ with similar medical backgrounds to determine variance versus normality. The patient experience is simpler, diagnosis is much faster, and the cost to look at hundreds of biomarkers is comparable to the traditional cost to assess just one.

TEDMED: What’s the most important factor for entrepreneurial success in health tech—and is that different from your own key to success?

Drazan: The most important factor for determining success is accurately defining the unmet need. Many startup business plan summaries I see target undifferentiated and generally not explicit needs. Because of that, their business models are really inefficient. It’s crucial to define the customer need and stakeholders accurately enough to create a business model.

That is the same as my own key to success. I become the most successful when I understand who my customers and stakeholders are and when I’m unambiguous about determining what their real needs are.

To be clear, a customer is someone who pays for something, while a stakeholder is someone who can potentially influence the business model, but not necessarily pay for it. The stakeholder might be a supplier, or they might manage the channel, compete with the channel, or provide enthusiasm and support.

Say you’re providing a population health tool for people with diabetes. Your customer could be the patient, the doctor, or the health insurer. If the patient doesn’t need a prescription but you need the tool distributed, then doctors are the stakeholders because they might have an opinion that is supportive or adverse to it. One really has to drill down to understand who’s a customer versus a stakeholder.

TEDMED: For entrepreneurs with needle-moving ideas in global health, what are the keys to finding collaborators and supporters across specialties, industries, and geographies?

Drazan: The same question applies: Who is the customer? In the developing world it’s more difficult to answer. The parties that might normally pay for something in other markets have no capital in the developing world. You might have to go across geographic borders to find the true customer.

If you’re targeting the unmet need of hernia repair in Tanzania, for instance, the economy there either can’t pay doctors enough or the hospitals or governments don’t have enough money to buy the hernia mesh. So you have to go to a different customer, such as the Gates Foundation.

Conducting a very careful and deep local market map helps you understand how you might find new stakeholders and customers who could pay you to get there. That mapping process defines all the stakeholders; all those who provide economic support or derive economic benefit. That includes people as well as commercial and government entities.

Here’s an example: Potable water in the developing world has always been viewed as a fundamental problem to be managed by NGOs and governments. Several years ago, the CEO of Coca Cola was pitched on delivering potable water because Coca Cola has the most effective distribution capability in the developing world and in most countries. It has become a successful model of solving a global health problem with a commercial partner who has unmatched global and local expertise.

TEDMED: In 2020, you’re asked to give a TEDMED talk about the biggest transformation you helped bring about in your field. What is it?

Drazan: It’s behavior change. Behavior change in many disease categories would result in a significant transformation of outcomes and costs in many fields, whether it’s surgical, diabetic, mood disorders, and probably many more. Compliance with care and a broader collaboration between the patient, the provider, and the community would be a significant driver of value for companies, for our government, for tax payers, and for local economies. It is perhaps the most complex problem to resolve of all.

Bringing about behavior change comes down to better understanding your customer, in this case the patient. What are all the emotional, psychological, and business model tweaks that could increase compliance with medications, or that could increase rehabilitation after a major surgery? There could be innovation in specific programs, technology, monitoring technology, or business model incentives that would enhance the chance for success.

Could such changes come about in just 6 years? Absolutely.