Open Innovation Business Models Health Technology Competitiveness

1
Open Innovation Business Models- Health
Technology Competitiveness

• Dr. Michael Brennan
• Dept. Marketing Entrepreneurship Strategy
• Ulster Business School

2
Life and Health Sciences Exemplar UK Medical
Devices Industry

• The UK medical devices market is the fourth
  largest market in Europe
• Valued at around 7.2bn
• Healthcare markets are growing at 7-12 per year
  and the estimated world market by 2015 is 240bn.
• www.abhi.org.uk 2009

3
BERR Medical Biotechnology Sector

• The UK's medical biotechnology sector is the most
  mature in Europe and second globally only to the
  US, with 40 of public biotech companies and 17
  of all European biotech companies (2005).
• Approximately 450 biotechnology businesses in the
  UK
• Employing 21,830
• Revenues around 2.63bn.
• www.berr.gov.uk, 2009

4
Market Challenges in Health Industry

• Regulatory
• Medicines Healthcare Regulatory Industry (MHRA)
• Economic
• National Institute for Clinical Excellence (NICE)
• NHS Purchasing and Supply Agency (PASA)
• Patient
• National Patient Safety Agency (NPSA)

5
Innovation

• As a student of innovation for more than twenty
  years, I still find it amazing just how difficult
  innovation continues to be
• John Seely Brown,
• Xerox Palo Alto Research Centre

6
Innovation

• Innovation everybodys talking about itits a
  top national prioritybut it isnt easy!
• John Bessant Joe Tidd
• Imperial College, London

7
Competing Theories of Innovation

• Social or individual perspectives,
• Internal or external perspectives
• A planned rational process
• The individual hero innovator
• The creative individual who networks extensively
• Inter-firm collaboration
• John
  Storey

8
The Innovation Space

• Whats the organisation trying to do?
• Product improvement /new product development
• Getting lean the quest for excellence / radical
  process change
• Extending, deepening, segmenting markets /
  creating new markets
• Changing business models / rewriting the rules
• John
  Bessant Joe Tidd
• Imperial
  College, London

9
Innovation as an open process

• The next frontier in innovation is to open the
  business model itself
• Henry Chesbrough

10
The Virtuous Innovation Circle
The Virtuous Circle Broken
11
The Economic Pressure on Innovation
12
Contrasting Principles
13
The Business Model as a Cognitive Map Across
Domains
Measured in the Technical Domain
Measured in the Social/Economic Domain
A successful business model creates heuristic
logic that connects technical potential with the
realisation of economic value. (Chesbrough,
2003)
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The elements of a business model (Chesbrough
2003)

• Target market
• Value proposition
• Value chain
• Costs / margins
• Value networks
• Competitive strategy

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Elements of a business model

• 1.Target market the users to whom your product
  / service is useful and the purpose for which it
  will be used.
• 2.Value proposition the value created for users
  by the offering based on the product / service.
• 3.Value chain this coordinates the many
  activities needed to deliver the offering

16
Elements of a business model

• 4. Costs and margins how a customer will pay
  and how much to charge.
• 5. The value network set of inter-organisational
  links / relationships necessary to create a
  product of service.
• 6. Competitive strategy the competitive
  strategy for a chosen market.

17
Business Model Types

• Business Models are not all the same
• The proposed Business Model Framework (BMF)
  posits six types of business model from very
  basic to highly sophisticated that enjoy
  tremendous advantage

Externally aware
Platform player shapes markets
Undifferentiated
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Five Matrix Horizon Sectors

• Advanced Engineering (Transport)
• Advanced Materials
• Agri-food
• ICT
• Life and Health Sciences