Business Model Innovation: Will Customers Pay for Your Product?
The statement “build it and they will come” was a great quote from the Field of Dreams. However, in business, the levels of startup failures indicate that this is a flawed way of thinking about building a business.
I love cool technology and in our space things that save lives are great. However, in my interview with Tom Denison, On the Life Science Success Podcast we were talking about the companies he invests in. Tom said “Does this innovation, whatever it is, solve a real problem and will somebody at some point in time, pay for it.” This statement stuck in my head. You can have the coolest technology in the world but will people pay for it?
I have always enjoyed innovation and the overall process of creating something that solves a problem. The key question that founders need to ask is:
How do I create (innovate) a way that people will pay for my technology?
In what way does solving this problem get people to pay for treatment, tests etc?
Emergo asked 636 presidents and top executives what their top concerns were for medical device companies. In the top three concerns, reimbursement. How we get paid for something is not just about making more money for the sake of making money. Your company will need the money to fund the growth or development of new products etc.
It makes sense to take the time to innovate your business model. In their book Blitzscaling Hoffman and Yeh have this to say about business model innovation. “A major mistake made by many start-ups is focusing on the technology, the software, the product and the design but neglecting to ever figure out the business.
Starting with your business model will allow you to think about how the product your company develops will land on how you get paid. “Business model innovation is how start-ups are able to outcompete established competitors who typically hold a host of advantages over any upstarts” (Blitzscalaing Hoffman, Yeh).
Build your business model and they will continue coming because your business has started the journey of being scalable.
Are customers willing to pay for your product or service?
Do you have a business model that works out how your company gets paid for your product or service?
If your business counts on reimbursement from private or government insurance do you clearly know the DRG’s and CPT codes that will ensure reimbursement?