On Friday, April 1st, Medtronic, the world’s largest medical device company and insulin pump manufacturer, held its first ever Diabetes Advocacy Forum. Twenty-three diabetes bloggers, organizers, and otherwise-advocators were flown in and hosted for a day of presentation and discussion at the Medtronic facility in the Los Angeles area.
I’ll admit it, my expectations were low. Firstly, when I say “the Los Angeles area,” what I really mean is Northridge, which is about two miles north of where I grew up. Famous for being the epicenter of a really big earthquake, but other than that, pretty much a humdrum suburb of LA. Not exactly a tourist destination. And secondly, I feared the conference would merely touch the surface of Medtronic as a company, focusing on how they could better reach out to and befriend diabetics using social media, rather than how they could improve their products.
Those reservations, though, were easily subdued by my excitement at the prospect of another opportunity to spend time with some of the wonderful diabetics I have met online, many of whom I met in person at the Roche Social Media Summit last June. So, I drove up to Los Angeles (through traffic, mind you, even at 8:30 on Thursday night!) with mixed feelings, but good hope for a meaningful visit.
And here I will be frank: The Medtronic team put together an event that really impressed me. (Take note, please, Medtronic bosses and department heads who are responsible for approving the budget for forums like this!) In one packed day, we met not just the press and social media representatives, but also engineers, product strategists, and division directors. We heard the stories of the founding of the company (in a garage in 1949, with the first ever battery-powered pacemaker), of the son with diabetes, of the best friend and nephew and grandmother and so on with diabetes– and that did indeed reinforce my (perhaps naive) optimism that companies really do care, and that essentially most people really do want to help other people. We also heard the strategies– what is next for Medtronic? What holds back new products, and what is being done to keep development moving forward? This gave me hope that the good will which was evident in Medtronic’s staff would not be lost to poor process management.
In other words, the most encouraging part of the day for me was that it was clear Medtronic knows the precarious position it stands in, and also has defined strategies for moving forward. According to figures presented at the forum, Medtronic has over 400,000 insulin pumps in the market worldwide, and supplies 70% of the pumps used in the US. It is, without a doubt, the most established name in the insulin pump market. I wear a Medtronic pump, and I have since 2005. At the time, I was given a choice between the Medtronic Paradigm and the Animas; I chose the Medtronic because it was slightly smaller, and my doctor implied that most of his patients chose it. Since 2005, I have had several models, and each has been relatively reliable. Sturdy. Dependable.
These, of course, are all good things, and crucial to the Medtronic pump’s success in gaining the large market share it has. It’s simple to use, and doctors and insurance companies can trust that they will not fail unexpectedly.
For years, then, Medtronic has been at the top of the pump market. But, the landscape is changing. Diabetes is a complex, personally-managed disease, and now that insulin pumps are a standard part of care, pump-wearing diabetics are beginning to request different features and more choice. And, as it turns out, the things pump-wearers want are not necessarily the same thing the doctors and the insurers list as most important.
Doctors and insurers rarely use the machines; it is important that they are failsafe and easy to instruct users to operate. For wearers, though, now accustomed to relatively accurate and reliable pumps, other wants have risen to the top of the list. How does it feel? Can I wear it under a dress? Will the adhesive bother my skin? Does it work with the meter I have? Does it integrate with my iPhone?
With the growing market of pump wearers, this new customer voice matters. And new companies are springing up to address these new customers. Tandem, a venture backed company in San Diego, is aiming to make the iPhone of pumps. Cellnovo wants to integrate with smart phones and augment real-time diabetes management. The Jewel pump promises 6 days of tubeless tininess.
And Medtronic? As Allison Blass of DiabetesMine pointed out at the conference, the Medtronic pumps look the same as they have for the past decade.
But, they are reliable. And predictable, which is good for the original pump choosers, doctors and insurers. It’s the new voice of patients, however, that is drawing so much attention.
To some of you, this problem facing Medtronic– a changing landscape of customer desire– sounds familiar. And it should; this is not a new problem. In fact, this problem was analyzed and characterized in depth by Clayton Christensen’s 1997 book, The Innovator’s Dilemma. In his book, Christensen (who, incidentally, is a type 1 diabetic) took a long look at the hard drive industry as a case study of success and failure in the face of rapid technological change:
“This book is about the failure of companies to stay atop their industries when they confront certain types of market and technological change. It’s not about the failure of simply any company, but of good companies— the kinds that many managers have admired and tried to emulate, the companies known for their abilities to innovate and execute. Companies stumble for many reasons, of course, among them bureaucracy, arrogance, tired executive blood, poor planning, short-term investment horizons, inadequate skills and resources, and just plain bad luck. But this book is not about companies with such weaknesses: It is about well-managed companies that have their competitive antennae up, listen astutely to their customers, invest aggressively in new technologies, and yet still lose market dominance.” (p. 7)
What Christensen found was that these good companies– companies like IBM, Seagate Technology, and the like– failed not because they couldn’t keep up with the pace of change when new technologies entered the market. In fact, established companies, Christensen argued, excelled at advancing and improving technology when it fit into the framework they had established. It was the existing companies, not new entrants, that pushed the boundaries of storage space and access speed with the 16-inch drives in the 70s and 80s.
However, trouble occurs when new technologies come with shifting customer bases, and established firms, beholden to their existing customers, can’t make the directional changes necessary to adapt to the new environment. In the hard drive industry, this meant that the established firms scoffed at the notion of smaller, 8-inch drives initially; they couldn’t be made with enough megabytes-per-dollar to interest their customer base, all of whom had large centers with mainframe computers and cared more about bitspace than physical space. New firms, therefore, jumped into the gap that the established firms left, and made smaller, albeit less able to store data, drives. The trick was– the new firms were responding to a new set of customer demands, coming from companies interested in making smaller, personal computers. These companies were less concerned about cost per megabyte, and were instead interested in drives that would fit into smaller computers with lighter software demands.
So, not interested in the new set of customer use-cases, the established 14-inch drive companies didn’t respond quickly enough to disruptive technology that answered a different set of demands than they were used to, and were left behind.
And where does Medtronic fit in here? Without a doubt, they are an established player in the market. With 70% market share of pump users, they’re doing well. Further, they have been at the forefront of improvement of the existing technologies, with small, reliable pumps, predictive alerts, sensor integration, and so on. But, the customer use-cases are beginning to change, and Medtronic now is faced with the innovator’s dilemma– the customer voice is clamoring for new features and new technology, but meeting those needs requires a foresight of planning and investment that is not easy for a large established company. New challengers like Tandem and Cellnovo are more agile, and can focus on niches in the new markets. Will Medtronic be able to keep up?
Before this summit, I probably would have shrugged and said, “I don’t know. I have to put tape on this glucose sensor to keep it from falling off. Not exactly the mark of a product that is well-designed.”
But here’s what so impressed me about the forum: I didn’t make this connection to The Innovator’s Dilemma. It’s perfectly apt, but I didn’t think of it. They did. Lane Desborough, a product strategist at Medtronic, presented the analogy in his talk, and, more importantly, presented the steps they were taking to make themselves more agile, more lean, more able to respond as the new, pump-wearing customer starts demanding that medical devices look more like consumer electronics. He spoke about his son, a type 1 diabetic, who wanted to know why some products were small and easy to use– hummingbirds– whereas his diabetes tech seemed large and slow-moving, like elephants. And, he spoke about his background, coming from the world of control systems at oil refineries, where algorithms and processes have been perfected over decades. When his son was diagnosed with diabetes, he immediately saw the parallels between the work he was doing– controlling variance from a set of inputs to generate desired outputs– to the need for automated glucose control in diabetics. He spoke, too, about what he was doing now at Medtronic, pulling from his experience with complex control systems and from his interest in lean development to help push the company in innovative directions.
This new blood on the Medtronic team, with experience from other fields, exemplifies the fact that Medtronic is aware that it must shift in order to stay current, bringing in both novel ideas and a willingness to veer away from the way it’s been done for the past decades. Desborough was not alone, either. We spoke to Greg Meehan, the new head of the CGM Business unit which was recently separated from the insulin pump unit. And, our factory tour was led by a Six Sigma Black Belt, which is business-speak for “engineer who specializes in manufacturing process optimization.” Medtronic’s move to bring in fresh ideas and to reorganize existing business structures says a lot to me about their commitment to innovation, both in terms of technology and market focus.
So where does that leave us? Medtronic will need to shift paths, without losing any speed, to fend off the new market entrants that appeal to the different sort of pump customer who  has developed. But, they know that, and they’re changing to meet the new needs. Will they succeed? I don’t know, and I don’t have nearly enough business experience to guess. I hope they do, though, because I wear a Medtronic pump, and I like what they’ve done so far, and as long as they are willing to push technology forward to the benefit of their users, I would love to see them keep competing in the pump space.
To that end, then, my final thoughts for the Medtronic team: you seem to have a strong focus on software and hardware engineering, and you seem to be hiring good people in those areas. Push your analytics forward by opening up the data, and bringing in all those minds who love good Artificial Intelligence challenges, and, simultaneously, hire the best human factors engineers and user-interface designers that you can. Find your Jef Raskin, your Michael Graves, because the I want a pump like a pancreas– smart and responsive, but also so natural that sometimes I forget it’s even there.
I think another aspect of this challenge is that the FDA also needs to innovate. It’s stuck in a mindset where newer devices from existing companies (devices that add some amount of functionality to an older device) are more likely to get approved that a new type of device that may defy categorization or similarities. I think changes in the FDA will enable more innovation in diabetes devices, the challenge is how to do this without sacrificing consumer safety.
Karmel, Thank you once again for writing such a great article.
You are the best.
Thanks, Karmel.  I was thinking some of these things myself, so I appreciate your write-up.  I was glad that Medtronic thought to bring management from outside of the medical profession when they decided to put Lane in his current position.  When I chose an insulin pump in 1998, I went with a startup founded by a woman named Dr. Katherine Crothall called Animas Corp.  The reasons were rational: for one, the pump, unlike the Minimed 508 that was being sold at the time, delivered basal insulin in half-unit increments while the smallest increment that the 508 delivered was 1 unit increments, plus… Read more »