What are disruptive innovations in healthcare? The health systems of developed countries are globally confronted with an increase in their expenditure which is greater than that of their revenue. The deficit generated is all the more serious in that it is structural. Despite the innumerable reforms aimed at reducing costs and / or increasing revenues, it seems that the long-term solution does not lie at this level but at another, more structural and systemic one.
Schumpeter’s work and the concept of creative destruction have given rise to multiple developments, particularly on the issue of innovation as a driver of structural change and economic growth. According to the author: “Capitalism (..) constitutes, by its nature, a type or a method of economic transformation and, not only is it never stationary, but it could never become it. However, this evolutionary character of the capitalist process is not only due to the fact that economic life flows in a social and natural framework which is constantly changing and whose transformations modify the data of economic action: certainly, this factor is important , but, although such transformations (wars, revolutions, etc.) frequently condition industrial change, they are not the primary drivers. The evolutionary nature of the regime is no more due to an almost automatic increase in population and capital, nor to the vagaries of monetary systems – because these factors, too, are conditions and not root causes. In fact, the fundamental impulse that sets and keeps the capitalist machine in motion is impressed by the new objects of consumption, the new methods of production and transport, the new markets, the new types of industrial organization – all elements created by the capitalist initiative. (…) From the charcoal oven to our contemporary blast furnaces, or from the history of energy-producing equipment, from the water wheel to the modern turbine, or from the history of transport , from the coach to the plane. The opening of new national or foreign markets and the development of productive organizations, from the craft workshop and manufacturing to amalgamated companies such as the U.S. Steel, constitute other examples of the same process of industrial change which incessantly revolutionizes the economic structure from the inside, by continuously destroying its aged elements and by continuously creating new elements. This process of Creative Destruction constitutes the fundamental fact of capitalism: it is in this that capitalism consists, in the final analysis, and any capitalist enterprise must, willy-nilly, adapt to it. “(Schumpeter)
In other words, economic growth emerges through creative destruction, where the “old” is permanently destroyed, thereby freeing up new resources for the “new”.
What you will learn
- INNOVATION AND ECONOMIC CHANGE
- DISRUPTIVE INNOVATIONS IN HEALTHCARE
INNOVATION AND ECONOMIC CHANGE
From an economic point of view, this theory leads to saying that companies (or systems) are inevitably confronted with permanent changes which then make their original skills (or their functioning) obsolete, according to a discontinuous process. Their dominant position would then be weakened, even erased and this would therefore explain the permanent changes in the competitive landscape. This reasoning applies, in fact, to an organization in the broad sense, like that of the health system.
The accumulation of discontinuous changes could then be at the origin of the concept of disruptive innovation (disruptive innovation) which can be defined as a technology which has been judged to be underperforming by traditional consumers but carrying in it new performances. These new performances would then be capable of radically upsetting the competitive landscape and the economic system of a given sphere, as mentioned in the definition given by Christensen, who is the researcher who developed the theory of disruptive innovation: “The disruptive innovation theory explains the process by which complicated, expenses products and services are transformed into simple affordable ones. It also shows why it is so difficult for the leading companies or institutions in an industry to succeed at disruption. Historically, it is almost always new companies or totally independent business units of existing firms that succeed in disrupting an industry ”.
To do this, we will rely more particularly on the work of Christensen et al., Who explored this subject in his thesis. Note, however, that if most theories are directly applied to businesses, the same reasoning can be done for an organization or a system at large.
Discontinuous innovation: definition, consequences and origin
Before defining disruptive innovation, it is necessary to quickly come back to 1) what innovation is in the broader sense and in particular to the fact that it occurs in a recurring but also discontinuous manner, 2) the changes that it generates in the competitive landscape and, in particular, 3) the failure of dominant firms to cope with these changes and finally, 4) what role the environment plays in this failure.
A discontinuous innovation can be defined as an innovation which creates, on an ad hoc and momentary basis, a change or a displacement of the basic skills of the firm. Such a change may be due to a new technology, a new business model or to regulatory changes. Technologically, a discontinuous innovation is, for example, a substitute technology such as digital image (versus analog image); but it can just as much concern a product or a process.
Consequences for the firm
Numerous studies have shown that while dominant firms are capable of innovating in a stable and regular environment, they are less efficient than new entrants in innovating significantly when sudden changes in technology or business model appear. They would not manage to optimally manage major changes, which would lead them to lose market share or even disappear. The example commonly given on this subject is from Kodak.
Internal reasons for the failure of dominant firms
Various explanations have been proposed by researchers. Note in particular the theory of the path dependency; according to this theory, firms encounter difficulties in modifying their trajectory which is dependent on the path they have followed in developing skills related to their business model. Therefore, they would become vulnerable to any technological changes that do not correspond to their intrinsic skills.
As we mentioned in a previous work, in a dynamic conception, the notions of skills and learning become vectors of self-reinforcement. Learning is therefore the basis of irreversibility effects since it reinforces the specificity of the skills held by the actors and limits their ability to learn new ones. Dosi et al. conclude in the gradual exhaustion of technological opportunities along the particular trajectory of the firm. Skills guide actions, and most of the time individuals and organizations act in a certain way because they have the skills to do it and don’t choose what to do and then build the required skill. Whether it is about routines, technologies, learning, this analysis, largely inspired by evolutionary theories and applied to organizational phenomena, highlights the existence of self-reinforcement mechanisms which would explain the confinement of agents. in a model even though it is experiencing significant dysfunctions.
Firms would therefore advance on a trajectory and would constrain themselves ever more until they exhaust the potential of the paradigm in which their economic choices are inscribed.
For some researchers, the consequences of the dependence path in relation to discontinuous innovations must be analyzed from two points of view:
- on the one hand, internally, within the firm, with its skills and resources;
- and, on the other hand, externally, on the market and the environment.
Regarding the internal aspects of the firm, the modifications introduced by the innovations would be badly managed because of the organization of the firm, which, through its search for efficiency, would have been more and more hierarchical and “mechanized”, as it grows. However, this ultra-structured organization would have the drawback of limiting its capacity and efficiency to integrate innovations, including its own. There would be a major dilemma here between, on the one hand, the need for the firm to structure itself in order to be efficient and, on the other, to keep sufficient flexibility to adapt to changes and integrate innovation, in order to survive. long-term. The paradox that firms would therefore be faced with is that of being able to both develop new products or processes on the basis of their body of skills in order to generate a competitive advantage without, however, letting this generate rigidities.
Further explanations or clarifications on this dilemma have been provided by researchers. For example, for Henderson and Clark, the reason for the loss of competitiveness in a changing environment would be primarily due to organizational inertia and the limited rationality of agents.
Teece notes, however, that this dilemma can be mitigated through complementary assets (eg, distribution channels, associated service organization, value chain relationships, complementary brands, products or technologies). These are resources or capacities that would allow dominant firms to limit the impact of technological changes, by a shock absorber effect, by giving them the time necessary to renew their body of skills and their capacities.
Finally, neoclassical economists consider that if dominant firms lose their position, this is due to the fact that they have no incentives to invest in innovations, given their dominant position and the fact that this would mean for them to cannibalize their existing income and invest in uncertain areas.
External reasons for the failure of dominant firms
Beyond the firm itself, innovation can have a negative impact on customers or other actors in its network, by challenging their interests. Therefore, for the innovative firm, it is a matter of being attentive to the implications that its innovations may have for its entire environment; close links with its external network and an in-depth study of the reciprocal interests of the various actors in the chain is therefore necessary to master the implications of technological changes. This subject is at the center of the reflections of the theories of organizational strategic change.
An example of the difficulty for firms to introduce an innovation is that of digital watches. This innovation should, a priori, quickly replace the traditional watch. However, this was not the case because the original distribution network did not react according to the plan envisaged. The explanation is that the targeted distributors (traditional watch and jewelry stores) were making substantial profits from the sale of traditional watches which, moreover, required regular maintenance and repairs, made by them. Since the digital watch is a cheaper product (implying a lower margin per sale) and not requiring repair (loss of turnover), the distribution network had no interest in substituting the products. As a result, he reacted coldly to the arrival of this innovation.
Theory of disruptive innovation
Research has therefore highlighted the importance of firm and market boundaries in understanding the difficulties induced by discontinuous innovation. On this subject, the work of Christensen is a reference. In a series of articles and research, he has developed the Innovator’s Dilemma Theory, and the concept of disruptive innovation. At the origin of this concept, Christensen studied the hard disk market (and previous technologies: floppy disk drive and CD) between 1970 and 1990. He thus noted that if many technological changes had taken place during this period, the position of the dominant firms had shifted due to the emergence of cheaper drives, smaller in size and easier to use, even having initially reduced storage capacity.
Chistensen sums up the disruptive innovation theory as follows: “The disruptive innovation theory explains the process by which complicated, expensive products and services are transformed into simple affordable ones. It also shows why it is so difficult for the leading companies or institutions in an industry to succeed at disruption. Historically, it is almost always new companies or totally independent business units of existing firms that succeed in disrupting an industry. ”
In the rest of this part, we will therefore explain the main elements of the theory of disruptive innovation, starting with 1) what exactly disruptive innovation is, 2) how it differs from other types of innovation. , 3) which markets it targets, 4) the importance of the environment and in particular of the existing value network and finally 5) the reasons for the failure of dominant firms to develop disruptive innovations.
Disruptive technology and innovation
Christensen defines “disruptive” technologies as follows: “Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value. Products based upon disruptive technologies are typically cheaper, simpler, smaller, and, frequently, more convenient to use. ”
Gradually, following these reflections on the diffusion of disruptive technologies, the authors tried to broaden the field of this theory to that of services. In the most recent work of Christensen, it is in fact sometimes a question of disruptive innovation and sometimes of disruptive technology.
According to Christensen, the term disruptive technology has been a source of confusion for reasons of semantics or technological connotation. He therefore clarifies in his latest book: “disruption is an innovation that makes things simpler and more affordable, and technology is a way of combining inputs of materials, components, information, labor, and energy into outputs of greater value”.
Sustaining, disruptive, radical, incremental innovation
The difficulty for dominant firms is therefore both to address their existing customers with new technologies and at the same time to develop innovations that are outside the existing market. Christensen explains the failure of dominant companies by distinguishing between what he calls “sustaining” and “disruptive” technologies.
The technologies described as “sustaining” have in common the fact that they improve the performance of existing products, based on the criteria of existing customers. Technologies qualified as “disruptive”, on the other hand, have low performance, according to the criteria of existing customers, but have new functionalities or attributes. They are simpler and less expensive than so-called “sustaining” technologies.
He also differentiates “sustaining” and “disruptive” innovations from those which are “incremental” and “radical” by the fact that the terminology he uses is in relation to what makes the value of the technology with regard to the network. value (network value) of existing customers. Consequently, a so-called “radical” innovation can be qualified as “sustaining” and an “incremental” innovation can be qualified as “disruptive”.
“Innovations that drive companies up the trajectory of performance improvement, with success measured along dimensions historically valued by their customers, are said to be sustaining innovations. Some of these improvements are dramatic breakthrough, while others are routine and incremental. ” And further to specify: “A disruptive innovation is not a breakthrough improvement. Instead of sustaining the trajectory of improvement in the original plane of competition, the disruptor brings to market a product or a service that is actually not as good as those that the leading companies have been selling in their market. Because it is not as good as what customers in the original market or plane of competition are already using, a disruptive product does not appeal to them. ”
Low segments and new markets: the targets of disruptive innovations
In this work, Christensen developed the idea that disruptive innovations emerge in a specific segment of the market or in a new market. In particular, he distinguished between disruptive technologies which were aimed at the lower level of the market (low-end) and those which addressed a new market (new-market).
According to him, the disruptive innovations that appear in the lower end of the market are those that allow companies with an adequate business model, to offer cheaper products with lower performance; discount stores are a good example of this type of strategy.
On the other hand, there are, according to him, disruptive innovations which are addressed to a new market; the personal computer is the most representative example of this subject: “[…] though they don’t perform as well as the original products or services, disruptive innovations are simpler and more affordable. This allows them to take root in a simple, undemanding application, targeting customers who were previously non consumers because they had lacked the money or skill to buy and use the products sold in the original plane of competition. By competing on the basis of simplicity, affordability, and accessibility, these disruptions are able to establish a base of customers in an entirely different plane of competition…. In contrast to traditional customers, these new users tend to be quite happy to have a product with limited capability or performance because it is infinitely better than their only alternative, which is nothing at all. ”
As a result of these controversies and developments, other authors in their time proposed a new definition of disruptive innovation, which was recognized by Christensen himself and which is more comprehensive. It would then be “an innovation which introduces a different set of features, performance and price attributes relative to the existing product, an unattractive combination for mainstream customers at the time of product introduction because of inferior performance on the attributes these customers value and / or a high price – although a different customer segment may value the new attributes. ”
Christensen considers that the environment (and in particular its customers) constrains the company, even indirectly, and leads it to decision-making in the allocation of its internal resources which make it abandon or not integrate disruptive innovation. . He anchors this reflection in the concept of value network: “the value network is the context within which the firm identifies and responds to customers’s needs, procures inputs and reacts to competitors”.
The history of the hard drive market, according to Christensen, relates to this issue: initially new companies introduced low storage capacity hard drives that only appealed to a niche market, small in size and at low margins. The dominant firms have lost interest in this type of product (cheaper) and these micro-market segments and have continued to develop disks with high storage capacity, even going beyond customer demand. Technological advances by dominant firms have, however, enabled new entrants to gradually integrate higher capacities into their own products and achieve sufficient performance for a larger market. The dominant firms, following the demands of their most demanding and profitable clients, have continued to raise the technological level. However, they did not realize that this demand corresponded to the high segment of the market, while at the same time disruptive technology had reached a level satisfactory to hang the middle segment of the market (the largest). They then lost market share to new entrants who had built up a new network of value, with new customers.
Reasons for the failure of dominant firms to develop disruptive innovations
Christensen shows that dominant firms generally win the battle for technologies described as “sustaining” while new entrants win those for disruptive technologies. The explanation is that the dominant firms remain captive of their investors / financiers and main clients. As a result, the company’s internal resources are not allocated to innovation projects that would initially be less profitable.
“During the years in which a commitment to succeed with a new innovation needs to be made, disruptions are unattractive to industry leaders because their best customers can’t use them and they are financially less attractive to incumbents than sustaining innovations. In a company’s resource allocation process, proposals to invest in disruptive innovations almost always get trumped by next-generation sustaining innovations simply because innovations that can be sold to a firm’s best customers for higher prices invariably appear more attractive than disruptive innovations that promise lower margins and can’t be used by those customers ”. “The companies that had successfully sold their products or services, often dominating industries for decades, almost always died after being disrupted. Despite their stellar record of success in developing sustaining innovations, the incumbent leaders in an industry just could not find a way to maintain their industry leadership when confronted with disruptive innovations. The reason, again, is not that they lack resources such as money or technological expertise. Rather, they lack the motivation to focus sufficient resources on the disruption. ”
Christensen also identifies a managerial problem explaining these choices: the development of disruptive innovations requires specific skills and capacities that do not have or, above all, do not exploit, the dominant firms.
According to him, the solution for dominant firms to succeed in developing disruptive technologies would then be to outsource them, through spin-offs. This would allow the new structure to proceed calmly with a series of trial-error without pressure from the existing value network of the dominant firm because the latter cannot do so given the uncertainty of the results of the development of disruptive technologies. .
Complements, amendments and controversies on the theory of disruptive innovations
Christensen’s work has given rise to much research and sometimes to controversy; amendments were also made by Christensen himself.
Different themes can thus be reviewed because they lead to clarification – or to leave open! – what exactly are disruptive innovations and what are their characteristics. Thus we will come back to 1) the question of market segments, 2) the diffusion of innovation on the markets and, finally, 3) the importance of the value network and the concepts that surround it such as that of network, value and business model.
High segment and existing market
Many innovative technologies had broken through even though they were no less expensive or easier to use than those they had replaced and appeared in the upper third of the market (the high end segment). These innovations were characterized by their ancillary performance. The authors noted that these technologies were just as problematic for dominant firms as traditional customers did not demand these new attributes and performance. The mobile phone is particularly cited as an example: it emerged in the 1980s among a specific population – executives – who were ready to pay a high price even though the sound qualities were lower compared to those of wired telephones; but to the extent that they were “portable”, this represented an important attribute for this clientele. In fact, historical customers who disliked this feature continued to shy away from this innovation until the sound qualities improved and the prices came down.
The example of the wireless network versus the wired network for PCs still gives reason to think about the definition of disruptive innovations: in this specific case, the speed performance is lower but the laptop PC allows the introduction of a remote connection such as new performance. However, unlike the case previously explained, it is aimed at an already existing market segment, which was not initially envisaged by Christensen.
Market and distribution
The diffusion of disruptive innovations to the market has also given rise to developments. Indeed, as seen above, Christensen considers that the diffusion of disruptive technologies takes place mainly in the lower segments of the market or in new markets, before subsequently invading the original market.
For some researchers, the important question is not about this subject but rather about the marketing strategy used. It is important to understand precisely the structure of demand and to see how disruptive innovation impacts it. In particular, it identifies various critical performance thresholds which must be reached successively. These correspond to a minimum performance that the consumer can tolerate associated with a net utility, integrating the price. Indeed, he considers that technological change is induced by the diminishing marginal utility of modifications made to existing technologies.
Other researchers believe that the difficulties of disseminating a disruptive innovation could be reduced if firms were able to develop a
Increased “customer competence” or that they were more attentive to the needs of their customers. Christensen et al. identify that firms should focus not on the performance of their technology but on what their customers seek to do; in other words, on the result they seek to achieve and not on the means they use to achieve it. He re-expressed it in 2010 as follows: “A business model innovation is the creation of a new set of boxes, coherently established to deliver a new value proposition. Because the value proposition is the starting point for every business model (…) we take you on a deep dive into the concept of “helping customers do more effectively, conveniently, and affordably a job they’ve been trying to do. Understanding the job that customers are trying to do is critical to successful innovation. ” He strongly criticizes the traditional segmentations made by the marketing teams that he considers ineffective: “The problem with segmentation schemes such as these is that this is not at all what world looks like to customers. Stuff just happens to customers. Jobs arise in their lives that they need to do, and they hire products or services to do these jobs. Marketers who seek to connect with their customers need to see the world through their eyes – to understand the jobs that arise in customers’ lives for which their products might be hired. The job and not the customer or the product, should be the fundamental unit of marketing analysis. ”
Business model, network, value and value network
In Christensen’s work, the introduction of disruptive innovations creates a problem for dominant firms and often leads them to failure because they do not match a demand from their existing value network.
Indeed, the introduction of a disruptive innovation within an existing firm changes its business model. However, to the extent that the company is in a way captive of its customers, they induce a certain type of allocation of internal resources that is not in the direction of disruptive innovation. In this case, the problem for firms is therefore to find an alternative financial logic allowing the introduction of a disruptive technology where their original customers are not asking and which, as a result, will offer lower profits.
However, research has focused too much on just one aspect of the business model and on a restrictive conception of it. According to the author, the notion of the value network has not been explored enough, even though it is a key determinant of the failure or success of dominant firms.
As seen previously, the notion of a business model has become more prevalent over the course of Christensen’s work, thus making it possible to adopt a holistic point of view and a systemic perspective of disruptive innovation. However, the concept of business model remains rather vague although it always refers to “how firms create and capture value”.
Like “a system of interdependent activities that transcends the focal firm and spans its boundaries”. Other researchers highlight the fact that there are necessarily two major components in a business model: a “business system” and a “profit model”.
For some researcher, the concept of a business model is even broader: “Business models are generally concerned with how firms create and appropriate value by interacting with their environment.” Consequently, according to him, the notions of value and network are two essential components. In other words, for the author, and compared to the work of Christensen, the business model of a firm is not limited to the single customer but also concerns the value proposition of the firm, its model financial efficiency (revenue model), its customer strategy (the way to reach the customers), but also its environment, in the broad sense of the term.
Christensen et al. in his latest book gives a definition of the business model comprising four elements. It joins that of these researchers on certain elements but also refers to the theory of management by resources or resource-based view: “The starting point in the creation of any successful business model is its value proposition – a product or service that can help targeted customers do more effectively, conveniently, and affordably a job that they’ve been trying to do. Managers then typically need to put in place a set of resources –including people, products, intellectual property, supplies, equipment, facilities, cash, and so on- required to deliver that value proposition to the targeted customers. In repeatedly working toward that goal, processes coalesce. Processes are habitual ways of working together that emerge as employees address recurrent tasks repeatedly and successfully. These processes define how resources are combined to deliver the value proposition. A profit formula then materializes. This defines the required price, markups, gross and net profit margins, asset turns, and volumes necessary to cover profitably the costs of the resources and processes that are required to deliver the value proposition. ”
Continuing his reflection on the environment, the researcher studied the implications of the change in business model in terms of managerial complexity. Indeed, it is a question of knowing how firms must manage their internal organizational transformations to introduce disruptive innovation, but also to understand how they must manage the environment, so that it converges with their business model. Little has been said on this last point. In fact, in the simple case of a strongly vertically integrated firm, controlling its entire supply chain, the introduction of a disruptive innovation must be able to be managed from the sole point of view internal to the company, through these organizational capacities. But when the firm interacts with a large external network of actors, the adequate solution must be totally different. This has in fact not escaped Christensen who recognizes that the question of “how firms interact with their environment” should be investigated.
Beyond the environment, the theory of disruptive innovation emphasizes the company’s value web. While Christensen is not always completely clear on what he means by this term, it is possible to agree that the company interacts within a network that includes many players, not just customers. However, the concept of the network is not only complex and has many definitions and applications, but it has characteristics which make it a conceptual object in its own right and on which a digression is interesting.
There are many disciplines which use the concept of the network: physics, sociology, economics, etc. Moreover, within the economy itself, this notion is applied to various fields such as networks of services, distribution, care … In fact, behind this diversity hides that of the very conception of the network: this one. this is sometimes understood in the organizational, technical, social, etc. sense.
Generally speaking, networks can be defined as a set of ties (relations) among nodes (actors). Nodes can be types of organizations, individuals or groups. it is therefore an “emerging form” of organization of economic activities, the minimum definition of which refers to the existence of entities and relationships between these entities without them being precisely qualified. Networks can therefore be analyzed at different levels.
For economists, this term refers to a concept whose purpose is to describe a new modality of coordination that goes beyond the traditional market-based versus hierarchical coordination dichotomy. In other words, networks can be seen as a hybrid form between the market and the hierarchy. The theory of transaction costs developed by Williamson had taken the first steps in this direction, considering that depending on the level of transaction costs, the firm had an interest in internalizing (hierarchy) or externalizing (market) its assets, which was likely to profoundly modify the boundaries of the firm. Networks can then be identified as a hybrid form of the firm.
Other developments on the network have focused on social media, based on both industrial network theory and Actor Network Theory (ANT). For the former, the network should be seen not only from the point of view of users but also from the point of view of all actors, through the resources they control and the activities they develop. For the proponents of the ANT theory, technologies should also be considered as actors of the network because they interfere with humans; Latour insists that if a separation is made between humans and machines / technologies, there is permanent interference between them; this phenomenon needs to be analyzed. According to this conception, these networks then go well beyond firms and also integrate equipment, culture, etc. The entire environment therefore has an impact on the network. Therefore, modifying or building a network of actors is a question of managing conflicts, powers and forces of resistance to change etc.
The characteristics of network activities are also important; these are direct externalities, also known as the “club” effect, and indirect externalities. The direct network effects are linked to the existence of “club” effects: below a possible congestion threshold, each user sees his satisfaction increase with the number of users of the same good or service as him. The network effect then appears as a demand externality that is exerted between the users of a set of compatible products or services. Indirect effects also emerge from networking. In this case, consumers do not directly benefit from the total number of consumers but from the fact that this induces an increase in the services offered, linked to the increase in consumers. It is therefore a supply externality. The simplest example is the telephone. The direct externality (the club effect) allows users to increase their satisfaction with the increase in the number of users (they can thus communicate with an increasing number of people). In addition, their satisfaction is indirectly increased as the telecommunications companies offer more services (different subscription plans, messaging services, etc.).
These theories are indeed interesting considering the importance of the value network in the theory of disruptive innovation. Indeed, the resources that firms own and transform represent a value for their network and consequently, firms are dependent on the network. More precisely, all interactions are important in the network and therefore firms must constantly adapt to their environment. In this regard, Christensen et al. points out that while most of the economic literature on network externalities has focused on the size of the network, he considers the issue of the compatibility of its constituent members to be even more important.
The notion of value has also been widely commented on by researchers because it is at the heart of the demand for the value network, which, ultimately, could be less homogeneous than initially envisaged. This is therefore not without consequences for the analysis.
In this regard, we can usefully recall that in neoclassical economics, the notion of utility is used to understand that of value. Thus, the utility of any good measures the overall satisfaction that the individual derives from this good13. The level of total utility depends on the quantity of the good, and the marginal utility of an imperfectly divisible good is the change in total utility induced by an additional unit of that good. The marginal utility of a good (perfectly divisible) is therefore the variation of the total utility for an infinitesimal variation of the quantity consumed.
Finally, the value of a good is the quality of a good based on its utility (we speak of use value) or on its capacity to be exchanged (we speak of exchange value), in reference at the asking / offered price. Microeconomics also uses the concept of willingness to pay. It refers to the amount that a given consumer is willing to pay to acquire and consume a given good or service.
Value is therefore a subjective notion, dependent on the individual. This subjectivity is also underlined by marketing theories where ultimately value appears to be context-dependent, created and determined at different levels, both within the firm and outside.
The definition of the value network given by Christensen has been widely criticized as being very customer-oriented and, for many researchers, Christensen does not take into account the fact that the network in which a firm interacts is a kind of ecosystem which, from when an element is modified, modifies itself.
However, it seems that his vision has evolved because he gives a rather broad definition in his latest book: “A value network is the context within which a firm establishes its business model, and how it works with suppliers and channel partners or distributors so that together they can respond profitably to the common needs of a class of customers. The business model of each of the firms in the value network tends to be consistent with those of the other firms in the system – firms from whom they buy and to whom they sell. Together, their business model determines their perceptions of the economic value of various innovations, shaping the rewards and the threats they expect to experience through disruptive and sustaining innovations. ”
To illustrate what a value network represents, Christensen et al. gives the example of the advent of LCD (liquid crystal) screens in televisions, introduced by Sony, in competition with the original technology of cathode ray tubes. This disruptive innovation (cheaper, simpler, allowing to make products less bulky but of lower quality in its infancy) encountered difficulties in terms of distribution because the distributors-repairers were not interested in these new devices. Indeed, this technology, unlike the previous one, did not give rise to repairs which ultimately constituted the bulk of the distributors’ business model. In addition, with Sony achieving low margins per device and the distribution network being very fragmented, the distribution of devices through the existing network, over a huge territory, was not profitable. What ultimately made Sony successful was the fact that at the same time, discounters like Kmart and Wall-Mart appeared, targeting cheaper products (they weren’t selling CRT televisions). , too expensive for their customers), with little or no after-sales service and using the whole “low-cost” chain. As Christensen ultimately points out, it was not Sony that won the battle for disruptive technology, but the entire value network from component manufacturers and distributors to customers. He adds on this subject: “each of these value networks was internally coherent in terms of technologies and business models. You couldn’t just do a single-point hot-swap of Sony for RCA into the original value network, because of the technological and economic interdependence that spanned the materials and components suppliers, designers, assemblers, distributors, and retailers in the original system . ”
Obviously, Christensen emphasizes this notion of ecosystem here. In this regard, we can mention that an ecosystem designates (in biology) the whole formed by an association or community of living beings and their biological, geological, hydrological, climatic, etc. environment. (the biotope). The elements constituting an ecosystem develop a network of exchanges of energy and matter allowing the maintenance and development of life. There are interdependent relationships between the different elements of an ecosystem. The biotope and the biocenosis (all living beings) then form an inseparable system in unstable equilibrium, but which is able to evolve and adapt to the ecological context. A rapid modification of one or more parameters of an ecosystem leads to a rupture in the ecological balance.
Following this definition, we can therefore say that firms evolve well in an ecosystem (their value network) and that the introduction of an innovation modifies the existing equilibrium, all the more strongly as the innovation is precisely disruptive.
New versus existing value network
Christensen considers that disruptive innovations emerge in a new value web. However, some researcher considers that this is not the case because the firms do not all operate in the same market segments; it would then be surprising if one of them does not correspond to the one on which the disruptive innovation is introduced. We therefore find in the thinking of these researchers the issue of value which can be different from one individual to another and consequently on the market, once we stop considering it as a “black box. , To use the term commonly used by economists.
In this regard, he gives the example of digital images and (digital) video surveillance. The simpler installation and lower maintenance costs of these systems, he said, made up for the higher prices and lower initial image quality. the threshold of usefulness of a disruptive innovation can sometimes be lower in the upper or middle segments of the market if this innovation reduces the total costs of the client company. In the case of the video IP18, although the price is higher and the technology is inferior, its complementary attributes have been a source of value for the customers. This example also highlights the fact that the utility threshold is perceived differently depending on whether one targets certain actors or another, within an organization. Thus, the usefulness of an innovation in surveillance has traditionally concerned the security departments of companies. However, by speaking directly to the IT (Information Technology) departments of the same companies, and no longer to the one in charge of security, it appeared that the usefulness of the innovation was different depending on the department considered. He also notes in this regard that IT companies have become increasingly present in the video surveillance market compared to traditional companies that used analog cameras.
The example of the digital image in the photo is similar. This innovation makes it possible to take multiple images (at a very low cost), to instantly visualize the result, to replicate them, to send them, to manipulate them in a simple way. Despite the poor photographic quality of digital originally (4 megapixels against 36 for a film camera), this innovation spread to the high end of the market, to photography professionals, who were ready to pay the new product was very expensive because the complementary attributes of this technology enabled them to save considerable time (no more waiting for development, maximum capacity to handle photographs, to edit them, etc.).
The question would therefore not necessarily relate to the “height” of the market segment (and therefore of the price) in which the innovation is introduced, but rather that of the utility / value that it brings to the considered segment. It seems that if the digital image has been introduced in the high segment of the market, at a correspondingly very high face price, it is because, for this segment, innovation had the capacity to reduce the total cost of the firm. : by largely compensating for the time spent by professionals involved in the use of traditional devices. In a way, it is not so much the purchase price that is considered by the customer as the full cost of his activity, in which the innovation is part. In the example of the digital camera, this conversely represented too great a cost / utility ratio for the occasional photographer to invest in this innovation; It was only when the price of it fell that the report became interesting and innovation crept into other segments of the market. In fact, the difficulty of the analysis at this stage is that of measuring the utility / value which is reflected in many ways, including intangibly, and which is therefore often difficult to measure.
Summary of controversies and amendments
Finally, following its controversies and amendments, the precise identity of a disruptive innovation still seems unclear to us even if major elements have been identified.
- disruptive innovations could also emerge in existing markets or in high market segments. The underlying question is that of measuring utility on the one hand, and cost (face versus full) on the other.
- disruptive innovations create a great number of distortions within the company but also within its external network because it is a node of interdependence. The consequences are numerous. In particular, some of the resources previously used and valued lose their value; disruptive innovations are therefore “competence-destroying” in this sense.
- a network is a sum of captive mutual interests which is therefore characterized by divergent and converging incentives. As soon as disruptive innovation impacts this network, it comes up against resistance from certain players: those who lose their powers. In all cases, the disruptive innovation will modify the existing pattern, including architectural, of the links between the different components. It is therefore necessary to be interested in the consequences of the changes on each one, in the value created for some and destroyed for the others, in the modification of the distribution of the value between the actors and in consequences in the barriers which arise for the adoption of innovation (technological or incentive barriers). Ultimately the question is therefore how the firms will manage their internal resource allocation process AND how they will manage their environment.
- If we consider that the network is a group of different actors with different preferences (and values attributed to), resources and activities, it is then clear that the firm will only exercise a limited level of control over its environment ; However, and by reciprocity, it must be able to influence a (small) part of its environment.
o By focusing more on the notion of value that innovation can represent for a client rather than on that of (technological?) performance, firms should be able to increase the adoption of their innovations, by specifically targeting “ good ”actors. Appropriate marketing strategies, making it possible to influence the perception (and therefore the value) of customers or network players must be able to be usefully put in place. If we follow the idea that the adoption of a disruptive innovation is for each actor a function of his incentive and his skills, we can proceed to strategies for identifying the position of the key players in the network. One can give the example of a communication strategy, via opinion leaders who can persuade other potential users of the benefits of adopting the innovation. Still in communication strategy, it can be useful to communicate differently on innovation depending on whether we are addressing certain types of actors rather than others, considering the fact that what makes the value of the innovation is not the same depending on the type of actor. It is therefore a question of carrying out an analysis of the value network. This approach aims to describe how value is created and distributed in a network, how the activities of a company impact others and how other actors behave, which differs from Porter’s analysis which tends to analyze the environment from an “adverse” perspective.
o Strategies can also be implemented to change the original position of potential opponents, helping them to train, for example since innovation may have destroyed their original skill; it is therefore necessary that the entry, facilitate the learning process to overcome “competence destroying”.
- New entrants would be better able to introduce a disruptive innovation because they do not have a well-established network, unlike established firms which have developed strong relationships over time which also give them a competitive advantage (on established technology). On the other hand, this existing network, these long-established interrelationships, are all elements of rigidity, as are their value proposition and their business model. Research on these subjects also mentions this search for flexibility as a key determinant of success for established firms. Entering firms are by definition less interconnected and therefore their business model is more able to adapt; they can more easily implement a trial-and-error approach to find the optimal business model. Note, however, that the examples of the e-reader and the tablet PC distributed mainly by large IT firms would suggest that these companies have succeeded in the bet of flexibility and have twisted their necks to the predictions of researchers, on condition that these companies innovations are of a disruptive nature and not radical, in the sense of Christensen.
Ultimately, neither the clients nor the firm control all of the elements; rather, there are interrelationships between different actors within a network which, in turn, impose constraints on the firm. The actors, their power, the existing activities, the resources used all influence the business model of firms. So a disruptive innovation can be seen as a systemic business model change since it distorts the network and its interconnections and the interdependencies of all business models. It is indeed an ecosystem of business models which, when disruptive innovation appears, becomes unbalanced and which will have to change as a whole to find a new balance.
While various points of the theory advanced by Christensen can still be debated, the fact remains that this theory opens up interesting perspectives for seeing to what extent disruptive change is possible, under what conditions and what are the consequences. The essential point in our view is that the implications of this theory go far beyond the firm directly concerned by the disruptive innovation. They concern an entire ecosystem and its interconnections which can only be understood as a whole. Applied to the field of health, this theory suggests a new way of reading the future of our sick (!) Health systems, as we saw in the previous chapter.
DISRUPTIVE INNOVATIONS IN HEALTHCARE
The theory of disruptive innovation is particularly rich and it naturally leads to reflections on a particular field: health. Indeed, as Christensen himself emphasizes, health is widely considered to be a very specific subject, no doubt because it is at the intersection of several areas: health (medicine in the broad sense of the term, biology), people (and sociology), economics, innovation, etc. Moreover, as we emphasized in the first part, its cost continues to increase without effective solutions allowing to guarantee access to health for a population having been found. Economists even say (in a somewhat humorous way) that healthcare is “a perfectly imperfect market”.
These specificities led Christensen to take a specific interest in this field, since he devoted his latest book to it, with the support of two doctors: The innovator’s Prescription.
In this chapter we will therefore see the main reflections of Christensen on this subject, in what state of “disruption” is the health system.
The Innovator’s Prescription: disruptive innovation applied to health
Christensen’s latest work undoubtedly deserves special attention as the theory of disruptive innovation is applied to the field of health. We will therefore see in this part 1) what is Christensen’s analysis of the dysfunctions of the American health system (which can very largely be transposed to the French system) and what are the answers he brings to it, 2) we will briefly come back to on the main components of disruptive innovation, to finally 3) see how it is anchored in the health field.
Health issues and Christensen’s response
For Christensen, much of the current political debate about health deals with the question of “how to pay the cost of health care in the future? “. For his part, he considers that it is a bad question and he proposes to answer the latter, namely: “how to innovate in the reduction of costs while improving the quality and the accessibility of the care ? ”. He specifies that the question is not so much to find a financial solution to cover the costs (always higher) but to find a solution to make health more accessible, considering that care can be less expensive and of better quality.
To do this, he proposes to use the theory of disruptive innovation which has been successfully applied to fields as varied as national defense, financial services, telecommunications, hardware (material) and software (software). IT, public education, etc … Indeed, according to him, the problem facing health is not unique, on the contrary it is the same as that encountered in most industries where products and services have become so complex and costly that only a minority of individuals with high purchasing power can access them and where only a minority of experts can use them. These industries, as diverse as they may be, have nevertheless undergone significant changes and have managed to offer cheaper and more accessible products or services to a larger and less expert population. The transformative agent that has enabled this change is disruptive innovation, the building blocks of which he exposes.
Components of disruptive innovations
For Christensen, whose terminology we will respect as much as possible, beyond the controversies mentioned in the previous section, there are three constitutive elements of disruptive innovation as an agent of transformation of a system:
- A technological enabler. Typically, sophisticated technology aimed at simplifying, “routinizing” solutions to problems that previously required a complex, intuitive resolution process;
- An innovative business model which enables these simplified solutions to be generated for customers in a simple and financially accessible manner;
- A value network; a commercial infrastructure made up of disruptive companies that reinforce themselves through their interactions.
In addition to these three elements, Christensen adds a fourth, at the center of them, which has a particular role of facilitating interactions between the participants, a
“Lubricant”, within this new disruptive industry. These are the regulator and industry standards (Regulations and standards that facilitate change).
He gives the following representation:
Applications in the field of health
Applied to the field of health, the constituent elements of disruptive innovation can be broken down as follows.
Technological trigger in health
The technological trigger that would have the capacity to change the health care system is one that would provide the capacity to accurately diagnose the causes of disease and not just identify symptoms. These disruptive technologies in health are, for example, molecular diagnostics, in particular by imaging and telemedicine.
Indeed, Christensen points out that we are relatively powerless to identify a disease except by the symptoms it generates. However, these are common to several diseases; they are only one manifestation of one of them, which leads to diagnostic errors and therefore inappropriate treatment. When a precise diagnosis is not possible then the management is made thanks to a medicine which he qualifies as intuitive, practiced by highly qualified professionals (and therefore paid very dearly) who proceed according to a logic of trials -errors. Thanks to the experience and repetition of these, medicine has become empirical: pathologies are treated according to protocols, thanks to the clinical studies that have been carried out and the data collected. These protocols make it possible to treat
“Correctly” a patient, as long as he corresponds well to the average of patients who have been observed to react well to this treatment. However, it is only when one is able to identify precisely the diagnosis that the management can be done effectively for each patient, with their intrinsic differences, and that it is possible to put in place an adapted management and standardized. It is then a medicine qualified as precision.
Christensen mentions the fact that the progression from one side of the medical spectrum to the other is incremental. Medical care today has progressed considerably from intuitive medicine to so-called empirical medicine and is very similar to precision medicine. There would be only 16 to 20% of patients who would require so-called intuitive medicine.
This development now allows nurses to manage many infectious diseases and patients no longer need to be hospitalized. Diagnostic technologies allow similar transformations, disease by disease or by family of complex pathologies such as cancer, hypertension, type II diabetes, asthma, etc.
Innovative health business models
In health, many disruptive technological innovations have not resulted in lower costs, better quality of care or better accessibility to services. The reason given by Christensen is that the mode of delivery of care has been frozen in time, through two business models: that of the hospital and that of city medicine, both of which were put in place ago. a century, when medicine was intuitive. This lack of innovation – largely due to centralized regulation – is the reason for the high cost of healthcare.
However, for the author, generically, there are three distinct types of business models:
1) the solution shop,
2) value-adding processes and
3) facilitated networks.
The two traditional health care providers, hospital and city medicine, have an original “solution store” model. However, over time, they have also gradually slipped towards that of value adding process and facilitating networks. The consequence is that today these institutions have become particularly complex to manage and expensive due to their overhead costs. To counter this state of affairs, it would be advisable to return as much as possible to generic types of business models so as not to mix genres and generate savings.
Business model of the solution store type in healthcare
The Solutions Store business model is designed to diagnose complex, unstructured medical problems. Consulting firms, advertising agencies, R&D organizations and law firms fall into this category. Solution stores deliver value through the people they employ – people who use their intuitions, their reasoning skills to diagnose the causes of the issues presented and find the right answers. They are therefore experts who are therefore paid dearly. The work done in hospitals by specialists is of this nature. They are highly trained experts who will intuitively develop hypotheses about the causes of patients’ symptoms, test them and use the best available therapies to treat patients. If the patient responds positively, the hypotheses are verified and if not, the experts must reformulate other hypotheses, test them again, etc. until the best possible answer is found for the patient.
The remuneration system for solution store-type business models is generally that of a fee, sometimes partly based on results. But this is seldom the case because precisely the result depends on many highly uncertain factors and it can therefore rarely be guaranteed.
Business model of the value-added process type in healthcare
As the name suggests, organizations that have a value-added process-type business model use raw products or services that they transform into other more sophisticated products or services. Typically these are restaurants, car manufacturers, oil refineries or even educational organizations.
Many medical procedures are performed in a value-added process, after the definitive diagnosis has been made. This is the example of nurses who will provide post-operative care (for a hernia, cataract surgery, etc.). This type of value-added support always comes in second, when the diagnosis has been carried out, very often in a solution store. If these supports are carried out in a business model where there is only value-added process, they generally cost half as much as when they are carried out in an organization which mixes value-added process and the solution store (typically hospital services traditional). Outpatient clinics for ophthalmic surgery, orthopedics, cardiology are also good examples of value-added process.value-added process type organizations are generally paid according to the output of their process, while solution stores are normally paid according to the costs of their inputs. In addition, most of them guarantee the result thanks to their experience, to the repetition of processes which become ultra standardized, to the right environment, etc. that allow them to deliver the expected result. Most manufacturers thus determine their prices upstream of the sale and guarantee their products or services for a specified period.
As soon as we consider that medicine is empirical or precision type, we are then in a business model of the value-added process type. Thus in the United States, it is possible to see the “MinuteClinics” posting their prices for each procedure, as well as the ophthalmic surgery centers which do not hesitate to advertise them. Another, atypical example is that of Johnson & Johnson, which has reached an agreement with several European governments, guaranteeing the effectiveness of a molecule (Velcade®) treating multiple myelomas which can be diagnosed with a specific marker, on pain of reimburse the patient’s total treatment.
Christensen mentions that many consider that the value of health services provided by doctors or hospitals cannot be measured. But he considers this claim to be false, currently it cannot be measured because there is gender confusion between the value produced, the indicators and the payments which are incompatible with each other.
Business model of facilitator networks type in health
These are companies or organizations that allow their users to communicate with each other: for example, mutual insurance companies, internet exchange networks (such as eBay), etc.
This type of organization can also be a business model in health, especially for chronic diseases where changes in knowledge and patient behaviors have significant impacts on their health. Christensen gives several examples of this, such as dLife (diabetes networks), Waterfront Media and WebMD.
By harnessing patient data, they provide the opportunity for the patient to find “someone like him” and compare the progress in treating their disease with other patients, communicating and learning through them. In this case, accessibility is simple, fast, does not require expert knowledge and is very inexpensive.
Christensen emphasizes that this type of business model has particular characteristics because it usually occurs as a second step in a disruptive change. According to him, there are, in fact, two levels of disruptive transformation:
- the first is where the disruptive transformation comes from companies that emerge from the bottom of the market with simple applications and gradually move up the market segments. At this level of transformation, the new entrants and the old ones have an identical business model, generally a value-added process type.
- the second level of disruptive transformation comes when it is no longer just a question of buying and using simple and inexpensive products but when the development of these products or services costs next to nothing and is simple to achieve. When this happens, the business models are then quite distinct from the previous ones; they are neither a “solution store” type, nor a value-added process type but of the “facilitator networks” type. this is the example of the sale of music, moving from vinyl record (value-added process type business model) to CD (also value-added process type) and finally to MP3 (facilitator network-type business model). YouTube is a good example of a second level disruptive change in video development and distribution: now anyone with a webcam can shoot video; in these two industries (CD and video), facilitator networks have emerged and the participants have been able to exchange elements or valuable content between them because the development cost is almost zero.
As such, he considers that the current business models for the management of chronic diseases (solution stores or value-added process) are completely out of step with this type of disease because they lead the system to make money for professionals. with sick patients (who have an incentive to take care of them in a curative and not preventive way) while the facilitator networks allow them to be treated at a very low cost.
Articulation of business models among themselves
Christensen believes that disruptive innovation can play its role as a transformative agent in a multi-step scheme.
First, it proposes to specify the different business models of institutions, on the basis of their resources, processes and financial models, so that they are compatible with the nature and the degree of precision of the disease they take into account charge.
- Solution stores must focus on delivering care corresponding to intuitive medicine, at the corresponding costs.
- value-added process type hospitals must carry out well-defined and protocolized management procedures, after the diagnosis has been perfectly defined.
- And facilitator networks must be developed to deal with chronic pathologies, particularly sensitive to the behavior and knowledge of patients.
He advocates this fairly restrictive distinction, as it should be, between business models because it should, according to him, improve the measurement or determination of the value, costs, prices and margins achieved on each pathology. Note that solution stores and value-added process models can be created within the same hospital, provided that the distinction is clearly made.
A second wave of disruptive business models could then emerge within the three types of business models identified. Thus, the existing internet tools should allow general practitioners to replace specialists by finding themselves the precise diagnoses of patients, thanks to the process of interpreting symptoms that guide them in carrying out hypotheses and tests. This should make it possible to lead to less expensive primary care, while accessing the expertise of specialists who practice intuitive medicine. Likewise, outpatient centers of the VAP type should replace the hospitals of the solution store type. And these same outpatient centers should also gradually replace some of their specialist doctors with specialist nurses, etc.
The disruptive value network
The third disruptive element of Christensen’s theory is that of a value network that connects the different disruptive health business models. As the author points out, disruptive innovations are rarely compatible with old business models. The common mistake innovators make is believing that it would be faster and cheaper to use existing networks to disseminate their innovation. In this case, invariably, it leads to failure: the existing network ends up killing the innovation or transforming it in such a way that it can fit into the existing network. The reverse is never true!
This rule obviously applies to the health care system. Christensen therefore presents the difference between the existing value network and that which would be necessary for the realization of a disruptive model in health (see diagram below)).
He recognizes that this implies a great many modifications, starting with the availability of an individual electronic medical file and a general reform of the reimbursement and health insurance system because they will make it possible to connect the providers of care and thus play the role of system lubricant.
Consequences on health systems
The introduction of disruptive innovations in the health system requires changes in terms of regulation or the environment and will result in changing the health landscape.
The first change that is needed is that of the reimbursement system. As Christensen notes, most discussions of health system reform quickly stop when participants realize that the reimbursement system does not allow for these changes to be considered. Taking the example of the American system, he underlines the macro and microeconomic perversity of the incentives given by the reimbursement system which leads actors to go towards what is more profitable rather than towards what is not.
The fee-for-service example is one of the worst according to Christensen, because its incentive model is simple: it clearly encourages providers of care to increase the number of acts and if possible at high prices; this amounts, according to him, to adding fuel to the fire of the explosive costs of the health system!
One answer, he said, would be to couple a system of patient insurance bonuses on the demand side with a system of disruptive business models on the supply side, thus allowing the government and patients to obtain better care. quality and more affordable; he stresses that unless this reform is carried out simultaneously on both sides, it will not bring the expected gains. A payment / reimbursement system that aligns patients’ incentives (financial but also behavioral) with those of health care providers would give them the freedom to participate directly in their health and reduce costs.
Information technologies and facilitating networks
Information technologies are called upon to play a dual role, which is crucial, as it facilitates the emergence of disruptive business models. Thus, IT should facilitate exchanges and transform solution stores into facilitating networks. It will allow doctors, nurses and patients to interconnect and support each other. In addition, this will allow general practitioners to replace specialists and nurses to replace general practitioners. Then, these systems will make it possible to move from the “paper and pencil” model to a model of coordination between care providers; this will help prevent costly mistakes and involve patients more in their health.
The Internet allows the emergence of facilitative networks according to this pattern. For example, by allowing patients with the same disease to connect with each other, for physicians to share clinical studies, for general practitioners to have expert advice or to use, at through expert systems, knowledge and skills previously only in the field of specialists and, in the same way, for assistants vis-à-vis generalists, etc. As these systems develop, the business model of chronic disease management will evolve from the store of solutions to that of facilitator networks.
The second role of IT is to transform the cost and quality of care through the recording of medical data, via a personalized medical file open to all healthcare professionals and to the patients themselves.
Pharmaceutical and medical device industry
Christensen sees several changes coming for these industries. For the most part, the explanation comes from the development of precision medicine. This development would require investing no longer in therapy but more in diagnosis. However, the large pharmaceutical companies are focused on therapeutics which until now have provided them with high profitability. The development of precision medicine (and therefore of diagnosis) should lead to invalidating a large part of the existing therapies or, at the very least, to sharply tightening the market for each of them. Firms will then have to fragment their offer but this will no longer correspond to their business model, which is essentially based on that of their commercial successes or blockbusters.
In addition, Christensen observes that the big firms of the pharmaceutical industry operate a movement, slow but certain, of disintegration and choose to outsource their R&D, the realization of their clinical trials and even the manufacture of their products, which is coherent. with their search for profit and their business model. They keep, in a way that has made them their strength so far, marketing and sales. However, with the development of precision diagnostics, IT and enabling networks, the marketing and sales of these large companies will become obsolete. They were made up of experts, talking to experts (doctors); this will no longer be the case tomorrow. On the contrary, pharmaceutical marketing is becoming mass marketing, addressing itself more and more directly to the patient, by providing the patient with efficient self-diagnostic tools and information on appropriate therapies33. Whether for physicians or patients, the accuracy of diagnosis and information will allow them to make their own choices in many cases; the intervention of expert, specific sales forces is doomed to disappear. Eventually, what used to be a thorn in the side of the big pharmaceutical companies, namely their R&D and the conduct of clinical trials, will become what is really profitable in the value chain of the pharmaceutical industry. But it is precisely these functions that they are outsourcing more and more. For Christensen, the large pharmaceutical companies are taking the wrong option and abandoning the most profitable part of their future business to new entrants, namely the CROs (Contract Research Organization). By retaining marketing and sales which are becoming mass, nonspecific markets where competition from new entrants is easier, they themselves are digging into the branch of the tree they are sitting on.
Finally, the large pharmaceutical companies are also increasingly in competition with generic manufacturers who are developing their own originator products using a low cost business model. Christensen thus predicts the disappearance of the largest pharmaceutical companies.
Regarding the medical devices market, it should also evolve as equipment becomes smaller and smaller and more portable. If this equipment was centralized in specific sites (generally hospitals) initially, because expensive, bulky and requiring expert skills to be used, it should gradually be able to be decentralized, because of reduced size, less expensive and easier to use. The next stage of decentralization should therefore allow its equipment to be located in the practice of general practitioners or in the patient’s home.
In addition, the development of technologies associated with medical devices should also change the expertise required for many treatments. Interventional radiology is an example of these changes: today radiologists and other personnel (non-surgeons) are involved in the guidance of minimally invasive medical devices. As a result, the surgical procedure becomes simpler to perform. Ultimately, some interventions should be able to be performed by non-experts in the field of origin. For example, hysterectomies, performed by gynecologists, are increasingly performed by interventional radiologists using techniques to remove uterine fibroids, replacing total hysterectomy. Overall, it is possible to consider that the development of equipment and medical devices should make it possible to reduce the level of skills required, as is the case today in ophthalmology where the machine is gradually replacing most of the skills and experience required by the surgeon. The procedure is now carried out in 10 to 15 minutes in a quasi-automatic manner.
Changes in medical training and the structure of health care providers
Due to all the changes mentioned above, Christensen underlines the fact that more and more care will be entrusted either to disciplines other than the original discipline (example of interventional radiologists compared to gynecologists), or to general practitioners, either to clinical assistants or to non-medical personnel such as nurses or osteopaths whose original qualifications are less than those of doctors. There is therefore an urgent need to review the structure of care providers and to develop the appropriate training, including in learning how to connect between them.
If the need for specialists, experts, highly qualified, working in stores of solutions will always exist (if only because of the emergence of new diseases), these professionals should however prepare for a more collective practice. and no longer individual as was the case until now. The increase in chronic pathologies goes hand in hand with plural and complex pathologies, requiring to go beyond the boundaries of medical fields as defined to date.
Finally, a large part of the doctors of the future will have to devote a significant part of their activity to monitoring treatment protocols or managing care networks. As such, they will be required to be able to improve these processes, to manage organizations and people, which today hardly falls within their competence.
Faced with the limits of traditional solutions, the concept of disruptive innovation, developed by Christensen, not only brings hope of achieving a solution in the short or medium term, but also a robust theoretical framework allowing to feed future reflections on the evolution of health systems, on the one hand, in developed countries and, on the other hand, in emerging and even poor countries, constrained by reduced financing capacities.
Of course, the theory of disruptive innovation raises a number of questions and includes gray areas, but it constitutes a powerful base on which researchers can rely to propose a new health organization. Indeed, there are many voices to consider that the challenge now consists of “decentring” the healthcare system from traditional hospitalization to outpatient care, from hospital to city medicine, from medicine to outpatient care. prevention, etc. But these proposals lack theoretical foundations capable of legitimizing and guiding them; disruptive innovation theory gives them that.
In other words, the theory of disruptive innovation makes it possible to integrate these reflections into a broad theoretical framework and to clearly identify the path to follow. It also sets the limits for disruptive innovation to modify a system if it is not inserted into a coherent ecosystem where the role of the legislator (through a legislative and technological framework) appears primordial. It also gives, although we have hardly touched on it in this brief, the recommendations so that these changes can be made “at low cost”, by the human organizations behind the institutions of health. Indeed, the concept of disruptive innovation raises the question of the destruction of previous skills which cannot – or will not – be part of the change. Research on strategies for managing organizational change and the acquisition of new skills / resources should therefore shed light on the accompaniment and support needed for a disruptive change in our health system.
Finally, the theory of disruptive innovation opens up new perspectives for emerging countries. The example of China is quite significant in this regard.
Indeed, this country has, of course, become the world’s largest economy, accounting for more than a quarter of the planet’s GDP.
– According to the WHO report, China is now facing a major challenge: that of combining its very strong growth (forecasts of 7 to 8% in the coming years) with a more prosperous society, by reducing inequalities ; it must achieve a harmonious balance between economic growth and social development which can guarantee its long-term growth. The Chinese state is clearly aware of this problem and therefore wishes to increase the level of health coverage and increase the supply of care. This is all the more important as China “ages”. The one-child policy has still not been called into question at the national level and, in 2008, the “over 65s” were 100 million, or 8% of the population; they should be 340 million in 2050, or nearly 25% of the population. In 2010, the ratio of elderly people to workers was 16 percent. It should be 32 percent in 2025 and 61 percent in 2050. In addition, a report by the World Bank (2011) warns China about the economic cost and social from the increase in non-communicable diseases (chronic diseases). Predictions of the prevalence of cardiovascular disease, chronic lung failure, diabetes and lung cancer over the years are expected to double or even triple over the next two decades. Considering the cost of treatments and the resulting reduction in productivity, this would lead to a significant slowdown in economic growth and substantial social problems.
However, the organization of the Chinese healthcare system is far from complete; it is today the subject of political attention and an unprecedented rise in power, but the question both of the country’s financial capacity to allocate resources in this sector and of the training of the skills required for a health system quality remain unresolved. It is feared that the Chinese health system leaves out a large part of the population, especially rural ones.