Strategy is the essential framework for creating a marketable product or service. But how do you base your strategy on the reality of what customers will value rather than on guesswork? The Sequencing Division of Roche Molecular Systems faced the possibility of falling behind in a newly emerging technology area, even after making several technology acquisitions. In this fireside chat during GIL 2014: Silicon Valley, Roche Molecular Systems' Beth Button discussed with Product Development Consulting's Sheila Mello the need that drove the customer value assessment process at Roche, as well as the lessons learned and outcomes achieved.
Shelia: First, can you briefly introduce yourself?
Beth: I’m with Roche, housed in the Roche Molecular Systems building but Sequencing is not really a part of this business. We’re part of the diagnostics arm but we’re more research oriented. We work on high-tech DNA sequencing for research applications.
When I started about three years ago my business was under the life sciences umbrella. About 18 months ago, it became obvious this wasn’t working, so we reorganized and put research PCR under the molecular diagnostics and sequencing as an independent business.
Sheila: What drove the change?
Beth: Being a research component of a very large IVD company with a strong culture of quality and robustness was a challenge. Research requires you to be quick and nimble. Roche acquired the next-generation sequencing technology about seven years ago and it was disruptive. But Roche is not known to move quickly and underestimated how fast the market was moving. It’s like the Blackberry, which started as a leader but didn’t keep up with the technology. Roche can’t let that happen because sequencing is the future of molecular diagnostics.
Audience member: Who is your customer?
Beth: Our customers are researchers in the clinical space. In the future, we’ll be going to routine diagnostics like community hospital diagnostics labs. Currently our products require really experienced users. There’s a complex, laborious workflow. We’re looking at bringing in more automation to meet the clinical lab’s needs.
Sheila: Has anyone in the audience had an experience similar to this?
Audience member: I work for a robotics company in healthcare. Our situation is a bit of the opposite. We started in research and now we’re trying to commercialize. We’re dripping in technology, but have to decide: Which do we use to move forward? What is going to be commercially viable? We’re trying to determine what will work.
Beth: We had failures that brought us to this point. We weren’t investing as much in R&D as we should have. In the meantime, we were forming partnerships with other companies. The product Roche was rolling out as a result of that was a “me-too” product. When I came on board, I knew the landscape and the competition and understood the product was me-too and too late to market.
Sheila: What was the challenge in terms of getting people to change? You’re basically saying, “You didn’t do a good job.”
Beth: I’ve been in this position so many times. Even new leadership has a hard time pulling the plug. It’s often hard to pull back, and sometimes people didn’t have the courage or experience to stop a project. I’m a very outspoken person. When I went to the manager in charge of the me-too product, his first reaction was: “Roche has always been successful with me-too.” But that was like comparing a washing machine to an iPad. To convince him I had to collect facts and figures and go to the market, to get data to support what I was saying.
We brought in consultants for primary and secondary research. We prefer to stay in-house for product development. And for interviews we used cross-functional teams — regulatory, bench scientists, etc. — we want everyone to go in front of customers. You have to try to pick the right number of customers to allow you to do face- to-face interviews and observe their daily routine. We distill all that research and come up with the key features. Then we do broad surveys to validate what we think are priorities. We might get 300 specs out of the interviews but we have to pull out the top ten.
Audience member: One problem is that the customer doesn’t know what they don’t know. Can’t this be tricky?
Sheila: That’s where it really matters what you are surveying on. If the survey does not contain your solution, but rather the problems they have, you’ll get more valuable data.
Beth: When I walk into a lab to talk with the customer about sequencing, I’m not interested only in sequencing. I’m interested in when does a sample come in and the result goes out, and how can we make that whole process easier? We are an automation company also, so we look at the whole process.
Sheila: You’re looking for customers to tell stories about what got in the way of them doing their jobs and what were the consequences.
Audience member: Are all the surveys a snapshot in time or are they ongoing?
Beth: We do snapshots initially, but our projects have gates and we do go back and survey at various key points. The culture and market is changing so quickly we have to go back and reevaluate.
Sheila: The healthcare market is changing so fast. How do you stay abreast of what’s happening, especially with competitors?
Beth: We’re just deciding how to deal with that. It’s going to be a new concept for Roche. IVD doesn’t change quickly, so we haven’t had the need to keep up with fast market changes before now.
Sheila: Does anyone in the audience have ideas about dealing with change?
Audience member: You have to have continuous validation. When you develop a product, you always need to validate, talk to the customer and incorporate changes as you are going to market. Seventy percent of startups fail because people are building products nobody wants.
Audience member: In the entertainment business, we look at rapid experimentation. You put it out fast and evaluate; if it’s not working, you change. We have the ability to experiment so we don’t spend a lot of money on things that are not needed.
Audience member: Is it the product management unit responsible for doing that experimentation, or is it a special group that’s not distracted doing the everyday work for that product?
Beth: Our product marketers are the ones keeping up with the market. We have product managers looking at products. And we don’t ever launch something customers haven’t seen. We use customers as collaborators, evaluators and beta testers.
Audience member: We do have different groups who are not distracted, which works well from an innovation standpoint. But you have to bring in people from all the groups so you don’t form an elitist group that nobody in product management is going to respect or pay attention to.
Audience member: I’m from a small company with limited resources and funding. I have to pick the most important customer value activities. What would be the minimum in this process I should be doing?
Beth: At a minimum, kick it off right. Get a cross-functional core team and get everybody out there doing interviews in front of customers. You could forego surveys if you’ve gotten the VOC with your cross-functional team. And as you’re developing, don’t skip early evaluation. Maybe you don’t have a full design review board but you do want to have different gate checks.
Sheila: One thing that helps is to set up a “war room” that everyone can access. That way you can collect what’s going on in the marketplace. It could be from the sales force, people attending conferences, people coming from other companies, people reading or following on social media.
Audience member: I had the benefit of being trained by PDC and doing all of this at a large company. Then I left for a small startup. I took the core pieces of customer interviews with me. I did most of them by phone—that’s not the best, but you do what you have to do. The process of extracting the customer voices was key.
Audience member: There’s a great power to being face-to-face with the customer. Bring your iPhone, record it. Let the team see the expressions on faces and the environment. That’s a thousand times more powerful than seeing a transcript and it helps you stay true to the customer.
Audience member: We’ve had a lot of luck with video. That’s been so inspiring to people. If you present a bunch of survey data they don’t care. But if you show a customer saying this is my experience, this is what matters, it’s so powerful.
Audience member: You have to consider the cost of getting it wrong. For the medical industry, the cost can be very high. You have substantial up- front costs to make sure you get it right. For Coca-Cola, depending what we’re doing, the cost of getting it wrong is not that high. If the market doesn’t like something, it’s easier for us to pull out and put back. Sometimes the best test is the market.
Audience member: There’s some good research done at Dartmouth about the concept of affordable loss. That is, if we put out a product and fail, it’s OK because the reason we put the product out was to answer this question, and we did get an answer.
Beth: There’s a survey section that helps prioritize what problems we need to address. We look at the biggest segments of the market and come up with the top five. We also have technical limitations—we may not be able to achieve all five. Or maybe we can do one and three but not two and three. It’s a give and take.
Want to read more great insights from GIL 2014: Silicon Valley and other Frost & Sullivan events? Learn how to get your copy of Frost & Sullivan's Executive MindXchange Chronicles.
TAKE-AWAY: INSIGHTS FOR ORGANIZATIONAL CHANGE
Shelia: First, can you briefly introduce yourself?
Beth: I’m with Roche, housed in the Roche Molecular Systems building but Sequencing is not really a part of this business. We’re part of the diagnostics arm but we’re more research oriented. We work on high-tech DNA sequencing for research applications.
When I started about three years ago my business was under the life sciences umbrella. About 18 months ago, it became obvious this wasn’t working, so we reorganized and put research PCR under the molecular diagnostics and sequencing as an independent business.
Sheila: What drove the change?
Beth: Being a research component of a very large IVD company with a strong culture of quality and robustness was a challenge. Research requires you to be quick and nimble. Roche acquired the next-generation sequencing technology about seven years ago and it was disruptive. But Roche is not known to move quickly and underestimated how fast the market was moving. It’s like the Blackberry, which started as a leader but didn’t keep up with the technology. Roche can’t let that happen because sequencing is the future of molecular diagnostics.
Audience member: Who is your customer?
Beth: Our customers are researchers in the clinical space. In the future, we’ll be going to routine diagnostics like community hospital diagnostics labs. Currently our products require really experienced users. There’s a complex, laborious workflow. We’re looking at bringing in more automation to meet the clinical lab’s needs.
Sheila: Has anyone in the audience had an experience similar to this?
Audience member: I work for a robotics company in healthcare. Our situation is a bit of the opposite. We started in research and now we’re trying to commercialize. We’re dripping in technology, but have to decide: Which do we use to move forward? What is going to be commercially viable? We’re trying to determine what will work.
Beth: We had failures that brought us to this point. We weren’t investing as much in R&D as we should have. In the meantime, we were forming partnerships with other companies. The product Roche was rolling out as a result of that was a “me-too” product. When I came on board, I knew the landscape and the competition and understood the product was me-too and too late to market.
TAKE-AWAY: QUANTIFY CUSTOMER VALUE
Sheila: What was the challenge in terms of getting people to change? You’re basically saying, “You didn’t do a good job.”
Beth: I’ve been in this position so many times. Even new leadership has a hard time pulling the plug. It’s often hard to pull back, and sometimes people didn’t have the courage or experience to stop a project. I’m a very outspoken person. When I went to the manager in charge of the me-too product, his first reaction was: “Roche has always been successful with me-too.” But that was like comparing a washing machine to an iPad. To convince him I had to collect facts and figures and go to the market, to get data to support what I was saying.
We brought in consultants for primary and secondary research. We prefer to stay in-house for product development. And for interviews we used cross-functional teams — regulatory, bench scientists, etc. — we want everyone to go in front of customers. You have to try to pick the right number of customers to allow you to do face- to-face interviews and observe their daily routine. We distill all that research and come up with the key features. Then we do broad surveys to validate what we think are priorities. We might get 300 specs out of the interviews but we have to pull out the top ten.
Audience member: One problem is that the customer doesn’t know what they don’t know. Can’t this be tricky?
Sheila: That’s where it really matters what you are surveying on. If the survey does not contain your solution, but rather the problems they have, you’ll get more valuable data.
Beth: When I walk into a lab to talk with the customer about sequencing, I’m not interested only in sequencing. I’m interested in when does a sample come in and the result goes out, and how can we make that whole process easier? We are an automation company also, so we look at the whole process.
Sheila: You’re looking for customers to tell stories about what got in the way of them doing their jobs and what were the consequences.
Audience member: Are all the surveys a snapshot in time or are they ongoing?
Beth: We do snapshots initially, but our projects have gates and we do go back and survey at various key points. The culture and market is changing so quickly we have to go back and reevaluate.
TAKE-AWAY: ALIGN THE ORGANIZATION AROUND YOUR STRATEGY
Sheila: The healthcare market is changing so fast. How do you stay abreast of what’s happening, especially with competitors?
Beth: We’re just deciding how to deal with that. It’s going to be a new concept for Roche. IVD doesn’t change quickly, so we haven’t had the need to keep up with fast market changes before now.
Sheila: Does anyone in the audience have ideas about dealing with change?
Audience member: You have to have continuous validation. When you develop a product, you always need to validate, talk to the customer and incorporate changes as you are going to market. Seventy percent of startups fail because people are building products nobody wants.
Audience member: In the entertainment business, we look at rapid experimentation. You put it out fast and evaluate; if it’s not working, you change. We have the ability to experiment so we don’t spend a lot of money on things that are not needed.
Audience member: Is it the product management unit responsible for doing that experimentation, or is it a special group that’s not distracted doing the everyday work for that product?
Beth: Our product marketers are the ones keeping up with the market. We have product managers looking at products. And we don’t ever launch something customers haven’t seen. We use customers as collaborators, evaluators and beta testers.
Audience member: We do have different groups who are not distracted, which works well from an innovation standpoint. But you have to bring in people from all the groups so you don’t form an elitist group that nobody in product management is going to respect or pay attention to.
TAKE-AWAY: KNOW WHERE TO PRIORITIZE
Audience member: I’m from a small company with limited resources and funding. I have to pick the most important customer value activities. What would be the minimum in this process I should be doing?
Beth: At a minimum, kick it off right. Get a cross-functional core team and get everybody out there doing interviews in front of customers. You could forego surveys if you’ve gotten the VOC with your cross-functional team. And as you’re developing, don’t skip early evaluation. Maybe you don’t have a full design review board but you do want to have different gate checks.
Sheila: One thing that helps is to set up a “war room” that everyone can access. That way you can collect what’s going on in the marketplace. It could be from the sales force, people attending conferences, people coming from other companies, people reading or following on social media.
Audience member: I had the benefit of being trained by PDC and doing all of this at a large company. Then I left for a small startup. I took the core pieces of customer interviews with me. I did most of them by phone—that’s not the best, but you do what you have to do. The process of extracting the customer voices was key.
Audience member: There’s a great power to being face-to-face with the customer. Bring your iPhone, record it. Let the team see the expressions on faces and the environment. That’s a thousand times more powerful than seeing a transcript and it helps you stay true to the customer.
Audience member: We’ve had a lot of luck with video. That’s been so inspiring to people. If you present a bunch of survey data they don’t care. But if you show a customer saying this is my experience, this is what matters, it’s so powerful.
Audience member: You have to consider the cost of getting it wrong. For the medical industry, the cost can be very high. You have substantial up- front costs to make sure you get it right. For Coca-Cola, depending what we’re doing, the cost of getting it wrong is not that high. If the market doesn’t like something, it’s easier for us to pull out and put back. Sometimes the best test is the market.
Audience member: There’s some good research done at Dartmouth about the concept of affordable loss. That is, if we put out a product and fail, it’s OK because the reason we put the product out was to answer this question, and we did get an answer.
Beth: There’s a survey section that helps prioritize what problems we need to address. We look at the biggest segments of the market and come up with the top five. We also have technical limitations—we may not be able to achieve all five. Or maybe we can do one and three but not two and three. It’s a give and take.
Want to read more great insights from GIL 2014: Silicon Valley and other Frost & Sullivan events? Learn how to get your copy of Frost & Sullivan's Executive MindXchange Chronicles.
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