cardiogram machines to screen dozens of people
in an afternoon and wirelessly send their ECGs to
be read by doctors hundreds of miles away. Insurance
is still rare in India, so Medtronic had to make
its pacemaker more affordable. It worked with a local
partner to create India’s first financing plan for
medical devices.
No new technology was involved here—and
that’s the point. Medtronic used business model innovation
to enter markets formerly out of its reach. It
follows in the footsteps of Vodafone (M-Pesa mobile
payment service in Africa), Dow Corning (Xiameter
online channel), and Hilti (tool fleet management
services) as a market leader using a new model to
power growth.
Healthy Heart’s first implant occurred in September
2010. Over the subsequent 18 months, pilot
programs in a handful of hospitals screened thousands
of patients who previously would not have
been diagnosed, let alone treated, and provided vital
in-market learning. Though the total number of
implants is still relatively small—approximately 50
to date—the pilots have demonstrated the model’s
promise. On the basis of this early success, the company
plans to scale up the program across India and
then in other emerging markets. The effort also positions
Medtronic to dramatically expand in those
markets as it develops new technologies that lower
costs. (CEO Omar Ishrak has announced a goal of
radically reducing the cost of a simple pacemaker.)
Think about the challenges that would face a
start-up seeking to compete with Medtronic. It could
mimic pieces of Medtronic’s approach, such as the
diagnostic camps and a financing plan. But it would
have to either build a new pacemaker and seek
regulatory approval (which would take years, if not
decades) or partner with an established pacemaker
manufacturer. It would struggle to get meetings
with local doctors with whom Medtronic already has
deep relationships. And, of course, it would have to
learn how to operate in India, a notoriously complex
market. Medtronic simply has capabilities, experience,
relationships, expertise, and resources that
entrepreneurs don’t.
This is a fourth-era-innovation story. Medtronic
mixed the entrepreneurial approach of a third-era
VC-backed start-up with the unique capabilities
once housed in second-era corporate labs. It’s easy
to bemoan the stifling bureaucracies that characterize
some large companies. But giants like Medtronic
have hard-to-replicate advantages over start-ups.