Philips Healthcare: A New Approach To Innovation

By Doug Roe, Chief Editor

Apple co-founder Steve Jobs once said, “Innovation distinguishes between a leader and a follower.” He wasn’t referring to the incremental or sustaining innovation seen in many of today’s top med device companies. He was describing the vision, support, and courage it takes to be disruptive. Instead of developing new ways to expand the existing $6 billion annual iPod revenues, Jobs created a smartphone platform that he knew would cannibalize it. He wasn’t held back by many of the self-imposed hurdles that exist in large companies. His idea and long-term vision were allowed to be explored without the normal constraints of innovation.

But the need to deliver Wall Street results and quarterly ROI is at odds with risk-taking. The changes in healthcare economics have forced medtec companies to cut costs and improve efficiencies. Adoption of Lean and Six Sigma methodologies, combined with bureaucratic cost-first management strategies, has become the norm. While these changes can deliver a slightly improved bottom line, they also install barriers to innovation. Thinking outside of the box is a difficult concept at a company when its own initiatives and systems have built the box.

True innovation is racing to failure, or the fast-fail concept. Try something, do it fast, learn something, and repeat. The key is to quickly identify the ideas to pursue and the ideas to table or discard. But you need an environment where this is possible. It is not a complete lack of structure that promotes optimal innovation. Just simplify or remove enough rules. Loosen the reins. Then isolate (or shield) the idea or development group from your typical processes. A critical component to success is the willingness to sacrifice the returns of today for the potential of tomorrow.

It is not an idea problem but a cultural one, as evident in the following quote from a recent research report on innovation from PricewaterhouseCoopers, LLC: “Medtech executives expect a higher level of breakthrough and radical innovations in solutions and business models over the next three years, but just 14 percent say they have a coordinated plan to achieve that goal.”

What is your company’s innovation plan? Will you continue to inch forward, or will you leap ahead? I had the chance to discuss this topic with Ken Berta of Philips Healthcare. Berta works under the Philips Group Innovation umbrella and is the Head of Commercial Operations, North America.

Med Device Online (MDO): Can you give an overview of Philips Group Innovation and the outcomes it is trying to achieve?

Ken Berta: Philips Group Innovation, or PGI, is set up as a strategic, direction-setting group. It also coordinates the research activities and any early-to-market efforts. PGI has six major research centers around the world that all build products dedicated to a certain commercial sector. Historically, it was lighting, lifestyle, and healthcare. Now that we have focused on health tech, the research is collaborative and concentrates on healthy living through home healthcare products – the whole health tech continuum.

The goal of PGI is simple: How can we get new innovation, in the form of some beneficial solution, to market as quickly as possible?

MDO: What is different about the process that accelerates speed to market?

Berta: Once the idea is developed, it is either immediately absorbed by a Philips business unit, or the PGI group starts a venture around it. PGI targets those opportunities that are really revolutionary. This could be a new technology that has not found a broad market yet, or something that is addressing a previously unsolved problem. That idea is allowed to operate as its own independent business unit. We then start testing its very early-market viability.

MDO: How does that compare to more traditional innovation?

Berta: Structures in midsize to large companies create innovation silos. The potential of a new technology starts to climb to a point where it needs to be released into the field, but the capability hasn’t been tested yet.

Sometimes this can create internal resistance. Individual business units are under pressure to meet customer demand and still generate the most revenue they can. Often they are somewhat blind in taking on the new technology. What is it going to do? Is it going to take a lot of resources? Is it going to distract from the mature products that are already building the strong market share they have today?

When you break an idea off into a venture setting, you can quickly see if it can support itself or not. That happens at PGI before an idea is pressed into one of the other business units or pushed to stand on its own. It is a different form of risk management, protecting the parent company from an expense that may or may not be worth the investment.

MDO: What other differences are there?

Berta: In my early career, I worked in emergency medicine. We were a midsize OEM, but also had a distribution arm. Our R&D tended to be laser-focused on individual customer demand. That forced a much broader product line that was difficult to manage and exhausted most of our resources. Innovation was an afterthought. At PGI, innovation is the opportunity driver.

MDO: What is an example of a product born out of this process?

Berta: Philips Digital Pathology is the first product emerging from this new business model. It was spun out of research and turned into a viable product. We have moved it into a production environment that allows us to supply it to early adopters in the market. Now, we can field test and get feedback on what other service models or additional technology need to be placed around it to optimize its success.

Digital Pathology takes advantage of the large investment healthcare has made in electronic medical records. Pathology is still one of a few areas that use a large volume of paper and physical specimen samples. Those things will be digitized. Digital Pathology creates an organized database that researchers can easily access from anywhere. Leveraging Philips’ long history in optical storage technologies allows these large images to travel across a network without slowing it down. We are not sending the entire image, just the pixels you are looking at. It will produce unprecedented lab efficiencies and open the door for collaborative, multiple-location research. We believe it will be a core future segment of personalized medicine.

Another such product that is close is our Home Chemo Monitor. It allows patients, through a finger prick device, to measure their white blood cell count. The count is then communicated directly to a hospital or an oncology clinic, to see if the patient is prepared to have therapy. Often, sick patients make the drive to their chemo sessions and find they can’t have the procedure that day.

MDO: What is your role in helping PGI achieve its goal of “quick to market?”

Berta: I work with our North American team on how to most effectively roll out these early technologies. At this point in the process, we are still at the phase of educating the market and enhancing the product. Part of my role is to manage the formation and execution of industry partnerships. Some current partners are Mount Sinai Health System and Inspirata, Inc. These partners, along with other early adopters, help with additional product developments. We have seen that once the value is recognized, those early adopters become advocates for regulatory approval and commercialization.

MDO: What do you think the footprint of innovation will look like at Philips in 10 years?

Berta: I think it will focus on informatics. All the new med devices are trying to put more and more information into the hands of patients and physicians. That information needs to be presented in a way that is easy to use.

Philips is trying to develop this in a platform format. Ten years from now, that will mature into the ability to create applications that layer on top of the platform. This will include first-party and third-party applications. New innovation will happen as rapidly as new apps do today on your cell phone. The pace at which that will evolve, assuming the regulatory process remains neutral, will make today’s innovation look super slow.

Once you have a platform that anyone can easily build on, innovation will come from everywhere. 

About Mr. Berta

Ken Berta has over 20 years of research, technology development and general management experience, as well as extensive experience successfully commercializing technology into global markets. He joined Philips Corporate Technologies (now Philips Group Innovation) to support the launching of a new venture into virtual microscopy. Responsible for commercial operations in North America. Prior to joining Philips, he served as executive VP of daytaOhio; VP of technology commercialization for Angel Partners, LLC; GM of YSI Life Sciences; and head of R&D for Ferno-Washington, Inc.

As a design engineer and researcher, he has been awarded five international patents for medical device innovation. He also was honored by the Dayton Business Journal as one of the region’s top 40 business leaders under 40 (2004), and was appointed by Ohio Governor Ted Strickland to the Executive Order of the Ohio Commodore (2008).

Ken is active on several university, corporate, non-profit, and economic development advisory boards, and he holds a bachelor’s degree in biomedical engineering from Wright State University and an MBA from Xavier University.