3 Mistakes That Will Stop You From Being Successful
Elizabeth Holmes dropped out of Stanford University at 19 with a big, disruptive idea and founded Theranos. Now at 31, she’s a billionaire.
She has dramatically improved the experience of getting a blood test. Based on just one or two drops of blood drawn with a finger prick, Theranos can run more than 70 tests to detect dangerous medical conditions at a cost that is 50 percent to 90 percent less than Medicare reimbursement rates. Additionally, customers can get results on their smartphones in just four hours. The Theranos test is painless, more accurate, quicker, and cheaper.
While all of this is very impressive, it’s not the most interesting part of the story.
What I find most interesting is that all the negative aspects of getting a blood test have been widely known for decades. Yet, the major players in the market — companies such as Abbott Laboratories, Ortho Clinical Diagnostics, and Baxter International — missed the opportunity. You might think that such companies, with their abundant resources and deep expertise, would be constantly innovating to improve the patient experience.
So why hasn’t one of them eliminated these problems before?
It could be that Elizabeth Holmes simply had a scientific breakthrough that surpassed anything the incumbent companies could do. But I have seen three common mistakes that companies make in similar situations over and over again that may have been at play here as well.
1. Defining business by product or service rather than need
Companies define their business according to the product or service they sell rather than the needs their customers want satisfied. In reality, people don’t want to buy a blood test. They want to detect dangerous medical conditions. One day in the future, another entrepreneur will disrupt this market again by figuring out how to detect dangerous medical conditions without taking any blood. When a company gets attached to its solution, it risks becoming obsolete.
2. Refusing to develop new offerings
Entrenched players willfully refuse to explore and launch new offerings that will cannibalize their existing profitable offering. Sticking one’s head in the sand, however, will not prevent someone else from disrupting your market. I think the best advice in such circumstances is to continue to innovate and create new value for customers, and then release any breakthroughs into the market at your discretion. For most companies, the market share they stand to take from existing competitors will more than make up for any cannibalization.
3. Believing customers can’t play a role in product ideas
Companies believe that “customers cannot tell us what they want.” Even Steve Jobs made comments like this, but he was only half right. It is true that customers cannot tell us what new products they would like. Asking customers to come up with new product ideas is like asking patients to devise their own treatment plans! It’s not their areas of expertise and they should never be asked to do it. So if we are talking about generating new product ideas, Steve Jobs was right, customers cannot tell us what they want.
But customer needs are separate and distinct from products. Customers can tell us what they want to accomplish (detect dangerous medical conditions) and the many ways they measure success in the process (avoid getting stuck with a needle, avoid pain, receive results rapidly, etc.). These are the customers’ needs, the crucial inputs that companies can and must capture to be effective at innovation and growth. Customers can tell us what they want if we ask them what they are trying to accomplish rather than asking them to propose new product ideas.
Companies that are skilled and disciplined about obtaining the appropriate customer inputs tend to be the most successful at making innovation and growth a predictable business process. Customer needs that are both important and poorly satisfied are targets of opportunity. You don’t have to be a Steve Jobs or anElizabeth Holmes to discover opportunities in your market.
