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pro medicus imaging:
secure servers or home work?
Welcome to this month’s Strategy Standoff.
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It is 2016. You're Dr Sam Hupert, co-founder of listed Australian medical imaging business Pro Medicus. Your software manages scans taken in hospitals so radiologists can analyse the images and make diagnoses.
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Your newest software, Visage, uses the cloud so radiologists can access image files outside the hospital. Images never sit on a remote computer because they're streamed like a movie.
Your growth plans for Pro Medicus include expanding into the USA, because winning in their market would make you another Aussie breakout winner in health, like ResMed or Cochlear.
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Unfortunately, your US competitors are not rolling over.
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Glitch in the Matrix
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The US incumbents are defending their US share and discounting up to 40%, just to block your entry plans. They're running a scare campaign about data security to frighten hospital CIOs into sticking with older on-premises image servers.
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With your competitors appealing to conservatism and discounting hard, how might you persuade hospital leaders to bet their careers on your Aussie software?
the strategy standoff
Strategy A: Stream Dream
You could stick to your guns and pitch the new remote Visage system as cost-saving tech.​ Sell CFOs on the savings from using remote radiologists on lower salaries. Your engineering team could also stay more focused on a single version.
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But this approach would risk walking into a wall of old-school CIOs and you'd lose deals to incumbents offering cheaper, "safer" on-premise software types they are used to running.
Strategy B: Ground Control
You could make a bridging version of Visage that sits on hospital servers, while you buy time and get a beachhead in the US market. ​An on-premise offer would neutralise the main buyer objection, security. You'd let CIOs build some trust in your company before enticing them into a image streaming trial.
However, this option could undervalue the transformation opportunity of remote radiology work and create more work for your IT team as they'd have to support a US-specific version.
so, which did they choose?
Cast your vote to find out!
good job, strategy a was chosen!
better luck next time, strategy a was chosen!
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But what did this mean for Pro Medicus...
outcome: facilitator commentary
Matt Braithwaite-Young
Managing Partner
t +61 2 9002 3100
Pro Medicus kept its head in the clouds and stuck to its price premium
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In a crash-through-or-crash move, Pro Medicus held its line, promoted their remote-access product and refused to build a compromise hybrid version.
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They stared down the discounting competitors and didn't to react to the security scare. They reframed the Visages sales pitch from data security to cost savings. This was a clever move because hospital sector margins were under pressure and CFOs were open to ideas about savings.
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They then won the world-famous Mayo clinic who became their dream foundation US client and instantly signalled big-player confidence in streaming security.
Mayo bought the vision of lower salaries for radiologist talent because in the US, big city radiologists make over US$400k which means savings in medical salaries could dwarf the Pro Medicus brand premium.
​The lower salaries are because remote radiologists can do the work from lifestyle and family-friendly locations (and they're happy with the lower salaries).
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With a Mayo on board, other hospitals started to eye off those savings. And Pro Medicus is now in the ASX 50 with their competitors wishing they'd developed their own imaging streaming tech sooner. They had been working on it, of course - their discounting was a ploy to hold off Pro Medicus.
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Outcome: Facilitator Commentary
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A competitor offering a steep discount is always going to create some headaches for your sales team. But discounts can also create a focus on price and open up new angles. With a little strategic thought in your response, competitor discounts can be reframed as proof of desperation or impending obsolescence.
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In hindsight, attacking with innovation was a smart move by Pro Medicus, focusing on the total value of the savings benefits of its technology. But it was an all-or-nothing move.
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Sometimes The Cowboys Get the Arrows
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Deciding to be the first mover in a new technology can be dangerous. As the saying goes, "the cowboys get the arrows, the settlers get the land."
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If Pro Medicus hadn't persuaded anchor clients like Mayo to take that first step and trust their security, they may have wished they'd developed a hybrid model to give hospitals the best of both worlds and a bridge to the new tech future.
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Hybrid Bridging in EVs
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In the electric vehicle market, hybrid cars (plug-in hybrid Electric Vehicles) are vastly outperforming pure EVs as buyers dip their toes into petrol-free driving and weigh the pros and cons. Plug in hybrids let people experience the future without the fear of being stuck somewhere waiting for a charge.
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In today's case, Pro Medicus understood the hospital value chain and the CFO imperative to create salary savings. They went for it and dodged the arrows.
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Is your firm thinking about how you can win in a new market or segment?
You need to decide where you want the fight to happen and how you plan to get the edge.
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Do you fight on price or value? If you fight on value, what value? And for whom?
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We do a lot of competitive and commercial strategy projects for leadership teams wanting to place their bets with confidence and alignment.
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If you want to clear the fog around your strategy and get your leaders aligned and accountable, drop me a line today.
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Matt Braithwaite-Young, Turning Leaf 02 9002 3100
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