Managing Technology: Synthes' Case
Synthes is a leader maker and distributor of “internal fixation devices” and has to make a choice about a new technology (Bioresorbable implants). The main options available for the company are: 1. To continue to Ignore bioresorbables, focusing on well established competences (Metallic implants); 2. To Wait for other manufacturers to develop new generation technology (3rd generation) and push it to the market. Just then, if room for success is present, quickly enter the market; 3. To Develop and Market a line of bioresorbables using the currently available technology (2nd generation); 4. To Research and Develop the next generation technology.
Obviously each of those options present strength and weaknesses, as well as pros and cons that have to be evaluated in order to assess risks and potentials involving the new technology development. At what degree Synthes will influence the development of the bioresorbables market? How might Synthes introduce resorbables?
What is on the table?
Invention, Innovation, Diffusion
We have to consider the difference between “invention” and “innovation” before making the decision. Synthes’ success was determined by its strong capacity to innovate and diffuse its product, mainly thanks to its top quality sales force and to the close link with the Swiss “no-profit” organization AO. Relating to the options mentioned in the introduction we see that the company has to choose if to: • Stay out and wait, in order eventually manage technology in the future. We have to remember that the development and distribution of such a technology might result in a potentially disruptive and self-cannibalizing innovation. Synthes invested most of its resources in non-resorbable technologies, as it refused to follow the first two innovation waves. And it feels in comfort as a leader in the market. Arguably, the introduction of the new technology would serve more as an external protection from competitors’ leaps rather than an internal necessity to innovate (to acquire market share, for example). • Manage technology by using the existing 2nd generation resorbables and diffusing it. This would allow the exploitation of the company’s existing competitive advantages (primarily sale force), but would not create new ones given that competition is already years ahead in the market. On the other hand, it would set a good (and relatively not expensive) base for a future shift to a wider 3rd generation’s products portfolio. • Manage innovation by creating the 3rd generation resorbables. The point is that this technology does not require a completely radical innovation, given that the underlining concept already exists many years back in time. The aim is basically to adjust some factors such as the strength/volume ratio and absorption times. Being the first mover (achiever) in this direction is key.
Value for the customer
Some key questions at this stage are: Is the firm really concerned about creating new value for its customers? Does the fact that the customer is the surgeon and not the patient affect the decision? Does the market “pull” the new technology?
Being the leader, and being in the market already long time ago, the company ideally would like to sustain its technology. Arguably, to reduce the number of surgeries the patients have to undergo is not its priority. Why?
• From the case we imply that the Healthcare system do not provide incentives to Synthes to reduce the national health’s costs. On the other hand, government might later regulate and eventually set the new technology as a standard, namely forcing Synthes to adapt and creating “natural monopolies” situations. This is a very high risk for the firm in this situation. However I believe that heavyweight companies in this industry have quite high influence in the choices made by the government. There might be a “political funding” fight...
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