Any market that experiences a boom of innovation and creates transformative start-ups has a typical lifecycle. It often starts with deregulation, followed by start-ups popping up and creating a market of many competitors with novel but often similar products who find short-term success. At some point, however, the competition becomes too fierce, and not everyone can survive. Some business strategies, products, and operations will find long-term success, while others will not.
Think of the telecom market in the 1990s. An influx of hundreds of dial-up Internet providers initially entered the market. Once there was a lot of competition, the marketplace leveled out. The companies with the best products, business models, and operations found success, while others ultimately disappeared.
This phenomenon is called ‘rationalization’ of the marketplace, and it has yet to happen in the ever-evolving market of healthcare IT. However, the shift will likely arrive in the next few years.
Oversaturation leads to consolidation, and industry ‘winners’ and ‘losers’ naturally appear. We are already starting to see telltale signs: capital meant to fund start-ups is becoming more limited, and acquisitions of innovative products by major brands that can support expansion are increasing. Some business models will work, and some won’t; some are made to scale, some aren’t. Once more competitors enter a marketplace, it gets harder to differentiate oneself and secure the capital needed to keep building.
What will rationalization mean for healthcare IT innovation? The impact will not necessarily be straightforward. There are three main forms of innovation:
- Groundbreaking Innovation: Think of the person creating technology in their garage. This is the type of innovation that brings brand new concepts to the market. These new ideas spark an influx of capital and have the ability to kickstart a new market when it is just beginning to take off, giving these innovators enough time to bring a product to the marketplace before it becomes oversaturated. When a marketplace levels out, the number of small-time, groundbreaking innovations will ultimately decline.
- Large Scale Innovation: This is the wholesale innovation that comes from mature companies that have the power and experience to address the big picture issues of an industry – ones that are too broad and sweeping for groundbreaking innovations to address off the bat. This type of innovation can change how a whole industry – like healthcare – is done.
- Collaborate around Shared Value Ecosystems: Moving forward it will become critical for organizations to create shared value ecosystems of technology game changers that are pursuing financial success in a way that also brings benefits to society and enables transformation.
Ultimately, time will tell which companies will thrive and which will falter in the healthcare IT space. As more providers seek solutions that address more than one issue, healthcare IT vendors must adapt and take the end users’ needs into consideration. This conscious decision will help them better prepare to succeed as the market evolves.
This article was originally published on Mobile Health Matters and is republished here with permission.