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eHealth Start-up Guide for business success A practical introductory manual on business modelling and routes to marketExecutive Summary Developing a company requires some work for the Finally, eHealth implies some specifics, for instance because entrepreneur about business planning, and within the eHealth your customers could be different from the users of your sector, a high innovative field, the exercise could appear solution, or because of the presence of public sector decision- complex. makers requiring specific commercial relationship and processes. However, some tools and innovative approaches exist to support the entrepreneur or the business development This short document will give an overview of these concepts manager in the design and the mapping of his/her activities, and provide you tools and resources, as a practical guide for customers, channels, etc. your business design. The Business model canvas is one of these tools that gives you a 360º vision, a comprehensive approach to define, set up and expand your business. More in eHealth sector than others, designing the model of a company is an iterative process, and innovationdoesn’t only concern the technology side, but as well the other function of the company (marketing, commercial, communication, finance, etc.). The Lean Start-up methodology, promoted by Eric Ries, helps you to create the minimum viable product, in order todon’t loose time in full developments and be able to quickly test with potential customers and users and adapt or pivot your business model. As eHealth is evolving fast, the Continuous improvement methods will engage a dynamic approach about the design of your solution and of your business. 2Background and introduction Why have we created this document? Who is the document for? There are many methods and approaches to supporting Start- This document is aimed at eHealth start-ups hoping to enter up businesses each with a powerful message aiming to support the health and social care market with their product or SMEs achieve their goals. The issue for eHealth Start-up service. This document aims to provide eHealth start-ups with business is that success becomes more challenging because of a“foundation” for the future providing you with the skills and the context they are working in. There is a wide range of processes that kick-start your eHealth businesses. With this customers, including providers, commissioners and knowledge you will be able to rapidly improve your products stakeholders who each need to be considered. Policy and gain more market share and success direction, regulation and standards can influence the market, and as such gaining access to that market can prove almost How to use the document and content impossible without the application of the right considerations and processes. This document will review three approaches, which individually are able to support business success, but which There are some key methods and approaches which can when properly understood and applied together effectively, support you and this document will introduce you to three will provide a far more comprehensive approach to entry and approaches, which each provide helpful resources eHealth success into the eHealth market. start-ups will benefit from, but will seek to encourage you to blend these approaches create your own toolkit and process Each of the approaches will be discussed individually to offer to apply your creativity too. an outline structure and a fundamental level of understanding, along with links to tools, literature and case studies for further detail and references to help you consider and apply these methods to help achieve best success to your eHealth start-up. 3Digital in Health & Care Without a doubt the pace at which new technology is Digital eHealth products are able help to support the impacting our everyday lives is increasing at lightning speeds. challenging economics and can increase levels of self-care and In 2014 it was documented that 29% of all people said that accelerate transformation towards practice and services that their phone was the first and last thing they looked at monitor, inform, enable and support on-going management of everyday which is a telling sign of how connected we are all conditions and vulnerability. The deployment of digital can becoming to technology. also add capacity to service. According to the European Commission figures, the costs of This means there is a huge market opportunity for Businesses health and social care will rise substantially to about 9% of EU who have a product to support this agenda. This document GDP in 2050. To ensure the control of healthcare costs whilst will support start ups in the eHealth get their product to maintaining high quality care, eHealth has seen an market. increasingly important role to play in transforming the There are a wide range of activities in this sector. Products & European and cross-border healthcare landscape. As people services could be designed including one or several of the become increasingly connected, new opportunities are arising categories as infrastructure or Data Exchange, Data Analytics, to tackle economic and social challenges faced by healthcare Devices, etc… services across Europe. Where new technologies have the potential to empower patients to take an active role in their own healthcare and to help professionals with better monitoring tools and information. 4Overview of the 3 approaches This Guide will provide you some insights about 3 different Business model: definition approaches with their associated tools: Definitions. Numbers of definitions exist for business model but in a simple way: Business Model Lean Continous • A business model describes the rationale on how an Innovation Start up Improvement organisation creates, delivers and captures value; A plan for the Constantly seeking and Is a process for turning • A plan for the successful operation of a business, successful operation of ideas into commercial gaining feedback from identifying sources of revenue, the intended customer a business, identifying ventures. Its premise is customers to adjust sources of revenue, that start-ups begin with a base, products, and details of financing; business processes in the intended customer series of untested order to deliver better • The plan implemented by a company to generate revenue base, products, and hypotheses. They succeed value and make a profit from operations. The model includes the details of financing. Is by getting out of the components and functions of the business, as well as the where two or more building, testing those revenues it generates and the expenses it incurs. elements of a business hypotheses and learning model are modified to by iterating and refining Business model Innovation. Innovative sectors as eHealthdon’t deliver better value in minimal viable products in only require creativity regarding the technology and the a new way front of potential products, but as well about business modelling. eHealth customers. Innovation is a complex sector with a multi-stakeholders environment, and the design of thecompany’s model is a critical aspect of its success. Entrepreneurs should analyse Each of these approaches will be discussed in turn then move carefully their business and define a multi-parameters model, to think about how eHealth Start-ups can benefit from a in order to reach correctly the market. blended approach using all three together. ACTION. As you move through each method, make notes ACTION. A Business model describes numbers of components about how you could use each approach and which tools of the company and its environment. We propose you to use would work well for your eHealth start-up some tools, like the Business Model Canvas 5Business model Canvas • Key resources: define the requested resources needed in Why using the Business model Canvas? order to develop your business. It could be financial, A Business model is a complex concept referring to the human, physical resources & materials, knowledge (IP, complete design of the activities of a company, take in patents, know-how)… These resources could distinguish account the“globalpicture”, and defining all the parameters you from competitors. and characteristics of the company and its relations with its • Value Propositions: define the value you propose to your environment. The Business model Canvas is a tool gathering customers, whichcustomer’s problem(s) do you propose to all components of the strategy and the operations, and solve? Which customers needs do you satisfy? Each helping the manager/CEO to plan his/her business. customer segment could have different problems and then Download Canvas: your value proposition should be adapted to each category. A specific marketing and specific messages should be 0CslmNsPZ5KCNQwAIh9rh4baYgT0VWNAA&urp=https://www.g designed around each value proposition. Warning: in health sector, the value proposition could be related to the customer or to the end-user of the solution, which Business model canvas components could be distinct (customers of your customer). • Key partners: define your own ecosystem of innovation & • Customer relationships: define the type of relationship business; who are your partners? Your suppliers? What are you have (or must have) with each customer segment. the key elements they produce that you need? What are Apart of a simple contract, it could implies additional their/your motivation in the partnership (money, visibility, services (assistance), it could require specific access to other stakeholders, optimization, risk-sharing…)? complements from your part. In Health sector, outcomes- • Key activities: define the activities your company will based business model are emerging (see below) and it develop in order to be able to present products/services modifies deeply the relation between provider and and associated added-value to your customers? customer, as it pushes to act as“associates” sharing the (production, integration, R&D…) risk related to the implementation of the solution (see more below) . 6Business model Canvas • Channels: define the best way(s) to reach your customer Customers Examples of value propositions segments; how do you manage the - Improve the quality of life of the patients or/and communication/marketing? The distribution of your informal caregivers (family) solution(s)? What are the channels most performing? - Improve quality of care Patients/Citizens - Improve health status • Customer segments: define the categories of customers - Improve knowledge about disease (health education) you’re targeting, with characteristics and specificities; for - Improve independent living whom is the eHealth service creating value? (See example - Improve conditions of work of professionals next slide) Health & Social care - Optimise the workflows providers - Reduce costs • Cost structure: define the costs implied by your business - Improve quality of care and patients satisfaction model; what are the costs of your activities, partners or - Improve quality of care suppliers, your own resources? The distribution channels - Improve health status of the population / resolve public you will use? The marketing strategy? Public authorities & health issues public insurances - Improve citizen satisfaction • Revenue streams: define the value your customers are - Reduce costs really willing to pay. Each customer segment generate - Improve quality of care, of services potentially different revenues and participate at different - Improve customer satisfaction level to the global business (prioritisation of customers). Private Insurances - Reduce costs Define as well the way how your customers pay you. - Optimise the workflows - Innovative marketing, differentiation with competitors Example of how to fill the canvas: some customer segments - Improve productivity of employees thanks to better health status - Reduce care costs of employees (when the company Companies takes it in charge) ACTION. Design your own template with your product, your - Innovative marketing / social responsibility, attract customers and the associated value propositions (see employee profiles completed example of Business canvas on next slide). 78Lean Start up What is Lean Start-up? Lean Start-up is a process for turning ideas into commercial ventures. Its premise is that start-ups begin with a series of untested hypotheses. Success is achieved by getting out of the building, testing those hypotheses and learning by iterating and refining minimal viable products in front of potential customers. Lean Start-up approach The approach of Lean Start-up includes building a hypothesis based on your product, measuring assumptions and gaining data, learning from the new information and turning this into ideas which feed back into the build of the product Why is it important? Because of the high level of uncertainty, eHealth start-ups need to make the best possible guesses or assumptions as to what kind of product and market to target, to minimise the ACTION. Write down the Hypothesis (assumptions) you have production of waste. Lean Start-up should think of these about your product or service and the market. Consider how guesses as hypotheses; ideas about the outside world based on testable they are. Order them from highest risk to lowest a set of assumptions that have been made. You need to ensure risk. Think how and where you can start to test your that all assumptions created are testable, that you have hypotheses. customers to test the product with and you understand which assumptions will be tested first. 9Key Concepts Validation of hypothesis approach Minimal Viable Product What is it? Validating your hypothesise about your product or What is this? Once you have figured out the problem that service is critical when starting a company. By testing a simple needs to be solved you then need to develop a minimum hypotheses countless of hours and resources can be saved. viable product (MVP) to begin the process of learning as quickly as possible. Once the MVP is established, a start-up How do you use it? can work with customers to measure and learn to create • Find out what the problem is from the customers point of improvements. view. Interview customers face-to-face to understand the Why use it? When start-ups fail to reach broad uptake from “job” customers are trying to do, their current challenges, customers, it is often because they never spoke with them to and how they solve it at present. Pivot when you discover understand if the product was of value to them. However, by you are wrong. You can use the problem interview script to using the MVP tool, you can test your product and feed any support these conversations. learning into improvements. content/uploads/2011/08/problem-interview-script.png • Find a Solution. Develop a minimum viable product Pivoting prototype ( discussed more below) and get outside the If your research with customers suggests that your current building face-to-face with customers to test your vision of ideaisn’t going to work, it might be time to“pivot” your the solution. Change or pivot when you discover you are start-up. Pivoting means changing your business strategy to wrong. Repeat these tests until you find the best solution. align with a new hypothesis of how to succeed in a structured • Go-to-Market Strategy Ensure you understand the end-to- way to test a new hypothesis about the product. end customer buying process, the market communication Example Groupon; when the company first started, it was an infrastructure, the distribution infrastructure. Identify the online activism platform, after no success the founders leverage points. opened a blog and launched their first coupon • Pivot. Throughout the process learn to change course promotion. Although they only received 20 redemptions, they whenever you discover you are wrong. realized that their idea had successfully empowered people to 10Key Concepts coordinate group action. Three years later, Groupon would grow into a billion dollar business. Market Fit A difficult decisions for a startup is understanding when your product is good enough to drive sustainable, scalable customer growth. Trying to scale too early can easily kill your startup. Using a survey asking the key question How would you feel if you could no longer use product? with your customers gives you an objective measure. The If you find that over 40% say that they would be“verydisappointed” without your product, there is a great chance you can build sustainable, scalable customer acquisition growth on this “musthave” product. More details on distributing the survey are here. io/ Testing and Metrics An important part of the lean Start-up methodology is the “Measure” step of the Build-Measure-Learn cycle. In terms of product testing, the best approach suggests a“Split” or “A/B” testing. This involves making multiple testable versions of a product so that any changes can be compared to a baseline. When thinking about your metrics focus on measures which are actionable, accessible and auditable. 11Continuous improvement What is it? Continuous Improvement, is an approach which allows you to constantly introduce small incremental changes in a business in order to improve quality and/or efficiency. Continuous Improvement model Why is it important? eHealth Start-ups are faced with a number of challenges. In the current economic climate there is increasing pressure for SMEs to be more efficient and improve their product/service offerings to survive. SMEs have to be agile enough to cater to multiple customer demands, and this requires constant improvement to its operations. Using continuous improvement in your Start up you can achieve • Less waste, more satisfied customers and people • Improved commitment and retention of staff • Improved competitiveness and Improved problem solving 12Lean Start-up + Business Model Innovation By looking at these two approaches you can The case for using all design business models and validate them BUT without Continuous improvement the three approaches chances of scaling it are minimised. Lean Start up Business Model Innovation Lean Start-up is a helpful Business Model Innovation is approach, but some challenges crucial for any business to survive with this concept remain, by but without Lean Start-up and itself it does not address how continuous improvement to you retain market fit or validate assumptions the business deliver stable, scalable model, it can be nothing more software to the customer. than an interesting thought exercise. Continuous improvement This helps SMEs to increase speed to customers. Although without Business Model Innovation + Lean Start-up + understanding what the customer Continuous Delivery Continuous Delivery values, on its own Continuous By using these two approaches Here you can quickly learn about what Delivery will simply give you will have connected your is/ not valid as a product and can do it businesses a way to deliver waste Business Model with your in a well designed, scalable manner. BUT faster customer BUT without without the Business Model you may validating assumptions. struggle to take advantage of the revenue generating opportunities. 13By using all three approaches…. Business modelling and Lean planning Start Up Customer Centric Continuous Improvement Using all three approaches helps eHealth start-ups to develop and grow in the challenging environment of health and care. By using a multiple approach, eHealth start-ups are able create clear business models, rapidly validate/invalidate often risky assumptions and deliver value to their customers in a quick and scalable manner. 14Why eHealth is different? Each EU country has specific requirements regarding eHealth or The eHealth contexts. eHealth sector is specific and the market access regulation of health products/services. Business model canvas could be built define the position of your solution into several“contexts” specific to each market For medical devices, European regulation: and customer segments : devices/documents/revision/index_en.htm • Human and organisational context: which actors (professionals, citizens/patients) will use your solution? • Solution provider(s) context: who is/are the current What are their tasks their objectives? How do they providers? With who do you need to partner with work/live? How are they organised? What is changing with (products, services, technologies)? What is your position your solution? How will they adapt? Which change regarding your competitors? management strategy? Which training sessions? Which This could require to build partnerships, and build sub-ecosystems incentives? joining different skills and activities to develop an integrated solution, a comprehensive solution • Decision-maker context: which public policies/healthcare providers/insurances strategies your solution is related • Economic context: what is the funding scheme in each with? Which priorities do the public authorities/healthcare specific segment? How are the healthcare solutions are providers/insurances set up? Are they opportunities/ traditionally bought? If your solution act as a substitute, threats? what is the current cost structure / budget of your customers? Are there opportunities to disrupt the funding • Regulation & Legal context: which are the laws, model/system? directives, regulations related with your solution? which standards or norms? Does your solution comply with the requirements? Are they barriers or opportunities for market differentiation? What is the process to reach the market (market access regulation)? 15Why eHealth is different? As an eHealth start-up, you need to think about whoyou’re Business2Customer (B2C) selling your product to: • Your company sells its products/services directly to final customer/user. Business2Business (B2B) • The value proposition should focus on the user needs. • Your company sells its products/services to another organisation (public authority, hospital, insurance, other Example: a company provides to consumers a smart watch company…) in order to support its own activities. and a mobile apps to monitor parameters as number of steps and sleep activity • The product/service provided should bring value to the target organisation(s) within its (their) own business model. In Europe, there are a number of payment models, you will Example: a company provides to an hospital an remote need to consider which applies to your product: monitoring system for chronic diseases patients at home Business2Business2Customer (B2B2C) • Your company sells its products/services to another organisation (public authority, hospital, insurance, other company…), which is in contact with individual customers (mass market). • The product/service should bring value to the final customer/user (customer of your customer) and be integrated into your targetorganisation’s business model. Example: a company provides to an insurance company a web portal to give advises on nutrition, physical activities and wellness to the insurance’s clients 16Why eHealth is different? Moreover, you could engage different kind of relationship and Outcome-based business models (risk-sharing) agreements with your customer. Here below some specific • Definition: risk-sharing contracts mean that the customer agreements & purchase processes: and the provider are co-investing to implement the solution, agreed on a starting situation and objectives, and Public sector will share the risk of a benefit or a loss , associated with • Pre-Commercial Procurement (PCP): generally several the implementation of the solution. procurers associated decide to share the risk of designing, • Alliance contracts: Collaborative approach with all prototyping and testing with providers- The PCP is organisations (commissioners and providers) sharing the procurement of research and development of new contractual responsibility and risk, therefore promotes innovative solutions before they are commercially joint ownership of outcomes available - commercial-procurement• Social Impact Bonds (SIBs): 3 types of actors are involved: a public authority, a service provider and an impact • Public procurement of innovation (PPI) occurs when investor. The SIB is a contract with the public sector or public authorities act as a launch customer for innovative governing authority, whereby it pays for better social goods or services. These are typically not yet available on outcomes in certain areas and passes on part of the a large-scale commercial basis and may include savings achieved to investors. A social impact bond (SIB) is conformance testing - https://www.innovation- not a bond, per se, since repayment and return on investment are contingent upon the achievement of Platform_Guide_new-final_download.pdf desired social outcomes; if the objectives are not • Innovation Partnership: introduced in March 2014 by the achieved, investors receive neither a return nor new EU Directive 2014/24/EU on Public procurement, this repayment of principal model facilitate relations between public purchasers and solution providers (still not always implemented in national regulations) - content/EN/TXT/?uri=celex:32014L0024 17Why eHealth is different? Below is a table summarising the different kinds of business models related to the agreement and the type of customer you have B2B Business models B2B2C B2C Public sector Private sector The final customer Reimbursement (citizen/patient) pays partially administrative process or totally the cost / the Fee for Negotiation on (Inscription on intermediary (e.g. insurance, Direct marketing pricing product/service reimbursable bank…) proposes the product/ product/services list) service to its customers (with or without financial support) Different models: – Fee + % of ROI – % of ROI only rd Outcomes-based – Deal with 3 actor: impact investment n/a n/a model (SIB) model (Risk-sharing) Comment: request evaluation capacities to assess the starting situation and ROI after intervention ACTION. Watch the video and see how this eHealth start-up used the 3 approaches to improve their product and their business design. - Owlet's business modelling competition video 18Resources Validation of hypothesis approach BUSINESS MODEL INNOVATION Business model canvas explained (video) - Market fit productmarket-fit-26608647 Business Models for eHealth Report ( including 5 case studies) Minimal Viable Product including business model canvass VALERI, GIESEN, JANSEN (Feb 2010) Prepared for ICT for tools, Customer interview templates and customer/ product Health Unit DG Information Society and Media European validation tools Commission 28 February 2010; Case studies and%20Resources alth_report.pdf Pivoting Examples of Business model canvas mHealth solution: CONTINOUS IMPROVEMENT Continuous improvement tools LinkedIn, Facebook, Google, VISA, Twitter: ces/9791/9791K/Continuous_Improvement_Tools_wi.pdf examples/ Stakeholder analysis Several examples with healthcare provider: analysis.html model-canvas-43559948 Practical InnoSupport guide LEAN START UP McAdam et al (2000) "Innovative change management in SMEs: beyond continuous improvement", Logistics Information Lean start up principles and resources Management, Vol. 13 Iss: 3, pp.138 – 149THE 19About the project The GET project delivers four high-impact services to eHealth SMEs and entrepreneurs in order to boost their growth and If you want to know what GET can do for move them to the next level of competitiveness. Each life- transforming service has been designed to provide cross- you, suggest resources or insight border value to a different target group of companies. It will do by offering training, mentoring, market intelligence, Contact us support and, above all, quality contacts. These services are: • Get on track Targets early-stage companies, start-ups and entrepreneurs. It supports them to optimize their business model and commercialization strategy. Follow us on twitter • Get funded Designed for SMEs looking for a second round GET_eHealth of funding. It provides training, resources and networking opportunities with investors at European level. • Get global Helps mature SMEs to access international markets by putting them in contact with foreign commercialization partners and potential customers. This document is a deliverable of the European Project GET, funded • Get inspired Identifies and disseminates unmet needs in by the European Commission with Grant Agreement number 611709 eHealth that can become business opportunities for entrepreneurs and SMEs. 20