The “Innovation Era” is causing tangible changes in orthopaedic research & development (R&D) and product development. Small amounts are being shaved off traditional new product budgets for reallocation to advanced projects believed to have a higher return on innovation. These reallocations often result in double-digit increases in budgets for highly innovative and advanced products. Amounts, at times not small, are being directed toward external open innovation that affects R&D development. Processes and measures are now needed to understand the efficacy of changes in allocated R&D spend. As pure innovation plays often take more time to get to market, it is increasingly challenging to find frameworks that capture the essence of these new risks to determine if they will result in premiums in the orthopaedic marketplace.
At the same time, patents and other forms of intellectual property (IP) are becoming more important. The ability to monetize IP has increased significantly. In the next decade, the ability to transact an IP sale will begin to rival the ability to transact a product sale. Business and product plans will evolve to weight products and their IP equally as potential revenue and profit streams from any given R&D investment. Orthopaedic product development professionals will soon work in a highly concurrent fashion with their IP counterparts. These often separate organizations will become much more integrated.
Underpinning this all is the ever-growing importance of maintaining core and functional competencies. With global knowledge doubling nearly every year for the last 20, keeping staff current on today’s skills while building new ones for the future is a necessity. Human resource management practices are changing to facilitate the active management of competencies, historically a touchy subject. Competency measurement is growing. In orthopaedics, competent products that effectively and economically span the physical and biological domains are the key basis of competition.
These four macro trends will create permanent changes that permeate R&D/product development processes and metrics.
Professionals in western civilization caught a glimpse of the future of competition in the 1970s when Japanese automotive, consumer electronics, semiconductor and robotics manufacturers arrived in western markets with highly competitive product offerings. In less than a decade, market share began moving from west to east. The offerings were not simply lower cost goods manufactured overseas, but rather better designs at better prices. Western companies began to examine their entire business models. Historical approaches to product development and manufacturing were a center of focus. Over the next two decades, western companies concentrated on more effective and efficient execution, and on lowering of defect rates. Time-To-Market, Lean, and Six Sigma were the great initiatives leading the way.