Douglas FahlbuschDouglas Fahlbusch
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by Douglas Fahlbusch

Perioperative loves to apply innovations from other industries in order to improve the accessibility of healthcare. Why is a product ecosystem useful for improving accessibility, reputation and profit for healthcare facilities? Let’s look at mobile phones for an example of a product ecosystem.

Ten years ago there were just 5 major mobile phone manufacturers – Nokia, Samsung, Motorola, Sony Ericsson and LG, who together controlled 90% of the industry’s global profits. That was until Apple’s iPhone exploded onto the market soaking up an extremely large share of this.

By 2015, the iPhone generated 92% of global profits, whilst all but one of the companies mentioned above, made absolutely no profit at all. The iPhone looked great and had different and unique capabilities compared to the others, but it had been a very weak player, holding less than 4% of the market share in desktop operating systems and none in mobile phones.

Nokia and the other companies all had the classic strategic advantages which should have secured their dominance on the market; strong product differentiation, trusted brands, leading operating systems, excellent logistics, protective regulation, huge R & D budgets and massive scale. They appeared overall to look stable, profitable and secure.

So what caused this turnaround? The fundamental key to it was that Apple took full advantage of the power of platforms and the new rules of strategy. Platform businesses unite producers and consumers in high value exchanges. Their main assets are information and interactions. The combination is the source of the value they create, and their competitive advantage.

Based on this, Apple saw its iPhone and operating system as more than just a product. It imagined them as a way to connect participants in two sided markets, app developers on one side and app users on the other, thus generating value for both of these groups. As the volume of participation grew on each side, the value increased – a phenomenon called ‘network effects’ which is key to platform strategy. Amazingly by 2015 the company’s App store offered 1.4 million apps and generated $25 billion for developers.

Companies across many industries can learn from the brilliant success Apple had in building a platform business within an ordinary business. It’s a lesson that shows that companies who fail to utilise the platforms concept, and don’t equip themselves with the new rules of strategy, will fail to compete – fast.

Perioperative Solutions (PS) has embraced the ‘platform’ concept shown in the diagram. PS is a platform that brings suppliers (‘Providers’) together to form a product ecosystem for reducing risk and cost, and for improving the experience of patients, nurse and doctors. Healthcare facilities act as both consumers and producers, as their staff innovate using tools from Providers. In turn, the latent value otherwise lost through healthcare’s inefficiencies is unlocked, improving accessibility, reputation and profit for healthcare.

 

DFahlbusch
About DFahlbusch
Douglas has worked in healthcare for over 20 years, as a specialist anaesthetist and has a graduate diploma in management from the Australian Graduate School of Management. As a past Director of the Australian Society of Anaesthetists, being a patient and working with Adelaide hospitals, 1,000's of patients, nurses and doctors he has seen first-hand the need for a more efficient healthcare system. His passion is tackling waste and inefficiency by adapting innovations from other industries to healthcare and making healthcare a great place to be or work.

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Adapting Innovations from Other Industries to Healthcare