Labs vs Home-Diagnostics #3 – and why home-diagnostics are an intangible threat

In my last article, I presented the definition of a disruptive innovation, described the devastating impact it can have on an incumbent's business, and made the case that home-diagnostics meet all four criteria to be considered a disruptive innovation. In case you missed this article, you can find it?here.

As mentioned earlier, I will now share a detailed analysis of all four criteria by applying them to home-diagnostics, starting with the first one:

· No market data can be obtained about home-diagnostics

The four criteria have in common that they disguise the threat of a disruptive innovation so that incumbents will classify the new technology as harmless and unattractive. They are why management often learns about a disruptive threat far too late - namely, when the technology suddenly becomes competitive and begins to target the same customers.

There is no market data about Home-Diagnostics in the first place

The home-diagnostics market is real, and I could name many companies by now that have either launched or are about to launch their first-generation home-diagnostics solutions. However, "real" from the perspective of an established company doesn't mean listing a handful of startup's home pages but rather providing concrete numbers on how many home-diagnostic devices and tests have been sold in the market.

Established companies usually operate in well-known markets where a thorough process for evaluating, developing, and launching new products is not only possible but critical to success. Such procedures require precise, quantifiable data, usually obtained from customer surveys, competitor analyses, and market reports.

Many companies in the home-diagnostics field that I consider successful are not publicly traded and therefore have no obligation to disclose any information - while they are probably the only ones with reliable market data on customers and competitors at the moment.

Regarding market reports, innovation science states that good journals usually have an excellent track record in predicting developments in established markets. However, when it comes to innovations with a disruptive nature, such reports are generally not in a position to make accurate predictions, even if they have substantial amounts of information at their disposal?– disruptive innovations are just unpredictable.

Another problem I've noticed is that new markets often develop new terminology to accurately describe their industry's specifics. I personally first started using "home-testing" and then switched to "home-diagnostics," as it sounds more relatable to "lab diagnostics" (e.g., no one talks about "lab-testing"). I tried to summarize the current terminology of home-diagnostics in one of my earlier articles?here.

However, the language of home-diagnostics has not emerged yet, and it will continue to be confused with blood glucose tests, blood pressure monitors, or the constant synonymous use of COVID-19 tests for a long time to come. An unclear terminology is another reason for the difficulty in obtaining reliable market data.

The dilemma of the first criterion is not that the business cases on home-diagnostics will look too unattractive to invest in but that those business cases cannot be completed in the first place because reliable market data cannot be obtained. While a poor but complete business case at least makes it to the resource allocation committee, an incomplete one is not even considered.?

In other words, the processes that guide established companies consistently and reliably through the turbulent waters of competitive markets are usually the same forces that will kill any attempt to invest in a disruptive innovation because those processes are inherently incompatible with the characteristics of a disruptive innovation.

Instead of squeezing any bits and pieces of market information of a disruptive technology into a resource allocation process made for existing markets, companies must consider using another set of procedures that take the unique characteristics of new-market-forming innovations into account. Otherwise, they risk missing out on new market opportunities.