Real-Win-Worth

June 2, 2006
Ronald B. Schilling, PhD

Making investment decisions is perhaps the most important responsibility of any executive. Examples in healthcare include building a new structure and purchasing a major piece of equipment. The typical approach involves a very long and tedious list of questions. For vendors, this means answering those questions. However, in the early stages, when strategy is required, Real-Win-Worth (RWW) is the way to go for both the buyers and the sellers of those investments.

Making investment decisions is perhaps the most important responsibility of any executive. Examples in healthcare include building a new structure and purchasing a major piece of equipment. The typical approach involves a very long and tedious list of questions. For vendors, this means answering those questions. However, in the early stages, when strategy is required, Real-Win-Worth (RWW) is the way to go for both the buyers and the sellers of those investments.

Key to a successful approach to making investment decisions is clarity, which requires excellent communication and calls for brainstorming among team members, such that critical thinking can effectively take place prior to the detailed planning process - that long and tedious list of questions. RWW manages to keep the essentials in focus, while allowing for in-depth analysis as well.

Real: How real is the situation under consideration in terms of the market to be served (i.e, is the market real?), and how successful will the product or service under consideration be in meeting the needs of the market (i.e., is the product real?). For example, if we look at a hospital considering whether to invest in digital mammography, we probably won't have much of a problem with the team agreeing that the market is real. Women's health is a critical need. But when we turn to the question of the product meeting the needs of the market, there may be some serious debate.

Equivalence has been proven for special market segments. However, the drive to "go digital" may be a key market factor as well. There is considerable data available to evaluate the question of whether the market is real.

Win: Is the technology competitive with existing technologies that are already in use or being considered (i.e., can the technology win?). An important strategic tool to think about for this evaluation is the High 5 (DI SCAN 4/7/06, High 5 highlights importance of understanding the competition).

At the RSNA 2005, this question was raised during a panel on tomosynthesis (a new technology for the study of breast cancer): "Should we still consider purchasing digital mammography in light of the exciting results being demonstrated for tomosynthesis?" The answer was that it should be done if the manufacturer agrees to upgrade the product to tomosynthesis - otherwise buyers should wait for the future.

The second part of "Win" is for a vendor to consider the capabilities of its organization in terms of skills and resources versus its competition (i.e., can the company win?). An important strategic tool to consider for this evaluation is the vision statement (DI SCAN 5/8/06, How vision determines success ).

The vision statement tells us how the organization will be successful. This goes far beyond just the equipment being considered. It is very possible that a market situation is real. But that doesn't mean the organization is properly positioned to win against other entities that might offer a similar or superior product or service.

Worth: The final part of the investment decision is based on the question, "is it worth it?" We might consider the customer and the stakeholders as the key players to whom this question is addressed. The customer will want to look at the diagnostic accuracy, sensitivity, and specificity of a modality. Here the customer needs to think about a High 5, whereas stakeholders will consider return on investment.

As noted earlier, the key in the early phases of an investment decision is to clarify the opportunities and issues for the team. RWW can do that. The major items for consideration are kept in focus at all times: market, product or service, technology, competition, customer, and investor. However, the way team members deal with individual factors is up to them. For example, should a consultant be brought in to look at the specific issues at hand? Or should results from a similar study be borrowed to understand the competitive technologies?

Shilling is an editorial advisor to Diagnostic Imaging and president of RBS Consulting in Los Altos Hills, CA. Comments or questions should be addressed to ronald11341@aol.com.