new business development in the health care market in

Original Asian Pacific Journal of Disease Management 2009; 3(2), 47-62

Copyright© 2009 JSHSS. All rights reserved.

New Business Development in the Health Care Market in Japan —Creativity Management in the New Business Development—

Shoichiro Meguro

Reitaku University

AbstractFrom the government to the boardroom to the business press, everyone is talking about health care relatedbusiness as one of the potentially growing industries in Japan. However, the management of new businessdevelopment in health care fields is not so simple and certainly much more complicated that of the tradi-tional industries, and demands that we fully utilize our creativity. In this article, the author demonstrateshow large industrial organization embedded the health care business, which was far different from theexisting businesses, in a broad-based and highly systemic way by presenting the strategic concept whichconceptually made up of three nested layers—market space, business space and organizational space—.To challenge these business developments, the author presents five key agenda, and also describes thebasic thoughts and methods, which are common across almost all the new business development, based onmore than twenty years frontline experience in operating and managing health care businesses.

Key words: new business development, home oxygen therapy (HOT), customer-focused, customer rela-tionship management (CRM), product life cycle (PLC), vision, market space, businessspace, organizational space, customer activity cycle (CAC)

Introduction

What is the difference between marketing in thehealth care business and the traditional product/ser-vice business? Are there any differences between thehealth care field and the other industries? I think theanswer is yes, there are substantial differences; mar-keters should develop a different approach in theirmarketing in the health care fields because of individ-ualized customers, rather than targeted customer seg-ments, complexity of the offerings, which arecombinations of product and service rather than sim-ple products or services, and value that is experienced

by the customer, rather than product/service valueitself.

This is one of the reasons I chose to highlight newbusiness development in health care and/or health carerelated fields and provide insights for marketers toanswer these questions, especially for those leaderswho are in the initial trial stages of the challenge todevelop new businesses or new products/services.

In addition, there are potential new businessdevelopment opportunities today in health care andrelated fields to develop entire new industries becauseof dramatic changes in the demographic and psycho-graphic situation which reflect changes in the life-style, attitudes, behavior and, most importantly, thevalues of the Japanese people. There are many relatedissues behind these changes, including increasinginterest in lifestyle-related diseases of the aging pop-ulation and stimulation of new policies on aging forthe elderly by the government.

At the same time, professionals, including physi-

Received: March 21, 2009Accepted: June 7, 2010Correspondence: S. Meguro, Department of Economics andBusiness Administration, C. Hiroike School of GraduateStudies, Economics and Business Administration, ReitakuUniversity, 2-1-1 Hikarigaoka, Kashima-shi, Chiba 277-8686, Japane-mail: [email protected]

48 Asian Pacific Journal of Disease Management 2009; 3(2), 47-62


cians, as well as managers in hospital and clinics, aredeveloping new frameworks and/or systems to pro-vide and operate their services based on their ownideas and concepts to improve medical services.

My goal in developing this presentation is to pres-ent a conceptual framework for developing new busi-ness based on my experiences and reflections frommore than 20 yr in health care industry management.In this presentation, I will give the background on thedevelopment of marketing in Japan in order to shedlight on the key managerial issues which I will dem-onstrate. And I plan to review the new business (inthis case, the Home Oxygen Therapy Business) devel-opment process in established companies using astage-by-stage approach and identify some manage-rial points for each stage. After that, I will focus on thekey managerial issues in new business development,which I believe contribute to the successful develop-ment of new businesses in the health care and relatedmarket arena, as well as other existing markets.

Marketing Overview in Japan

What is the very nature of business? Why is newbusiness development becoming such a critical topicamong key industries? Those are the very fundamen-tal questions for business people in this rapidly chang-ing and unpredictable world. One of the approachesto understand this situation practically is to thinkabout what happened to the marketing concept in Jap-anese industry in the last half century.

The marketing concept which was introducedafter 1950s, and the concept of marketing mix, for

example, has become common knowledge and exper-tise among businesspersons in Japan. Those whowere in the service industries in Japan accepted thedevelopment of the concept in the marketing mix andput the 7Ps of the marketing mix into practice (see Fig-ure 1)1).

The marketing concept itself has been very muchfocused on product development based on new tech-nologies and added value to secure a premium in themarket by better product differentiation. In Japaneseindustry, new product development has been one ofthe key strategic issues and has contributed to growingthe Japanese economy after World War II. In short, the

prevailing successful approach has been to focus onproduct development and improvement, as well asproduction efficiency, to cope with competition in theglobal market.

The marketing concept has thus contributed todeveloping mass consumption by mass advertisingthrough the mass media produced by mass productionin order to utilize the scales of economy to achieve thecost competitiveness. Simply put, consumers are con-tinuously consuming branded products and enjoyingnew branded products coming from industry. Indus-try and consumers in Japan have both been enjoyingthe benefits of the value of something new for almost50 years.

In these past two or three decades, the environ-mental factors of business operations have beenchanging dramatically by the advancing globalizationof the free market and the rapid progress in informa-tion technology. Now, marketers are becoming morenervous, irritated and disconcerted to realize that com-

Figure 1. Marketing Mix —Product & Service Marketing—

49New Business Development in the Health Care Market in Japan —Creativity Management in the New Business Development—


petition is coming not only from Japan but also fromChina and other developing countries.

Japanese industry followed the US companieslead in outsourcing the relatively less competitive por-tion of the total value chain to improve their cost com-petitiveness. These models have been very successfulbut still the concept of the management was focusedmainly on the cost competitiveness. And as globaliza-tion has advanced, the effectiveness of product differ-entiation and planned product obsolescence has beendeteriorating at a rapid pace because of the competi-tion for lower prices initiated by developing countries.

I believe the real problem is that marketers havebeen feeling and realizing how everything is drasti-cally changing, but they have been caught up in thestatus quo of the traditional way of thinking in market-ing. It is true that marketers believe in consumer ori-entation and have been very successful in deliveringquality consumer-oriented products to grow theirbusinesses. But, consumer-oriented means to targetthe consumer as a whole, or part of a specific averageconsumer segment, not as individual customers.

Under these circumstances, marketers are discov-ering that some of the reasons for the changing situa-tion include globalized competition. In addition, therules of the game have been totally changed from aproduct based concept to a customer based or cus-tomer-focused concept as in, for example, the cus-tomer relationship management (CRM) capabilitydeveloped in the last decade. I believe marketers, whoare solely responsible for the sustainable growth ofbusinesses, are now faced with tough but meaningfulchallenges.

The Process of Developing the Home Oxygen Therapy (HOT) Business

There are good reasons to integrate my feelingsand ideas into a framework to develop new busi-nesses. My previous company was the pioneer inoffering HOT as a business in Japan. I led the effortfrom 1986 to 1993 to launch and established the firstmover’s position in this new industry.

Until 1986, I had been working for the polyesterfiber division as the manager of sales and marketing,which was one of the mainstream businesses in thecompany. Our customers were major spinning millsin Japan and we had attained the largest market sharein this traditional industry. The business itself was oneof the traditional B2B businesses and we were facedwith fierce competition at this mature stage of theproduct life cycle.

At the end of 1986, I was assigned as a candidatefor manager to have the responsibility for strategicdevelopment and control of the oxygen concentratorproject. I was very excited to challenge this new posi-tion but at the same time, more perplexed than sur-prised to find myself in another world. First as Imentioned above, there was a totally different style ofmarketing activities in the process of launching theHOT business for chronic obstructive pulmonary dis-ease (COPD) patients, which required our company todeploy a much wider variety of competencies com-pared with that of new product development and mar-keting in the past2). In Figure 2, I propose a newframework for marketing mix in the health care busi-ness using 7Ps, modifying the one presented by

Figure 2. Marketing Mix in the Health Care Business



McKinsey3).These differences demanded that we move the

focus from specific industrial customers segments toindividual customers, i.e. patients, and the medicalspecialists providing their care. In addition, the HOTbusiness itself consisted of a combination of productsand services, different from the company’s existingbusiness to simply supply materials to other compa-nies. Finally and most importantly, there was no exist-ing system or business model in the home health carefield in the private sector in Japan at that time.

The company was one of the leading material sup-pliers to the spinning industry and the business opera-tions at the time were focused on improving theproductivity and efficiency to cope with fierce compe-tition not only in the domestic market but also interna-tionally. It was very natural that the company wasvery technology oriented and appreciated their prod-uct quality, and the capability of their research andnew product development, based on world-class R&Dactivities. The company had grown up mainly pro-ducing man-made fibers but tried very aggressively todiversify into a wide variety of markets in the 1960sand 1970s. But almost all the new businesses hadfailed, except for the pharmaceuticals business, whichthen brought the company into the health care arena.The HOT business developed just after the bitter expe-rience of multiple failures of various attempted proj-ects for diversification.

It is not my intention here to review the history ofthe company in detail but it is very important to under-stand the background in order to stimulate your imag-ination of the actual process of new businessdevelopment in the company at the time.

The government had made the decision to intro-duce HOT under the umbrella of national health insur-ance in 1985. At that time, even though many leadingcompanies in a variety of industries were interested indeveloping this new health care business based ontheir own specific strengths, including companies inconsumer electronics, electronic medical devices,home building, private life & health insurance, andmedical gas production, no one had yet accepted thechallenge to actually start up a new business. But theyall shared the notion that it was the time to develop anew business because the reimbursement system hadagreed to reimburse HOT.

1. Stage 1: Developing the business conceptIn this case, it was truly fortunate that the senior

managing director himself, a board member, hadcarved out the home health care business as a desiredmarket space for the division to achieve sustainedgrowth for the future. The division had been targetingvery specific pharmaceutical markets including respi-ratory disease, and launched a set of new products rel-atively successfully.

He had a very clear notion on the strategic devel-opment of the pharmaceutical business division forwhich he had responsibility. Actually, the divisionhad entered the market very late and he thought that inorder for the company to succeed, it should thinkabout how to differentiate itself from the existingcompanies, not only in products themselves but also inthe concept of the business as whole. Based on thisnotion, he expressed to the initial project team mem-bers his basic thinking and prospects for the marketspace, and shared with them his business concept,which was, ‘Reassurance and Credibility’.

The points we need to recognize at this initialstage are as follows:1) In the health care business, one of the triggers to

launch a new product/service is that it has beenauthorized as an approved therapy under theumbrella of the national health care reimburse-ment system, thus providing a concrete potentialsource for revenue.

2) In developing a new business, visible commit-ments by top management or at least one of thesenior management people is required. Evenmore importantly, they should articulate theirown concept or view, which should be very cre-ative, and also their high level prospects for thenew businesses, which are very understandableand motivating for the team, even without detail atthis point.

3) It is very important to see where potential compet-itors are coming from. In the case of the HOTbusiness, as mentioned above, there were a vari-ety of companies with a very strong interest in theemerging business. In other words, it is very com-mon to have exactly the same interest for emerg-ing opportunities among existing competitors, butin addition, potential competitors in totally differ-ent industries and in foreign countries should alsobe watched very carefully.

4) The difference between success and failure in



kicking off the initial stage depends on how thebusiness concept and vision are articulated, andby whom. In other words, the business concept,vision and values, as well as clear the definition ofthe new business, should be deployed with a well-organized demonstration. These are indispens-able ingredients to achieve the advantages of thefirst-mover.

2. Stage 2: Visualizing the market spaceWe had started to begin by meeting and discuss-

ing with people inside and outside the organization todefine the business, based on the business conceptexpressed by the senior managing director. This pro-cess was conducted concurrently with the process ofclarifying the vision statement. We visited key doc-tors and specialists not only in Japan but also in the USwhere HOT was developed in 1965, almost 20 yearsbefore the company started the business in Japan.

The vision development was the next step afterthe decision was made to kick-off the new business.Based on the business concept, we started to build andreinforce the vision in the project team. The visionstatement became “to enhance the quality of life ofpatients at home”. This was communicated toemployees, key affiliated providers, and even to thepublic. We utilized many kinds of media, includingthe development of brochures for patients, doctors andnurses at hospitals (see Figure 3).

The process was very exciting but required much

reflection and debate to conceptualize the customervalue of HOT. But in the process, we developed manyuseful connections with people and organizations inthis potential business field. We were very successfulin getting support from doctors, nurses, allied healthprofessionals, and patients in hospitals. During thisstage, we also clarified who, and for what reasons,among the patients and doctors made the decision onchoosing the oxygen concentrators. Based on thisinformation, the communication strategies wereestablished to efficiently diffuse the concept of HOT.

The main point here was to develop conceptualmaps which literally clarify who surrounds and sup-ports the patient, determine what kinds of connectionsexist among these surrounding individuals and orga-nizations, and finally, map out who was doing whatfor whom and who had responsibility for each action.These conceptual model-building processes werereviewed repeatedly until I fully understood them (seeFigure 4).

This process was very time consuming for usbecause of the complexity of the connections amongall the people in this “previously unknown world”, butbased on this process, I was able to demonstrate to allrelated parties what kind of business we were devel-oping and specifically what kinds of roles/responsibil-ities should be shared with each other (see Figure 5).

It was a truly creative process for the team andvery exciting at the time to define this new marketspace in front of their eyes, though the object at that

Figure 3. The Good ‘Vision’ Leverages the Organizational Capacity



time was how to explain the workings of this new mar-ket space in order to make sure everyone involvedunderstood.

When I think back about the whole process that Ipromoted, I now recognize that this stage was not onlythe most critical point in establishing the new businesswithin the company organization, but more impor-tantly, it was the crucial stage to develop a dominatingpresence which gave the impression of our companyas the “first mover” in the HOT business in both the

marketplace and to the public.At the same time, we started to develop commu-

nication strategies to quicken the pace of the diffusionprocess of HOT among doctors, nurses, allied healthprofessionals, and the public, all over Japan.

The managerial points for the second stage are asfollows:1) It is very important to clearly define the new busi-

ness. In the case of traditional marketing manage-ment, definition of the target market or segment of

Figure 4. The Roles & Responsibilities Among the Parties in the HOTBusiness (a conceptual model)

Figure 5. Visualizing the Relationships with Each Individual Patient



customers has been a very important key to suc-cessfully build up the marketing mix. But in thecase of developing a completely new business, ifyou are willing to meet this exceptional challenge,you should start by defining the market based onthe business concept.

2) The main points here are: to define who the cus-tomers are; what is the value or function to bedelivered to the customers; and how is this valueor function to be delivered. We need to recognizethe tremendous differences between traditionalnew business development and the approach weemployed in this case. In the case of the tradi-tional approach to new business development, weusually chose markets adjacent to the existingcore products. For example, we diversified theman-made fiber business from selling the staplefibers to polyester-blend yarns and fabrics inorder to increase the added value. But in the cur-rent case, the boundary of the target industry wasyet undefined and we just thought about how todeliver the customer value of HOT to the ultimatecustomers, i.e. the patients at home (see Figure 6).

3) One of the keys for success in developing and dif-fusing the vision is to invest enough resources. Atthe initial stage of developing a new business, themembers of the project are typically recruitedfrom unrelated areas of the company and havetotally different backgrounds and experiences.Every businessperson can understand that it takestime to get all the members of the team on thesame page, and for them to share the same big pic-ture. If enough time and resources are not allo-

cated, these efforts can stumble at a very earlystage when some team members fail to gain acommon image of the new business ahead.

3. Stage 3: Setting up the business spaceIn this case, we started from what is known as a

membrane-type of oxygen concentrator and later,decided to introduce an absorption-type of oxygenconcentrator. The initial decision was very simple inthat the specific membrane was developed by ourcompany and patented. But after a series of clinicaltests by key researchers and doctors, it was deter-mined that the membrane type could not produceenough oxygen to cover all the COPD patients athome due to low concentration (Actually, the mem-brane-type of concentrator provides nearly 40% ofconcentration of oxygen but the absorption-type ofconcentrator is able to produce up to 95%).

At that time, the mainstream oxygen concentratorin the US was an absorption-type because of its highconcentration capability. There were about 35 com-panies which provided equipment for the home healthcare industry in the US. Our company had a technicalassociation with one of the leading US manufacturersin order to enhance our capability for pursuing cuttingedge technologies in this market. And we importedtheir concentrators for the clinical tests in Japan. Inparallel with these clinical tests, we started to gatherinformation and knowledge on the liquid oxygen sys-tems at home because these systems had also beenintroduced in the US.

Up until that time, the basic sales methods andguidelines had been set up based on the experience of

Figure 6. Developing the New Business Around the Customer Value Cycle



selling the membrane-type concentrators. After theapproval of HOT for reimbursement by the nationalhealth insurance in 1985, sales activities had beenexpanded in terms of coverage of the market byincreasing the number of the sales reps.

It was a critical time to make the decision whetherto sell the membrane-type of concentrator based onthe company’s own technologies or to start-up theentirely new HOT business, which required us todevelop the totally different management. The under-lying issues, which had been discussed among keypersons, including board members, were as follows:1) The HOT business is not a logical and appropriate

business for the company because traditionally ithad grown up as materials producer and had noexperience to operate a business to consumer(B2C) business and, especially, provide servicesdirectly to the ultimate customers.

2) If the membrane-type of oxygen concentratorswere not adequate for the patients, we shouldthink about just selling the medical devices towholesalers without getting into the home healthcare market by ourselves. And, we should notdevelop the absorption-type of concentratorsbecause of a lack of technology, competitiveadvantage and core competences.

3) So far, the company had been very successfully inestablishing a high value corporate brand and ifthe HOT business was not well accepted or acci-dents happened, it had the potential to do enor-mous damage to the image of the company.Finally, after considerable discussion and

because of the senior managing director’s over-whelming persuasive power among the board mem-bers, the decision was made to start up the HOTbusiness directly by introducing an absorption-typeoxygen concentrator. I believe the fact that the busi-ness concept had been shared and well acceptedamong the members of the board was one of the keysto reaching agreement.

Professor Thomas L. Petty at the University ofColorado, the physician who developed HOT in theUS, and Assistant Prof. Louise M. Nett, a specialist inthe respiratory therapy field, supported doctors andnurses in Japan during this period by giving lecturesand education/training programs. The company orga-nized everything for these programs, which contrib-uted to developing relationships with key doctors,nurses and other caregivers. But more than that, these

promotional activities were well accepted and muchappreciated by the medical professionals in eachregion due to the fact that state-of-the-art research andpractical guidelines in HOT had been introduced.

The Business Space of the HOT and related busi-nesses is represented by the theory of the three dimen-sional model by Abell4). The HOT business includesthe business of the membrane-type oxygen concentra-tor and the absorption-type of oxygen concentrator,and is part of the home care business, The process ofdeveloping the business space has defining the busi-ness re-defining the business, and re-re-defining thebusiness. The Figure 7 illustrates the business spaceof the HOT business and the process of the developingit.

Key issues in defining the business space are asfollows:1) The business space defines the dimensions of the

operating business in which the company is goingto execute first in the market space. In otherwords, the business space is the top-priority sub-space of the market space, and the one in whichthe company has selected as the place to kick offthe first new business. At the first stage, concep-tual model building was one of the key elements,but in this second stage, one should think abouthow to manage the business in the emerging mar-ket as the first mover on a more practical basis.

2) At this stage, strategic development should bepromoted and led by a knowledgeable marketingperson, followed by a team of people who haveextensive experience around the customers. Thecommitment of top management is required in theteam building to initiate the new business devel-opment and also in choosing the candidates andnominating team members. Team building is oneof the greatest challenges5).

3) The marketing strategies are going to be devel-oped at this stage and these strategies are imple-mented at the same time. In the case of the healthcare area, the marketing concept is more thanproduct marketing or service marketing. Themarketer should have a holistic view of the healthcare system in developing and implementingstrategies (see Figure 8).

4) The market structure in the health care field ismore complicated than traditional industries.There are a variety of related parties and each ofthem has specific roles, functions and responsibil-



ities. Each of the parties must agree upon the newmethod, operations and the business itself. If oneof the parties does not agree, you should be pre-pared for your project to float in midair, effec-tively disconnected from the market and unable totakeoff (see Figure 9). In other words, if you aregoing to introduce your business into the healthcare market, profit or non-profit, you shoulddevelop and keep well-established connectionswith all the related parties, which include not onlythe patients but also their family members, people

in the government, medical specialists in the hos-pitals and leading professors in the pertinentdepartments in medical schools.

4. Stage 4: Developing the organizational space

The organizational space defines the structure ofthe new business organization, including the infra-structure, and especially focused on effectiveness andefficiency to deliver the optimized value to the cus-tomers.

Figure 7. The Process of Developing the ‘Business Space’ —Three Dimensional Business Definition (Abell)—

Figure 8. Consistency Management Between Internal & ExternalFactors with the Marketing Mix



I believe it is very natural that every establishedcompany has its own genetically programmed behav-ior according to its specific culture and organization.These factors should be carefully analyzed when start-ing up the new business to identify both the drivingand potential suppressing factors, especially in estab-lished organizations, whether private or public.

The process of developing and designing anappropriate organizational structure was conceptual-ized and discussed in parallel with the process ofdeveloping the business space. It is instructive toapply the stage model such as four stages model byGebhardt6) et al. to analyze this process.

In this case, three steps were taken before thefourth stage:1) Step 1: The senior managing director chose the

initial project team members and developed thenew department under his control, but separatefrom the rest of his department. At the time, healso had responsibility for the pharmaceuticalsbusiness unit and he juxtaposed the HOT businessdepartment with the existing pharmaceuticalsdepartment. Each department had all the func-tions needed to operate their own business andthose two departments were totally independent.Some of the managers who had responsibility forinformation gathering in R&D did work for bothdepartments but their roles and responsibilitieswere clearly separated into two departments.

2) Step 2: When the senior managing directordecided to start up the HOT business, the deci-

sions around developing the organization werebasically made by him alone, including nominat-ing candidates for managers in marketing andsales, as well as in the manufacturing facilities. Inthe marketing and sales fields, he chose candi-dates among the people who had worked for him,or whom he had some kind of relationship, evenindirectly, in the past. The personnel decisionswere made top down and the organization of thesepersons was very carefully considered in order tobuild up a well-balanced team to start the newbusiness.

3) Step 3: In this case, the initial project team, the socalled “control tower” of the start-up business,had been organized in 1986 just after HOT wasapproved by the government to be incorporatedinto the national health insurance and the managerwas nominated and transferred from a differentbusiness unit to organize and direct the team. Thefunctions of the team, later becoming the HOToffice, covered almost everything necessary tomanage the business including financial manage-ment, product planning, product development,management information system development,sales planning and control as well as marketingstrategic development.The senior managing director selected key per-

sons for this team who had expertise in each functionalarea. The team contributed to formalize every activityin the business and documented them in written jobdescriptions. As you might imagine, the team had

Figure 9. Development of the Identity for the New Business



highlighted a variety of themes, which had been col-lected by the front line sales reps, manufacturing man-agers in the manufacturing facilities, R&D staff in theresearch center and related people outside the com-pany, for example from potential competitors and thegovernment.

The “control tower” of the start-up business wasdedicated to developing the marketing strategies andimplementing multi-functional activities includingfinancial control, product development, managementinformation systems development, training and edu-cational programs, and sales management, on a dailybasis. Everything was new for each member eventhough each was well trained in his/her specific func-tional area, but all the members of the team made adedicated effort to make the new business happen suc-cessfully.

The team finalized two proposals within 5 years:one was the proposal for the organization to spreadand cover the entire Japanese market, and the otherwas a long-term business strategic plan to build thehome health care business.

Key strategies in the organizational develop-ments:

There are so many strategies and practices avail-able for launching new business organizations butthere were some noteworthy strategies employed inthis case (see Figure 10)7).1) We need someone who provides centripetal force

for gathering resources, especially people, inorder to initiate the new business.One of the points here is that the senior managingdirector himself initiated the new business con-cept. And, importantly, he was well respected inthe company because of his distinctive perfor-mance in his career. He had been supported by theoverwhelming majority of the middle manage-ment people who had the experience of workingwith him either directly, or indirectly, because ofhis good personality and attitude in his day-to-daybusiness activities. In addition, he was also muchappreciated outside the company by competitorsas well as business partners.

2) Developing the ‘control tower’ is the key togather, integrate, and implement the energy tolaunch the new business.It’s worth noting that the senior managing direc-tor had assumed approval of reimbursement as anexplicit prerequisite to start up the HOT business.The organizational development process was pro-moted step-by-step using a hands-on approachbecause of uncertainty of the final decision by thegovernment whether HOT would be covered inthe reimbursement system under national healthinsurance. But he made developing the projectteam organized around the shared business con-cept as his first priority. He recruited key manag-ers and persuaded them through his enthusiasm to

Figure 10. Evolving the Business by Repeating to Define the Business



join the initiative by articulating his very basicbusiness concept. Through his hands-onapproach, he motivated the new team members toaccept the challenge and work with him to bringhis business concept into shape.

3) The top priority of the control tower is to visualizethe business concept not only inside but also out-side the company to insure the existence of proofof concept.Among the activities of the control tower, it is par-ticularly worth noting that we had been dedicatedto developing communication strategies that visu-alized the business concept and then sharing thisvision with the public as well as doctors, nurses,and allied health professionals.The reasons are as follows: first, in the case of theproducts/services that are reimbursed by thenational health insurance system, advertising isregulated. We needed to develop the idea of howto promote the diffusion process for the HOTamong the medical specialists and also the publicunder these constraints. Secondly, in order that allparticipants can visualize the start-up business,we believed it was critical to promote the conceptand vision of the HOT business, which wouldbring revolutionary change for the quality of lifeof COPD patients in the hospital.We identified that the company’s corporate brandwas very popular among the public, with the pre-vailing image at that time of a very successful andaggressive company among the cutting-edgecompanies in the high polymer chemical industry,diversifying its business by challenging competi-tors through innovation. The corporate brand hadalso been well accepted by doctors and nurses inthe respiratory field, as well as by patients,because of the company’s new pharmaceuticalproducts. That was the reason why we empha-sized the vision incorporating the corporate brandto promote the communication strategies.This vision was highlighted at every possibleopportunity inside the organization and in parallelwith the activities. We developed PR strategiesfor the public and related medical specialists inthe health care field from the patients’ point ofview. We put the emphasis on our basic notion todevelop the HOT business around the customersi.e. the patients, the intention being to be acceptedby the families of the patients, as well as by the

medical specialists. These promotional activitiesfor the public were also communicated exten-sively to the people inside the organization toreinforce their dedication and commitment to thenew business.The bottom line here is that the vision promotionin the organization should be prepared by consid-ering interactive effectiveness between inside andoutside the organization in order to achieve theoptimal outcome. In other words, the promo-tional activities are not just printing the vision onthe pamphlets and in-house magazines, or repeat-ing the same comments in managers’ speeches.The vision should be shared in ordinary conversa-tions and discussions among the people inside theorganization and also in the daily conversationwith related people outside the organization (seeFigure 9).

Creative Management in the New Business Development

There are several challenges for marketers to copewith the changing market and to develop new businessto keep their company growing. One of the basicissues, which everyone understands but rarely thinksseriously about, is the creativity ability that everyonehas. I believe every manager would agree that discus-sions on enhancing intellectual creativity and logicalthinking power should be a daily occurrence.

The process of the new business development, asI have explained so far, is comprised of a variety ofingredients and very specifically arranged steps (seeFigure 11). But in addition, the managers who areresponsible for managing this process are required toexecute these steps not sequentially but concurrently(See, Figure 12).

We, marketers, have been well trained and areaccustomed to promoting strategies and projects in asequential manner. But in a dynamic changing world,the process of business development or product/ser-vice development, demands that we manage manythings at the same time due to the need to managemany interested external parties, including partners.At the same time, we do not want to reveal anythingthat could give an advantage to potential competitors.These situations require us to create the big picture inthe future by holistic thinking and articulating them toother people both inside and outside the organization.



There are several aspects in which creativity isrequired in new business development (see Figure13).

These are important questions to consider whenthinking about creativity in your organization.1. Is there a clear business concept? In other words,

can you explain your thought in very simple andunderstandable words?

It is a truly creative process to form a businessconcept into a business by awakening to thepotential, newly identified needs of the custom-ers. In our case, the senior managing director had

Figure 11. Creative Processes in Developing the HOT Business —Sequential Process Model—

Figure 12. Creative Processes in Developing the HOT Business —Concurrent Process Model—



a very clear and understandable, but ambitiousbusiness concept: ‘Reassurance and Credibility’.And more importantly, the concept was definedfrom the customers’ point of view and was alsofuture-oriented to develop a completely newhome health care business within the company.

The concept had logical, emotional and strate-gic implications, which inspired creativity and aspirit of buy-in among the people who had beennominated as candidates for the leaders of the ini-tial stage of the developing the home health carebusiness. In the early 1980s, no one could imag-ine launching a business concept like this in thepharmaceutical industry in Japan. Those peoplewho had the opportunity to discuss this with him,including me, were very excited and encouragedby the creativity and imagination expressed tocreate the new business.

2. Is the articulated vision of the new businessunderstandable to everyone in your organization?In other words, what is your definition of the busi-ness space?

At the stage of building up the business space,the vision should be identified and shared amongthe people in the organization. At the same time,the communication strategy, mainly the publicrelations strategy, should be developed to com-municate the vision as well as the business con-cept at every opportunity. For example, we

utilized every chance available, such as maga-zines for nurses, exhibits at medical congresses,training programs/seminars, broadcasting pro-grams including TV, and newspapers as well asin-house publications and brochures.

The point is that it is crucially important to com-municate the vision outside of the organization inorder to be recognized and that its existencebecomes a kind of proof of reality of the new busi-ness for people in the field, and the public in gen-eral. Such recognition by people outsideinevitably reflects on the insight of the visionowned by the people in the organization and rein-forces their ability to conduct bold activities withsufficient self-confidence (see Figure 3).

3. Who are the players on the stage, what kind of per-formance is each of them going to play, and whois working behind the scenes? And who is theaudience? Are there clear definitions of every-one’s role and what kind of values they deliver tothe individual customer?

When we were ready to start up the business,we reconfirmed the functions and roles for eachmember in a visible chart in order to share itamong all the team members. Importantly, thiskind of chart should also be shared with the cus-tomer to make him/her understand the mechanismto deliver their value received. The point here isevery member is able to identify his/her real role

Figure 13. Creative Management in the Health Care Business Development



in interacting directly or indirectly with the cus-tomer to create customer value. This is a basicconcept used to think about individual customer-oriented marketing, especially in the health carefields.

4. Is there a clear definition of the customer values?The customer values means indispensability

for the specific customer. In other words, theorganization should become the only and irre-placeable source for each individual customerspecifically. That’s why the views of each spe-cific customer’s daily experiences should be iden-tified continuously. The customer activity cyclemodel provides us with one of the most valuabletools to identify this value by carving out thevalue-gaps, or identifying what is missing. Figure14 depicts the customer activity cycle model,which is modified model, originally proposed byVandermerwe8) (See Figure 14).

For example, in this case, the company origi-nally developed oxygen concentrators, but thenadded value by developing ambulatory oxygenbottles to enable their customers (i.e. patients) toeasily walk around and go shopping. Even in thecase of traveling on trains and airplanes, the com-pany provides not only the ambulatory oxygen,but also set up oxygen concentrators in custom-ers’ hotels or inns free of charge. They have beenaccumulating a repertoire of these many small,but very helpful, efforts into their service throughthe re-defining process (as shown in Figure 15) inorder to literally realize their vision for making

themselves an indispensable part of the patients’quality of life, in home or out.

5. Do you have the best team members both insideand outside to deliver the customer value mosteffectively and efficiently?

For several years now, there have been a num-ber of excellent cases published on the valuechain9) or supply chain management to achieve acost advantage by outsourcing some, or even all,link in the chain to developing countries becauseof their lower labor cost. This is reasonable interms of gaining cost competitiveness while thecost is significantly lower than in the home coun-try, and the competitors, including those of thedeveloping countries, have not yet emulated themanagement expertise. However, it has becomevery clear that outsourcing alone is not able to beleveraged for sustained growth in the long term.

The point that we should think about here ishow to develop partners inside and outside theorganization and how to manage collaborationamong the partners in a creative manner10). As wecan experience and demonstrate in outsourcing,information technology gives us invaluable toolsto communicate with each other in images andsounds, as well as characters, at the lowest cost.

Dr. Thomas L. Petty described collaborationvery clearly as follows11); “The essence of collab-oration is the bringing together of professionalswith unique skills and experiences in such a fash-ion that forward movement becomes possible. Noone person can be dominant. ‘The chain is only asstrong as its weakest link’. No one has a bad ideaand all are considered”.

Figure 14. Customer Activity Cycle Model

Figure 15. The Cyclical Process of Re-defining the Business



Closing

The case that I have introduced here happenedalmost 20 years ago and the number of the patients onHOT today is estimated at between 130,000 to150,000 in Japan. It is said that the company now hasaround 65% market share. But as I have pointed out,the management of new business development in thehealth care fields is not so simple and certainly muchmore complicated than that of the traditional indus-tries, and demands that we fully utilize our creativity.

It may be true that there will be the potential todevelop other new businesses in the health care fieldin Japan. For example, in the last ten years, chronicdisease management has receiving a fair amount ofattention from leading companies including life insur-ance companies, medical devices producers, andinformation technology companies, among others.Now there are many institutions, including big andsmall, private and public, profit and non-profit, whichare taking the plunge into projects, programs and busi-nesses in the disease management field.

I hope that those who are accepting the challengeto develop these new businesses in the health carefield gain useful suggestions and insights from thiscase. First, in the case of developing a new businessin the health care field, the business concept should bejustified by an obvious public need. Secondly, thebusiness itself should be prepared for engaging in notonly more societal issues but also specific personal-ized day-to-day experiences. Thirdly, I want toemphasize here that they should be prepared todevelop the programs and new products/servicesthemselves based on scientific evidence and makethem credible for the customer. Finally, the most crit-ical point for marketers who are trying to enter thehealth care market from traditional industries is thatthe customer value should be co-created with the cus-tomers, and not provided by just selling the specificproducts and/or services by pushing them into themarketing channels. In other words, customer valueshould be provided for each specific individual’songoing experiences concurrently and in a seamlessmanner by combining products, services and informa-tion. This demands much more complicated and cre-

ative management and marketing activities than thoseof in the traditional markets12).

References

1) Meguro S: The marketing imagination for the healthcare organization. Reitaku International Journal ofEconomic Studies 15, 137–142 (2007).

2) Meguro S: A prospective perspective of the health-care marketing in Japan. Reitaku International Jour-nal of Economic Studies 13, 25–27 (2005).

3) Tanimura K: Bonanza in Japanese healthcare busi-ness struck by novel technology. McKinsey Quar-terly (Japanese edition) 21, 169 (2000).

4) Abell D: Defining the business: The starting point ofstrategic planning. Englewood Cliffs: Prentice-Hall,1980: 169–173.

5) Anthony S, Johnson M. et al.: The innovator’s guideto growth: putting disruptive innovation to work.Boston: Harvard Business School Press, 2008: 199–222.

6) Gebhardt G, Carpenter G. et al.: Creating a marketorientation: A longitudinal, multifirm, groundedanalysis of cultural transformation. Journal of Mar-keting 70, 37–55 (2006).

7) Meguro S: Challenging new business developmentin the health care field in Japan. Reitaku Interna-tional Journal of Economic Studies 15, 146–147(2007).

8) Vandermewe S: Breaking through: Implementingcustomer focus in enterprise. Hampshire: Pal grave,2004: 64.

9) Porter M and Teisberg E: Redefining health care:creating value-based competition on results. Boston:Harvard Business School Press, 2006: 204.

10) Day G: The market driven organization: Under-standing, attracting, and keeping valuable custom-ers. New York: Free Press, 1999: 167–182.

11) Horiguchi T and Meguro S: New business develop-ment in TEIJIN Ltd: strategic development of thehome oxygen therapy business-case (A) and case(B). Tokyo: Business Consultants, 2004.

12) Meguro S: The era of creative management intelli-gence. Reitaku International Journal of EconomicStudies 167, 72–73 (2008).

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