Insights on innovation from industry disruptor Dr Elaine Saunders
Doctor Elaine Saunders is an award-winning business woman, audiologist and academic with accolades including being awarded Asia’s Leading Woman in Healthcare, the Victorian Pearcey Entrepreneur Award and the American Academy of Audiology’s Award for Achievement in Industry. As managing director of BlameySaunders Hears, together with her business partner Professor Peter Blamey, they have developed a hearing aid package eliminating the need to visit a specialist – disrupting the audiology and hearing aid industries in the process. Samuel Tait of I/O sat down with her to gain her insights into disruption, innovation and how technology is changing the delivery of health services.
Samuel Tait: How did you get involved in the hearing aid industry?
Elaine Saunders: I think there are two aspects. One is that I’ve always been involved in hearing. I was inspired to do that as a missionary entrepreneur kind of thing because my dad was deaf and I saw how he just wanted good hearing aids. The technology just wasn’t good enough. That got me working with deaf kids as a volunteer. I thought the problem there was even worse. I didn’t really know how you could address the problem, but I was really interested to work in the field. Then, when I think about it all the jobs that I’ve had since my first career jobs, I was always the first appointee, so I was always quite entrepreneurial in them.
The very first career job I had was as a an audiological scientist. It was a new profession and I was put in charge of 25 hospitals in London, including two teaching hospitals, and told to make sure the standard was suitably high including training audiologists and upgrading the equipment. We ended up building the first semi-private, self-sufficient entity the NHS had ever had.
Then the opportunity came to be imported, if you like, into Australia as a foreign expert, actually to set up testing at the Alfred Hospital. I was not really intending to spend the rest of my life in Australia, but I thought it was a really good career opportunity to do something quite different in another country; it was a really good career development for me at the time.
As I was coming out to Melbourne, which is the home of the cochlear implant, it was inevitable that I would end up joining Graeme Clark’s team at The Bionic Ear Institute.
ST: What did you learn from your experience at The Bionic Ear Institute and working with Graeme Clark?
ES: After having children I went to work with Graeme where my job was to help articulate the problems that audiologists identified, to the engineering teams. He had pitched it really well because it just gave me free run to do anything. It was a great place from which to be launching new technologies.
I always think he was a really good entrepreneur for a number of reasons. One was he found the money – even using a telethon to get the original funding was part of it. He always knew, it seemed to me, how to pick good people. He had the vision and persistence to finding the money and hung in there. There are lots of other people in the story, but I think he is the central entrepreneur.
You need a lot of money to buy medical devices and he needed a lot of money. He didn’t raise all of it, for sure, but he kept going long enough to make it more than a dream. It is now a great Australian success and I think Graeme’s part in getting that initial bit going and hiring the right people was really quite visionary. Not everybody hires the right people.
ST: How do you define innovation based on your experience at The Bionic Ear Insitute and now leading BlameySaunders?
ES: Innovation is solving a problem that needs solving. That might mean developing a new product because there’s a market need for it. It might mean making an existing product better because there’s a need for it. Therefore it is developing a path to new solutions. In other words, I think innovation has to be useful.
ST: What is the role of disruption in innovation? Is it something you set out to do or is it the outcome of innovation?
ES: I think it can be either. I think it depends how your innovators are thinking. We didn’t specifically sit down and say let’s disrupt the hearing aid industry. We just thought there was a better way and did it. What we developed has ended up being very disruptive and I think that as newcomers to the industry we were in a better position to do it differently, rather than working with an existing model. I think it can be either.
The way things existed within the hearing industry; companies were not giving the best result in any way to people with hearing loss. It wasn’t from a technical perspective and it wasn’t from a service delivery perspective. In fact, the amplifier was born out of Peter Blamey, my co-founder, sitting at a conference once and thinking, “This is really not the best way to do this”. That’s what we ended up feeling about the whole business and delivery system.
I think if you sat and dwelt too much on what disruption meant that might be a bit discouraging because you’d think, “Well, how am I going to create something that’s so different? How am I going to message it? What will others say?” It’s much more focusing on a solution, and delivering that.
What I’m saying really is that disruption is a way of taking a really good, hard look at something and saying, “Is there a better way to do that?” It might be disruptive. It might be innovative. It’s probably both. What you’re actually doing not just do a little tweak of the old system. You need to do something completely different.
ST: People seem to be very fearful of disruption, specifically related to the impact of change that disruption brings. What is your experience of disruption?
ES: I think you’re absolutely right – that disruption brings a process of change. I look at what’s happening in medicine at the moment and we’re facing the biggest changes in medicine since the invention of the printing press. The internet is giving people information just like the printing press did, but much more convenient and accessible information, and it’s also in the next layer above. It’s giving a huge ability to communicate between people so they share their thoughts. The whole medical profession, which has this extremely secure pedestal-like position where they command, are suddenly not in that commanding position anymore. The patient is actually, or the customer, the client, the patient, whatever you want to call them, the consumer is suddenly in much more of a driving position than they ever were before.
That’s the real change that’s going on. There’s always been networking between people, but it’s being shared at a much higher rate than ever before. The people who are used to being in that control and command position no longer are. It’s rattling them at two levels. One is their whole business model is under attack. And secondly their whole authority level is under attack. They genuinely don’t believe that you can perhaps do more towards healing yourself. I think it’s leading to a mixture of business fear and a fear that that they are no longer the only person who can help fix you.
ST: Could you describe how you are disrupting the hearing aid industry?
ES: Within the hearing aid industry the big players own about 95% of the market. They supply through audiologists then to the consumer, which means manufacturers are really making products for the audiologist not for the consumer. They are just not in touch with the end user. They’re not as nimble, and have lots of legacy. We felt that we could go out and do what probably they couldn’t do.
The main thing we learned was that there would be a real advantage in delivering technology straight to the consumer. That meant you could optimise your technology for the consumer rather than for the supplier. We felt that we could make better products with this consumer focus.
Secondly, we felt that if the consumer was customising and setting up their own hearing aids that they would get better results. They are listening and they know what they want, and that we could make it easy for them to do that.
Thirdly, by having a very innovative business model we could bring the price right down and still make good margins. When you can provide a better product, for a better outcome, at a lower cost – you can end up disrupting a market. We realised that the customer we wanted to work with was the person with hearing loss.
ST: Innovation and trying to change the way than an industry works has inherent risk. How do you mitigate that?
ES: Both formally and informally. I think to some extent you’re keeping your eye on the environment and looking at things that might increase the risk on certainly a daily basis. Then, in the more formal strategy, evaluating things quite carefully. I think it depends where you want to put your risk compass or your risk reward compass.
My co-founder, Peter, tries quite hard to avoid doing things that have a strong downside. He feels quite strongly about reducing any potential downside. That’s not unreasonable because from a personal point of view we’re both aware that we are both 60 and want to exit at some point. We have built an asset that’s got quite a comfortable level of value. We don’t want to burn it. We want to build on that, but it’s probably more important not to burn it. I think that how much risk you’re prepared to take as an innovator and entrepreneur probably depends on where you are in your career cycle. Whether you’re thinking you want to do this another four times… or not.
I think that if we don’t do anything silly, we are building Australia’s first hearing aid company and neither of us want to do anything that would really risk that happening. At the same time, we have got an opportunity to really drive industry change. I think risk is making sure the small things don’t knock you over, and on your strategy you are deciding where you want your risk point to be.
We allowed an executive to make some decisions, which actually we probably shouldn’t have allowed in hindsight because they were quite risky at a big stage for the business. We’ve learnt from that and I don’t think the staff in their current role, anyone is exposed enough to make a big risky dent. I have to explain to people sometimes that as the MD, I need to keep my eye on quite a lot of little things and to be informed of little things sometimes because if a wheel falls off, the buck stops with me. If somebody, for example, put up a Facebook post that was entirely inappropriate, it would be me that ended up in court. Sometimes you do have to explain to people why you want to know some of the little things. Not exposing yourself to mistakes is slightly different to not making mistakes. Mistakes made inside, that’s all right, but if somebody does something outside – it’s my neck on the block.
ST: What have been some of the biggest problems that you faced building the business?
ES: We’ve seen people try cheaper hearing aids through a consumer model and fail. We were, if you like, competent (or maybe arrogant enough) to think we could do something that would be successful. I think we’ve both got a very strong approach. When problems come up we just see them as barriers to overcome. You have to solve them. It’s not optional. You can’t say, “Oh, dear. I wonder what happened here. We can’t do anything.” You’ve got to solve them.
The major thing for us was finding the right way to start. When we were both employed at our first company, Dynamic Hearing, we thought it would be wonderful to run a consumer business alongside it. We actually thought it would be a huge asset to Dynamic Hearing to have a sister company that was a product company. Being vertically integrated we thought they would have made a bigger profit together. Unfortunately our investors didn’t share that view.
By that time we were very keen to make something happen. Fortunately, Peter had the financial resources to go off and work part-time and think about the new company and did so. I joined him at a later point where it was suitable to leave Dynamic Hearing. Also, we’d done a certain amount of work by then and put in a lot of sweat equity. I’d certainly put in evenings and weekends and he’d put in a lot of time so that we felt that we could launch and it would work out OK.
ST: How do you differentiate between the two sides of the innovation? Between the idea side of innovation and the execution of innovation. How does that work at Blamey Saunders?
ES: I’m the ideas person often and Peter’s the implementer. We don’t have very formal processes. I try and keep the environment open for ideas all the time and I hope that I do. That people feel free to bring ideas forward all the time. I certainly encourage them to. Although you certainly have to set expectations that not every idea is going to make it.
If it’s something within the business where an evaluation suggests that it is really going to help the business, then we put the right team in place to make sure it’s operationalised. Peter would probably drive that, but not necessarily for all that long. It depends what it is. For example starting a clinic in Sydney wouldn’t be considered as very innovative, but we want the experience to be quite innovative and it’s an idea that needs to be operationalised so we put a team together to do that. We pick the right people for the right skill to make it happen.
We are trying to always do things better with the customer’s experience in mind. Always to reduce the barriers for them, to increase the results, and to make the experience really, really positive. I want that to be a constant. If there’s a big thing that needs a bit more planning, then clearly you’ve got to prioritise it and decide whether it is something you’re not going to do. You have got to go through a formal evaluation of how good an idea is it, how important is it. Then, it’s back finding the best people to do it. You’ve got to use your people smartly in a small team and I guess we’re 25, that’s a relatively small team. Choose the right people to do things from the point of view of the outcome, but also you want to stretch people and make sure that they’re really feeling they’re developing and being offered new challenges.
ST: How important is working with a co-founding partner that brings complimentary skillsets?
ES: I think if you’re confident and comfortable enough to do it yourself on your own and you’re that sort of personality, I don’t see why one wouldn’t. I think there are a lot of advantages in doing it with someone else also. Partly because you have a broader range of expertise. Partly you have some moral support. It could be quite lonely otherwise. Depending on what you’re doing. On the first stage of our business we were traveling a lot. Frankly, it’s more fun hanging around airports with someone else than it is on your own.
If you’ve got a complimentary co-founder, then I think that’s mostly a practical advantage. It’s quite hard even negotiating when you’re on your own and you go into a room and there are five people along the other side of the table. It’s hard work. It’s like the spotlight’s never off you. Having that partner is a huge advantage.
I suppose the way that we found each other wasn’t entirely by accident in that Peter was working as a researcher and unit leader and I had moved into a commercialization role within the same industry. I was clearly flagging that that was a side of life I was interested in, but he’s got some financial knowledge in his background and finance training, which is helpful in bridging across these elements. I have some engineering and science in my background, so there is an overlap. It’s not like you’ve got two people who are in completely different skillsets or come from completely different backgrounds.
ST: What companies do you most admire for the way that they go about innovation?
ES: Uber and Mozilla are two of them.
Uber because I think they’ve looked at the customer situation and frankly made it better in a very practical way. By doing that they’ve met similar opposition to what you meet in health in a way, which is regulations and legislators saying, “Well, you can’t do that. It’s probably not safe”. The fact is Uber is very challenging because they provide such a good service and if they were awful there wouldn’t be a problem.
Mozilla, I think because they’re very community focused.
Check out part two of our interview with Dr Elaine Saunders here, covering operations of innovation. She discusses how they used and solved customer needs to build their business, the value of external expertise and partners, the importance of diversity and culture to innovation and some of her advice for successful programs.