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On Medonyx: Small Company Realities
Monday, May 03, 2010 - mcanido

I recently sat down with Medonyx, a Toronto-based company that develops and manufactures infection control solutions. The president, Gilad Shoham, spoke candidly about the realities of small companies, product development and the approval process. His insights illustrate the complexities around making and selling products to meet a market need; and are a must-read for anyone planning to, or already operating a small business.

ON MEDONYX

MC: Tell us a little bit about Medonyx?

GS: Medonyx was founded in 2004 with the introduction of the gelFAST product line, designed to combat low-hand hygiene levels of healthcare workers observed in many hospitals. gelFAST is a wearable alcohol hand-sanitizer device (about the size of a pager) that is clinically shown to significantly increase hand-hygiene among clinicians, and was the recipient of several major awards including the DX/National Post Award. We have been basically doubling in revenue each year since founding. We came out with the initial gelFAST version and refined the product over several generations to improve hand-hygiene. Each iteration has been progressively easier to wear, easier to disinfect, and easier to use. Basically, we took the concept of a wall mounted hand-sanitizer that you see in a public washroom facility, shrank it down, and redesigned it to be wearable. gelFAST 2GO can be worn on the waist, on a lanyard, clipped to a lab-coat, and so forth. And each way yields better hand-hygiene...

MC: What may seem surprising to you is that we often see clients that don't seem to take as much pride as Medonyx does in their website. Do you have any comments on this?

GS: Thanks... The first thing most potential customers do when considering our product is to visit our website, so a professional presence is a prerequisite. This brings credibility to your work and thus we take pride in creating our website in-house - with thanks to our talented staff. At Medonyx we have what I like to call generalists, in that we are all able to do a multitude of tasks and are flexible in what we do. Our team is largely comprised of individuals with design backgrounds, ranging from graphic design to industrial design, even architecture.

MC: Your product gelFAST 2GO is one of the products featured on your website. Can you tell us how this product originated?

GS: The first gelFAST was originally designed for doctors and nurses; however, we started to get a lot of business in the promotional world and by that I mean a significant portion of our business was a result of individuals wanting to put their logo on our product. This led to the creation of gelFAST 2GO. People wanted something that was simpler and more economical. And we wanted something that you could throw across the room and someone on the other side could pick it up and instinctively know how to use it. Zero learning curve.

Although Promotional wasn't our ultimate target market, we found that the product has what I like to call "market stickiness" in that our customers were excited about it and that it wasn't just another "me too" product. It is not a cure for cancer; it is a simple product that quickly spread through word-of-mouth. When people got one, their friends wanted one too. And so it went...


ON PRODUCT DEVELOPMENT

MC: What does it take to develop a product?

GS: Developing a product is relatively easy. But developing the right product is the real challenge. We're trained as product developers, so we know that you can throw money and brain cycles at a problem and wind up with a warehouse full of product; the trick is making a product that so intimately fits a market need - in the right way - that it hits. This is a basic MBA 101 lesson. When you just learn it, it doesn't mean anything. But it takes standing knee-deep in your own product for that to click.

MC: How do you get a product that sells?

GS: We found that it starts with the customer. That sounds like another one of those fortune- cookie-type business clichés, but it's true: for us, the secret sauce is getting the customer to buy into the product before it exists.

MC: Do you think timing is a component?

GS: Timing is complicated - with innovative products, we are always dealing with the future. We have to be ahead of the market to offer the next innovation, but not so far ahead that the market doesn't exist yet, and we die all alone in the future, waiting for the market to catch up!

Also, sometimes customers cannot articulate exactly what they need. That is why it is our job to understand what the person is looking for in a way that they may not even realize. We got sizeable purchase orders even before our products existed on the market. Each time our customers were aware of this. Our customers are hospitals and government agencies and tend to be risk-adverse and not necessarily early adopters. Getting customers to "pre-commit" was a strategic shift for us - a big breakthrough. What this did, is it allowed us to mitigate risk by taking the appropriate channels to tailor our product to their needs, which is what we did with, for instance, Bettershield, our disposable anti-fog plastic FaceShield.


ON PRICE TARGETS

MC: What channels did you take?

GS: With Bettershield two major teaching hospitals in Toronto needed pandemic stockpiles for disposable face shields. Because they did not like the existing products already available on the market, they were able to show us exactly what they disliked, and so they asked Medonyx if we could do better.

MC: Was there a catch?

GS: Yes, they gave us a price target - a very very low price that we were not accustomed to dealing with, but on the flipside the purchase quantity was quite high. The price target was driven by the market's price target. And had we developed a product without customer input, we would have been left with a great product that we could not sell. The aggressive pricing informed many of the design and engineering decisions we made.

MC: How did you overcome this challenge?

GS: Well the cheaper you want a product to be, the more you have to spend in the beginning. By that I mean, investing hundreds of thousands or even millions of dollars in development and tooling, so that you can remove labour steps and to build the automation machinery to replace the person doing each step. We make our product locally, which means/meant we had to develop our own innovative manufacturing processes to compete effectively with offshore suppliers.


ON THE APPROVAL PROCESS

MC: Aside from overcoming price targets, what are some other obstacles you experienced?

GS: A big obstacle we overcame is the experience of developing a superior yet more expensive product that users on the front-line like, but whose purchasing managers - removed from the action - do not like on price. You need to systematically look at who your customers are all throughout the opportunity chain - from users to purchasers to management.

MC: Who were your customers for Bettershield?

GS: Customers are not just one set of individuals, typically an organization has several people involved in the decision process and that may even be at cross-purposes with each other. For example, front-line workers who wear the product have a particular set of needs. They don't really care about storage; they care about how the face shield feels when you are wearing it. Then there are managers who care about whether the front-line personnel not only like the product, but use it and that the compliance rate is high. Then there is the finance department who cares about the cost and balancing their budgets. There are logistics people that care about storage and lead times from receipt of order. And finally, in our case there is the pandemic planning team that cares about things like product shelf-life and ease of deployment ...So under one customer umbrella there's the reality of a complex "ecosystem" - our actual customers.

MC: How does this challenge present itself to smaller companies, compared to larger companies like 3M?

GS: Not only do you have to match competitors but you also have to overcome the natural inclination for purchasers to choose the more established company's product over yours, especially when up against a company like 3M. The product not only has to be better than theirs, it has to be MUCH better.

Bettershield looks simple, but it is actually quite sophisticated: We had to invent manufacturing processes and custom formulate elastomer compounds. We had to get vendors that could manufacture perfect film, develop anti-fog technologies from the ground up, and so forth. Basically it involved thousands of R&D hours...

MC: What are the pros and cons of Bettershield?

GS: The main benefit of BetterShield is that its users dramatically prefer using ours over what existed before. This is a very general, but comes from individual design "scrimmages" where we have designed to win. Our lead competitor's product can easily fall off the user's face; ours doesn't. Our competitors' plastic easily fogs up, ours doesn't. Our product has more coverage, and so forth.

Bettershield stacks very easily, which is attractive to those who oversee logistics. It is innovative because of the unique design which makes it comfortable and secure for front-line workers, ultimately raising compliance, which satisfies their managers' needs. When SARS caused supply chains to break down, face shields were not reusable. Our product, even though it is disposable, comes with a set of instructions on how to reuse the face shield in case of emergency. For each area having to do with a disposable face shield, we simply considered how to surpass what preceded us: we just aimed to create a better shield.

MC: What are the next steps for Medonyx?

GS: In short, finding and teaming up with "Development Partners" to help us bring out cool new products that the world needs. Development Partners are thought-leaders in hospitals, clinics, and elsewhere who become lead customers for our new products. We have a pipeline of exciting new products in various stages of development. But our challenge is to mesh our new products intimately to market needs - as I mentioned, it's easy to design a product, but harder to design the right product. Development Partners help us by signing on to an idea - either our own product concepts, or even a product idea or need they have originated - and becoming the lead customer for it. That is how we developed our last two hit products. The Development Partner is a rare and special type of person - they have the vision to advance the state-of-the-art in their field, and the skills to navigate the complex bureaucracies of their organizations. When we team up with them, this seriously fosters innovation. If the product or the need is in our market-space - infection control, usually disposables, and is something that can benefit from fresh thinking and innovation, then my team at Medonyx gets the chance to truly shine.

MC: Thank you for taking the time to speak with us and for sharing your experiences with our readers.

GS: My pleasure.

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