Episode #4 Transcript: Customization Per Clinical Application
In the world of medical visualization, digital visualization, cameras, and endoscopes there are always going to be projects and opportunities for new products that come out to go to market that need something that's never been done before. Certainly, that is an area of expertise for Lighthouse.
Specifically, it's one of those things that gets everybody thinking and moving in a positive direction because who doesn't like to create something brand-new?
Q - Justin Starbird: When we're talking about custom design and creating new products, and new technology, what goes into that? Who are the targets for those projects?
A - Benjamin Gray: Generally, the groups or the people that are looking for a custom design are also medical device companies, but they are not experts in the visualization or imaging side of things. We're talking very specifically about medical visualization, digital visualization, cameras, endoscopes, that nature of product.
Our typical client would have either a new therapeutic or other diagnostic type device where they're the experts on the therapy, or a specific procedure, or specific instrumentation, and they want to add eyeballs essentially to the system or visualization. They are not experts in optics, or image sensors, or video processing, and so they come to Lighthouse to help them out with that.
Q: When you're looking at some of these projects, when you're going through this with a client, what are the things that you ask them to look for? Like self evaluation things that help determine if there's not something else out there that's like their idea?
A: The very first thing we need to understand is what they want. That may sound like a simple question, but it's often a pretty loaded question, just like any aspect in life when we think of something, our very first inclination is a very idealistic view. As we start asking more and more questions about what it is we really want, how are we going to do it, things tend to get more complicated before they finally become clear to us.
Generally, our first interactions are trying to understand what somebody's trying to accomplish, and then asking some critical questions to think deeply about how that needs to be done. There are certainly times when the services and products that Lighthouse offers may not be of maximum value to our customers. We want to understand that early on.
We're not interested in spending our customers time or money in a place that doesn't provide them value. We're looking for the opportunities where we can provide significant value, and we can look for a long-term relationship with a customer who needs something very specific that doesn't already exist on the market.
Q: I would imagine that the relationships piece of that is really important because in some cases, if somebody is dead set on completing something, and they see another technology that they think would work but they don't have the expertise to pull back the covers, those conversations have got to be sometimes challenging when you say, "Hey, listen. You have to invest in creating a new custom piece to the project that you're trying to get to market."
A: The good news is generally by the time that we speak with our prospective clients, they realize they need something that doesn't exist, or at least that they're not aware of. There is always an education process, and it goes two ways. It's us learning about the prospective client and their method of operation, the way that they approach problems, the product that they're working on, then us educating them on the world of medical visualization, and what it takes to get to an endgame. Medical devices are not quick and simple to develop. There's technology to deal with, there's a lot of regulatory hurdles that you have to work through. Typically, our customers are medical device companies as well, so they understand those, but it is important that very early on we understand what are the orders of magnitude of budgets, of unit costs, of development styles, and make sure that there's a good fit between our services and products, and what the client is looking for.
Q: What is the process that you take your customers through when you're creating a design? What's their role?
A: Before we actually have a project, we're working with prospective clients, and we're going through what we call a discovery phase to understand what they want. Out of that discovery phase, we're generally able to put together a proposal. This proposal is going to be different in every application because what we do is custom work.
In all cases, this drives a phase-gate design control process where we go through multiple phases of increasing control and complexity that start from basically a paper exercise and end with transfer to manufacturing of a product. It's a pretty common process for medical devices and it's well exercised system, but it's something that we have in place to make sure that we're doing things in the proper order, at the proper time, maintaining the proper documentation, but also giving our client the value that they need.
Q: Obviously, value is one of the biggest parts of the equation. It's also got to be one of the scariest because you're talking about cost, because when you hear custom, when you hear here creating something new, in my mind that just means dollar signs. How do you help show them the value in creating a custom solution versus trying to edit or adjust something that's off-the-shelf?
A: It's a great question. Typically, this would go through the process of understanding what it is that they want and giving them options. Those options are generally going to have cost, performance, timeline, and perhaps other commercial considerations that we’re always going to have to consider compromises. We talk about a Lamborghini versus a Toyota.
If your objective is to have a vehicle, then a Toyota is just fine. If your objective is to go fast and look flashy, then you're going to want the Lamborghini, but obviously, there's a pretty significant price tag difference between the two of those. We want to make sure that our customers are getting the value that they want, where they see the value.
If they want a Toyota, we want to help them create a Toyota. If they want a Lamborghini, then we're going to work on creating a Lamborghini.
Q: Lighthouse is set up well to handle both. Let's go back to those things that are considered. You had said cost, performance, timeline to market, something else you mentioned was IP protection and creating a differentiation . Are those value plays for you to share with clients?
A: Yes, certainly. It does depend on the market and the specific product. Oftentimes when we're working with a client who is looking for something specific, it's because they're developing either a new product or there's a new procedure that they're trying to advocate. If it's successful, certainly other companies, other countries are going to look to try and replicate that.
By having something that's not available off-the-shelf and that has been developed and manufactured by a company like Lighthouse with very strong IP protection, that gives them a leg up in making sure that their process, their product, or their procedure is not being copied.
Q: Well, is it common to modify stuff that you have off-the-shelf or options that are off-the-shelf? Is the preference to create something new every time?
A: Our systems are generally all built around building blocks. The question is, "How small or big are those building blocks that you put together?" We're not designing our own image sensors, we're using off-the-shelf image sensors, but we are creating custom electronics that hold that sensor, get the data from point A to point B, and then process that video. Each of those steps have various levels of how deep we can go in terms of refining them.
One good example would be around the video processing. There is a whole host of options of what I'd call pseudo-to-off-the-shelf parts. There are options to do completely custom, and then anywhere in between. It really depends on typically the performance requirements and the cost requirements from a customer.
Q: One thing that always comes up when we're talking about customization and creating something new is the fear that because it has not been done before, then the service after the delivery could wane. How does LHI handle that?
Because it's one thing if you take something off the shelf that has been mass-produced. There's a customer service line. There are communities online. There is tech support available. When you guys create something, what's some of the value that you add after the sale? After delivery?
A: Our goal is to continually manufacture product for our customers. We generally don't sell the products that we make directly to the public. They essentially always go to our customers for integration and distribution. Basically, our communication is one point of contact between us and our customers, rather than having a whole bunch of customers in the public.
We support all of the products that we manufacture. Of course, we've gone through a design process, and a manufacturing transfer process. The goal is to make sure no non-conforming product ever leaves the building. In scenarios where there is a question or something comes up, we need to address it, if we do have a direct line of communication with our customers to help resolve that.
Q: That's something that gives great peace of mind once it walks out the door. That's really important for folks to know, understand, and be able to consider moving forward. As we talk about value, we talk about opportunities for customization and to bring things forward, but when is it not advised to do something custom?
A: Generally, There are three things that we consider. One is performance. What do you need the device to do? The second is schedule. How quickly do you need it to come together? The third is around cost, and this is both development cost and unit cost. Oftentimes what we see if a company is in the very early stages of trying to prove out a technology, the return on custom development is pretty low.
You can spend too much time and too much money developing something that won't eventually make it to the market, but it's just giving you information. A lot of times you can gather that information by using something that is existing off the shelf. Perhaps it doesn't meet your exact criteria, but it can give you enough information.
Now, Lighthouse still plays a valuable role in that scenario where the off-the-shelf equipment may still need to be packaged or configured in such a way that it can be cleaned or sterilized, or go inside of our customers devices.
In that scenario, we typically are looking to do what we call an MVP or a Minimally Viable Product, it meets some minimum amount of requirements to gather data. These are purely prototyping and development type units. That can inform our customers what they need. Do they need to invest in further customization or is what was available off the shelf or close to off-the-shelf valuable?
We like to be very open and honest with our clients. Again, this is a long-term relationship. We're looking to manufacture product. We strive to make sure we say the things that need to be said, rather than what people want to hear. Sometimes that may be that it's going to be costly and time intensive to develop exactly what they want, and maybe we need to consider an alternate set of performance requirements, or maybe we decide that there's some middle compromise.
Again, this is all about being very open, transparent, and providing value to our clients that fit within their constraints.
It's all about making sure that there's value in it for the client, and who their audience and targets are. By having the ability to see the big picture, with the skills to be able to create something new, and create opportunities that didn't exist before, it is a true skill set for Lighthouse.