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J&J’s new breakthrough?

 

 

A revolution in mobility is here …

 

… says the website of Johnson & Johnson’s Independence Technology Division. 

 

 

In August, 2003, the company received approval from the US Food and Drug Administration to sell the “iBOT 3000 mobility system” (picture below).  This electronic wheelchair, developed in partnership with Dean Kamen of Segway, can do things no other wheelchair can do:

 

Ø      It can climb stairs;

Ø      It can move over uneven terrain and climb curbs;

Ø      It can extend upward, bringing people in the wheelchair to eye-level of someone standing.

 

These features are impressive and unprecedented in a wheelchair.  Johnson & Johnson invested eight years and $150 million to bring the iBOT to market -- there’s a nifty timeline on the website that sketches out some of the development’s major milestones.

 

Personally, I doubt whether the product will be successful, and believ that J&J will have difficulty recovering their costs on this investment.

 

I’ve come to this conclusion after answering four questions about the new product:

 

1. Is the price lower than existing products?

2. Is the value higher?

3. Are switching costs low?

4. Is it easy to get?

 

Currently, the iBOT 3000 yields the wrong answer to all four questions.  While it may serve as a pioneering product for later extension, its current prospects are bleak. 

 

  1. The iBOT’s price is more than 10 times higher than existing products.  The iBOT is currently priced at $29,000.  A state of the art powered wheelchair costs $2600.  Insurance companies’ existing policies will be a major barrier to purchase.

 

  1. The iBOT’s value is not indisputably higher than conventional wheelchairs.  One of the early testers of the product, Dr Rich Barbara, found himself yearning for his conventional wheelchair. 

 

Given the iBOT for a 2 week trial in 2001, he told the New York Times:

 

 “I was glad when my two weeks were up.”

 

The reason: while the iBOT can do things that conventional wheelchairs can’t, it also can’t do things that conventional wheelchairs can.  For example: it can’t fit into a small car.  It takes up more space when in use.

 

  1. Switching costs are high.  Users need training, and not all users of existing wheelchairs can use the iBOT.  Since the iBOT requires the use of one hand to operate the chair by manipulating a joystick, in addition to judging what kind of terrain to avoid, doctors can prescribe it only to patients who pass a physical and cognitive test.

 

  1. Current availability is limited.  We can anticipate widespread availability, given J&J’s strong distribution systems, but not immediately.   J&J is rolling it out in 20 clinics this year.

 

What is J&J thinking?

 

J&J invested many millions of dollars and years of time in determining this product’s commercial feasibility. 

 

How can we explain the difference between our quick and cursory prediction of iBOT’s failure and the extensive analysis and testing done by J&J which brought them to the opposite conclusion?  Here are several possibilities:

 

  1. The J&J executives know more than I do, and can provide different answers to the four questions above, particularly with respect to the value that users will give to this product.

 

  1. The iBOT is the first in a series of products that will eventually result in a major product success.  Like many breakthrough products, the first release provides the company with market information that is not available without launching the product.  If this is the case, I would expect to see product extensions, at lower prices, over the next 18 months.

 

  1. Organizational biases have pushed J&J to launch a money-losing product.  In an article in The Harvard Business Review of July 2003,  Daniel Kahneman, the 2002 winner of the Nobel Prize in economics, and Dan Lovallo highlighted a number of biases that can make organizations irrationally optimistic with regard to new products.

 

Like the Segway, to which it is related, the iBOT 3000 is a world-changing product.  But the world needs to change first for this product to succeed. 

 

(note: I did a second piece discussing the iBOT 3000 in September 2003.  Click here to go there.)

 

 

For more information:

 

  1. New York Times Story on the iBOT: http://www.nytimes.com/2003/08/19/science/19CHAI.html?ex=1062043200&en=a1def8bec5a88272&ei=5070

 

  1. Website for the product: http://www.independencenow.com/ibot/index.html

 

  1. I did a previous update on organizational biases in decisionmaking, starting with the Kahnemann / Lovallo article.  Here’s a link to that:   

 

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