Today’s high-tech companies must face the ongoing challenge of adapting organizationally and philosophically as their markets evolve from supply side to demand side. In both instances, the technology shared had positive effects on Aircraft’s market competitiveness. Author: Steve Alder has many years of experience as a journalist, and comes from a background in market research. Start studying HITECH & Breach Notification. Steve holds a B.Sc. Rather, they need to link R&D with marketing. Google has found that about 50% of B2B queries today are made on smartphones. For strategic reasons, the company may have placed the high-tech group in a research environment (Silicon Valley, Route 128, or Research Triangle), or an attractive site (Aspen or Austin, for example), or at some distance from headquarters’ distractions. Marketing has tremendous impact on society. The Boston Consulting Group (BCG) expects that figure to grow to 70% by 2020. HITECH allowed penalties to be issued for HIPAA violations that occurred without the knowledge of the covered entity or business associate if the covered entity/business associate should have been aware that HIPAA was violated by exercising reasonable due diligence. A latent demand for in-home pregnancy tests may have existed for centuries, but biotechnology made these tests feasible and inexpensive. These managers fail to reorient themselves so that they can compete effectively under the new conditions. In the opinion of Richard Reiser, the California-based advertising executive, “True marketing—marketing strategy and positioning, not sales alone—often only occurs when the advertising agency sits down to plan a campaign.”. In development, the company focuses on product and market planning, from conception through actual introduction. The consumer is usually looking for the best price and Copyright © 2020 Harvard Business School Publishing. In fact, some 85% of the executives in our research report using focus groups to qualify new products. The advertising study included one-half of the top high-technology industrial advertisers and a sampling of high-tech consumer-product companies. This is linked to what the perceived value of the product is to the customer rather than an objective costing of the product on offer. As the organizational complexity of a company increases, the possibilities for linking marketing and R&D in profitably innovative ways become more intriguing. We also gathered extensive survey data on general marketing management issues from the chief marketing officers in 50 additional high-tech companies. Marketing and fundraising communications; and Individual rights to access electronic medical records and restrict the disclosure of certain information. In the semiconductor field, the industry’s ability to find ways to cram more transistors into a single chip may forestall advances in optics. Apple Computer’s president, John Sculley, is right on target; he has mandated that Apple’s top management pay close attention to product development so that more disciplined market strategy will result. After the R&D breakthrough is made, customer needs or wants are considered. Among those pitted in basic gene-splicing research are companies like Biogen and Genentech, along with a number of the more market-driven pharmaceutical and chemical companies. Making the transition to customer marketing has been an extremely High-tech industries tend to be volatile at best, and as seen in the semiconductor, microcomputer, and robotics fields, a sorting-out of competition occurs quickly compared to less technology-intense endeavors. While this in itself was a major breakthrough, the late R. Lee Waterman, former CEO of Corning, saw a different and unique application for this material (trademarked PYROCERAM). In this article, we share everything you need to know about GDPR for marketing. The HITECH (Health Information Technology for Economic and Clinical Health) Act of 2009 is legislation that was created to stimulate the adoption of electronic health records (EHR) and the supporting technology in the United States. … If a product is priced higher or lower than its per… The HITECH Act has several goals. Companies competing in the same industry forming a cooperative R&D venture. What are the HIPAA Breach Notification Requirements? Establishing realistic expectations early on mitigates cross fire later between R&D and marketing about “who is at fault” when a project fails to yield products that are readily marketable. Moreover, it gives solid direction to the marketing research people who seek the strongest commercial applications for a technological advance. Technological … It is important to note that, although HITECH mostly focuses on information technology, HHS can still take enforcement action against a Covered Entity or Business Associate when a breach unrelated to technology occurs. Several years ago we encountered a start-up consumer-products company that had received substantial backing from venture capitalists. Marketing and R&D people should talk almost daily during the initial market planning effort for a new product or application and regularly thereafter for updating and revision. And primary data from traditional interviews of prospective buyers or users are of dubious value in answering questions about possible products or applications resulting from new technologies. HITECH News The Department of Health and Human Services’ Office for Civil Rights must also be notified of breaches within the same time frame if the breach impacts 500 or more individuals. Our research finds that R&D’s actual involvement in formulating marketing strategies and tactics is best off limited to a technical-consultative role. TRW Inc., a diverse and geographically dispersed manufacturer headquartered in Cleveland, infused marketing concepts into its West Coast high-technology group while instilling a high-technology orientation in its traditional smokestack operations in the Midwest. Being the first person at WordStream to take the lead on customer marketing, I had to build the role from the ground up…seriously, we had zip, nothing, nada! Once agreement is made, however,…the marketing activity proceeds with the classical marketing functions while the engineering team begins the engineering process. This article suggests how managers can forge such a linkage. Finally, consider the linkage needs of the multidivision major corporation with market-driven and innovation-driven interface demands and, perhaps, a portfolio of high-tech and low-tech strategic business units (SBUs). In addition to fines for business associates, HIPAA-covered entities could also be fined for violations of HIPAA Rules by their business associates. Price coversthe actual amount the end user is expected to pay for a product. High-technology companies often have research and development capabilities superior to those of competitors, yet achieve only mediocre commercial success or fail completely. One way to improve understanding of high-tech markets is to divide them into either supply-side or demand-side markets. Over 90% of the executives in our study find that concept testing is helpful in forecasting the success of potential new products. The Marketing mix is a set of four decisions which needs to be taken before launching any new product. TI eventually withdrew from the home computer market in the face of sizable monetary losses. Mark Frantz, president of the rapidly growing Frantz Medical Development Ltd., comments, “Our business is built on the fact that so many companies do not involve their inventors in the final development of the product and the marketing side of the business.” Frantz’s company obtains promising medical patents and, with the inventor acting as product champion, produces and markets these innovations. Marketing Under HITECH, certain communications to encourage the use of a product or service that were previously excluded from the definition of marketing are treated as marketing communications (and therefore subject to an authorization requirement) if the covered entity receives remuneration for making them. Certainly, few businesses would have bet that such diagnostic tests would lead to a major new medical market so soon. Already on the market, for example, in Pizza Time Theatres, are video games that use laser technology; the fruits of Singer Aerospace research are in its sewing machines and handheld power tools. The HITECH Act, which was published on January 25, 2013, made several changes to HIPAA and introduced new requirements for HIPAA-covered entities with notable changes for business associates. Since then, the industry has grown to include dozens of competitors catering to a fast-growing and potentially huge market. We’ll break down the technological trends that will change the way we travel. Intermediate goals focus on automated products to identify blood types, and its long-term goals pertain to products for treating infectious diseases and cancer. It also introduces accountability for Business Associates and vendors of personal health devices, who – in addition to HHS sanctions – can now be subject to civil and criminal penalties for data breaches. Cigarette marketing has created a profitable business for tobacco companies. This arrangement prevents duplication of each other’s research efforts. The technical skills and acumen that served the president so well before have been much less relevant to the different demands in a market-driven milieu. Early on, any market-share leader is in a precarious position. Just as marketing is heavily involved in R&D during precommercialization, R&D participates in marketing activities during the selling stage. That evolution is usually not a smooth process. Within each SBU, either a market-driven or an innovation-driven interface is appropriate, but the creative linkage process should not end there. Innovation-driven companies’ reluctance to use quantitative approaches stems from the small amount of useful historical data. R&D’s reaction (dotted arrow) comes in the form of guidance on what is technically feasible and ideas from scientific circles. It has a solid background, is debt free, and has a compensation plan that has no equal. Turbulence of this kind makes high-technology competition different from that in most other businesses. 3. (It had suffered a similar fate some years before in digital watches.) Managers of high-technology companies like to think of themselves as being market-driven. The advertising agency is more integrally involved in the company’s total marketing efforts than in typical consumer marketing, where in-house marketers chart the course. General Electric sends out design engineers to obtain customer opinions on GE’s electronic wares.5 Further, many companies consider the introductory sales stage a quasi-test market and use the resulting feedback from customers to modify the product. In market planning, R&D can guarantee that marketing does not lose sight of R&D’s vision for the product. Title II of HIPAA includes the administrative provisions, patient privacy protections, and security controls for health and medical records and other forms of protected health information (PHI). The possibilities for applications may be less obvious or so numerous that the company must establish priorities for exploitation. Some of the key updates to HIPAA by HITECH are detailed below: The HITECH Act required business associates of HIPAA covered entities to enter into a business associate agreement (BAA) with HIPAA-covered entities and agree not to disclose PHI other than for reasons permitted by the HIPAA Privacy Rule. “As the project proceeds, project status information is available to both groups, and in-house quality and functional testing, beta-test site testing, and product-user manual reviews are also joint activities. Later, at the end of the 1970s, Defense Systems transferred digital design technology. HIPAA Journal's goal is to assist HIPAA-covered entities achieve and maintain compliance with state and federal regulations governing the use, storage and disclosure of PHI and PII. All rights reserved. For the first three years, Micom followed the all-too-usual corporate path of not linking marketing and R&D, and according to Steve Frankel, vice president of marketing and development, R&D and marketing were competing. These 3 sample plans can help. Copyright © 2014-2021 HIPAA Journal. 5. “Listening to the Voice of the Marketplace,” Business Week, February 21, 1983, p. 90. Once these are answered, the types of linkage guidelines appropriate for market-driven high technology apply to innovation-driven high technology as well. The corporation’s primary business is not high technology, but it has diversified into high-tech via startups (Goodyear Tire & Rubber and Goodyear Aerospace) or acquisitions (Champion Spark Plug and DeVilbiss). GDPR has changed the way marketers communicate with their customers. Yet only a few years ago the commercial potential of the underlying technology appeared poor. Within Marketing and Development, we have three assistant vice presidents who manage, on a product-line basis, the marketing and development activities of their respective product areas. Our inquiries reveal that applications support personnel are directly represented in the selling efforts of more than three-fourths of the robotics companies. With regard to pricing strategy too, the company has followed a premium pricing strategy which also reflects in its brand portfolio that contains 21 luxury and For the purpose of discussing marketing-R&D linkage, the most important distinction is between what we have called market-driven and innovation-driven high technology. In effect, market-driven research for the military and space programs is innovation-driven when it comes to consumer and industrial markets. The HITECH Act introduced a new requirement for issuing notifications to individuals whose electronic protected health information was exposed in a security breach if the information was not encrypted. Without getting too Aristotelian, with marketing, the whole is most certainly more than the sum of its parts - when it's done right that is. It is creating a channel for conversation with the targeted consumer base. Allied’s technology broker will promote new marketing-R&D linkage opportunities by asking, in effect, “How about the commercial market opportunities of matching Division X’s technological know-how with the needs of Division Y’s marketing?”. These updates formed the basis for the HIPAA Breach Notification Rule which requires HIPAA covered entities to send notifications to affected individuals if there is a significant risk of financial, reputational or other harm as a result of a breach. “High tech” has become a buzzword to describe everything from the space shuttle to the electric frying pan. Therefore, much of the early interface efforts should address such questions as what industry is the company in, what are the conceivable market opportunities, and what are the market development priorities? In this supply-side stage of market development, marketing strategy is highly entrepreneurial—formulated on sketchy market information and on intuition. Some suggest, for example, that a tiny Findlay, Ohio-based holography start-up has outpaced two longstanding Fortune “500” entrants. The composition may vary by high-tech industry. Although company-specific recommendations are needed, possibilities might include both the establishment of a conventional corporatewide marketing-R&D committee or project team and a more experimental approach such as in-house trade shows for the company’s SBUs to demonstrate and publicize otherwise proprietary knowledge and offerings to one another. Here marketing’s role is more traditional (i.e., more focused on advertising, pricing, distribution, and so on), much less entrepreneurial, and far more concerned with tight linkage between marketing and R&D. 2. In this seminal phase of market development, R&D is the prime mover behind marketing’s efforts. They may even be directed from corporate headquarters. In respect of expanding the adoption of health information technology, the HITECH Act applies to healthcare organizations and medical practices that benefit from the Medicare and Medicaid programs. As shown in the Exhibit, in market-driven high technology, the main direction for R&D is from marketing. The business requires a strong scientific-technical basis.2. As mentioned previously, and more or less widely known within the heath care industry, the consensus view is that HIPAA has not been rigorously enforced in the past. In the first and second types of companies, the linkage problem is straightforward, but, in the third and fourth types, marketing and R&D appear at many places and levels in the organization. The makeup of the marketing-R&D team often depends on whether the product or application is in development or being sold. As DeVilbiss Company robotics division marketing executive Timothy Bublick explains, “You develop a robot spray-gun attachment to paint for a specific customer and then it [the modification] becomes a product adaptation to the current state of the art.”. R&D or marketing prowess taken singularly, or even coexisting in the same organization, will not necessarily translate into financial success. The business requires a strong scientific-technical basis. Market planning that explicitly recognizes and accounts for the strategic distinction between market-driven and innovation-driven research goes a long way toward yielding better corporate performance. Defense Systems offers defense-oriented electronics to the U.S. military. Our findings show that R&D is active in a number of disparate marketing functions, including preparation of brochures and technical manuals, marketing research, and, to a lesser extent, consultation in public relations, advertising and sales promotion, and pricing. In brief, laboratory efforts are patterned after market objectives. The high-tech development strategy group consists of the CEO or president, marketing, R&D, and production in roughly three-fourths of the companies we sampled. We hear repeatedly that the lack of integration of marketing and R&D is a major obstacle to market success in high technology, and where an interface does exist, it is an inherently adversarial situation in which lab jockeys and pitchmen do not mix. 4. Exhibit Conceptualizing the high-technology marketing-R&D interface. The high-tech marketers surveyed register strong dissent to the notion that the R&D people’s involvement with a new product ends when it is turned over to marketing; 85% encourage a continuing role for R&D. Yet, once sophisticated marketing abilities became indispensable in the home computer market, companies dependent mostly on technological strengths were no match for IBM, Apple, and others. We can differentiate further between market-driven and innovation-driven companies. 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