What is Telemedicine? (Part 3: A More Strategic Approach)

As I was learning about the different ways of classifying telemedicine, it occurred to me that Porter’s three generic strategies might be a useful way to organize telemedicine value chains.

In the 1980’s Michael Porter developed three basic strategies for business success, cost leadership, differentiation, and focus. The relationship between market volume (broad or narrow), and cost (low or high), is the basis of the strategies, as shown:

• Cost Leadership is the “assembly-line” strategy, where a high volume of products or services is produced efficiently at a low cost. Some examples are Honda cars and car washes.
• Differentiation is a strategy used to identify a particular product or service line as unique, and therefore more valuable (and more expensive) to customers than the low cost counterpart is. Apple and luxury spas are examples of companies using the differentiated strategy.
• Focus means that companies tailor their offerings to specific target markets, such as bakeries that only produce specialized cakes, or lawn care chemical companies that spray for weeds. The niche markets may be high or low cost.

What does this have to do with telemedicine? Over the years, I have noticed that the systems I support generally fall into one or more of the following three categories:

• Low Cost/High Volume - workload in such systems is managed using the Cost Leadership strategy.
• High Cost/High Volume - this type of workload requires value added work, and a Differentiation management strategy is used.
• Low Volume/Low or High Cost – this type of workload tends to have narrowly defined work and data processing requirements, and it is managed using the Focus strategy.

I wondered if it was possible to overlay Porter’s generic strategy and the technical and human categories of telemedicine. When I attempted this, I found that a correlation exists between the strategy and the type of technology used to support the process, as shown in the following table.

Organizations that have been able to successfully integrate technology and business strategy have created significant business returns (Weiss and Anderson, 2004). This is as fundamental concept of enterprise architecture, and is essential to the successful implementation of telemedicine.

My conclusion is that applying Porter’s generic strategies to technical delivery methods is a useful way to align the human and technological aspects of telemedicine. This strategic approach also provides valuable guidance on how to identify the appropriate technology for each link in the telemedicine value chain, and then connect those technologies together in a meaningful way.

Next Post: The Telemedicine Infrastructure

References

Learn Marketing.com. (2010). Michael Porters Generic Strategies. [online article]. Retrieved 25 April 2010.

Marketing Teacher Ltd. (2010). Generic Strategies. [online article]. Retrieved 24 April 2010.

Weiss & Anderson. (2004). Aligning Technology and Business Strategy: Issues & Frameworks, A Field Study of 15 Companies. [online article]. Retrieved 24 April 2010 from the IEEE Computer Society website.

Wikipedia. (24 April 2010). Porter’s Generic Strategies. [online article]. Retrieved 24 April 2010.