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Incentive Based Business Models

Dated: 27 Feb 2013
Posted by David Osgood
Category: Business Model, Healthcare, Innovation Adoption, Investment ROI, Market Leadership, New Markets, Technology
0 Comments

 

“You get what you incentivize”

                                       – Peter Diamandis, CEO and Chairmen X Prize Foundation

charlesCharles Lindbergh became world renowned for being the first man to fly across the Atlantic. Lindbergh’s trans-Atlantic flight was a brave effort to win the $25,000 Orteig Prize offered by wealthy hotel owner for the first aviator to successfully fly from Paris to New York or New York to Paris. While Lindbergh’s fight was certainly heroic, the most significant aspect of his achievement is that it changed the way people thought of flight: An industry was born.

As a 25 year old U.S. Air Mail pilot, Charles Lindbergh was not expected to win the Orteig Prize. Many famous aviators with financial backing were also competing for the prize before Lindbergh beat them. In total, teams invested $400,000 to win the $25,000 Orteig Prize.

X Prixe foundation CEO, Peter Diamandis, often cites the Orteig Prize as his inspiration for starting the organization. X Prize is best known for the Ansari X Prize, a competition to fly a three-passenger vehicle into space two times within two weeks. The competing teams invested more than $100 million to win a $10 million prize. In 2004, a team headed by Paul Allen and Burt Rutan won the prize. The winning team  went on to sign a deal to develop a spaceship for Virgin Galactic, helping to usher in a new industry of space tourism.

xprise

Incentive based competitions are not new, infact DARPA (Defense Advanced Research Projects Agency) has been running a cash award program for years. In 2004, DARPA issued a challenge for a fully autonomous car to traverse a 150-mile off-road route. None of the cars completed the course.

The next year the challenge was reissued and five vehicles completed the course. In 2007, the test brought the challenge to the streets, where autonomous cars had to obey street signs. The challenge helped to showcase the capabilities of autonomous vehicles. Now we are beginning to see autonomous cars on public roads, potentially launching a whole new industry.

Incentive based competitions have also been seen merging with crowd funding through sites like Kickstarter. Only the ideas or products that reach their  funding goals are eligible to receive the financial backing, meaning only the best ideas survive. Industry and government are increasingly using incentive based competitions and getting a better return for their dollar.

Over the next few months we will be watching  new incentive-based competitions that can create new industries and transform old ones. The next DARPA Grand Challenge asks for teams to create robots capable of performing search and rescue operations. The latest X Prize looks to transform healthcare, challenging teams to create a “tricorder”, that can diagnose diseases via a smartphone-like device.

Perhaps the most interesting part about these open competitions is that you never know who might win. It is impossible to predict who will be the next Charles Lindbergh.

The Business Of Watson

Dated: 18 Feb 2013
Posted by Cameron Mehin
Category: Business Model, Healthcare, Technology
0 Comments

 

IBM’s Watson was made famous by its appearance on Jeopardy, utilizing natural language processing and a variety of algorithms to outperform its human competitors in a variety of question genres. Since Watson’s TV debut, IBM and partners WellPoint and Memorial Sloan-Kettering  have been preparing for their next big audience, Healthcare. Watson will no longer be a game show contestant, but will now apply 100′s of thousands of medical documents, textbooks, case studies and clinical trials to assist medical personal in making accurate and timely decisions. 

If Watson is what it was 2 years ago, it would be producing quick, but simple ranked answers to questions. However, Watson has evolved. The big-data driven system is now 240% faster, shrunk down to the size of a pizza box 


Think of your doctor, tablet in hand going over your medical records, rifling through text to find relevant information for your current condition to make an assessment… Did they read up on the latest clinical studies out? Did they miss a key point in your medical history? Alternatively with Watson, through voice recognition, data analytics and a recommendation engine the doctor is presented with a complete data set in just 30 seconds. This data set has been carefully combed through, sorted and aligned with the doctors preferences to enable easy consumption and analysis.(previously the size of a room) and its answers are correct 90% of the time. While 90% is still a far cry from the 100% necessary when lives could be on the line, its important to note that this is to augment and enhance the medical staffs decision process, not to replace it. Watson’s healthcare offering comes with a dashboard, and a UI that looks no different than a common, but well executed App currently on our tablets at home. 

Watson

From a Healthcare perspective, we all know big-data is everywhere, but where will Watson make the largest impact? WellPoint is already using the system to determine which treatments justify insurance reimbursement and an online webportal (Fee-for-Service?) is in the works. Beyond that, as the system continues to evolve we could likely see Watson moving away from presenting case studies and moving more towards analyzing medical scenarios and treatments.

The Watson healthcare team has implemented six of these systems already, but are hoping to have over 1,600 by the years end. Though the bulk of this segment is still an open book, competitors are starting to show up, such as combined effort from Microsoft and GE Healthcare. The current technology level seems to be bringing in a fair demand, it will be amazing to see how future iterations of these bundled technologies will change how this industry does business and makes impactful decisions going forward.

 

Via Forbes