Scott Henkel Slides on Why Dentists Buy and Don’t Buy New Products and Innovation

Why do some dentists not see the value to buy innovative products… even when the new products offer distinct improvements over existing ones?

It’s because… They irrationally over value benefits they currently possess relative to those they don’t.

A Clash of Perspectives This bias leads dentists to value the advantages they currently use more than the benefits of the new ones.

are basically damned. Their progression is stopped. While we stand in awe of the complete lack of understanding of something that appears so simple to us. Dentists that reject our innovation…

That dentists will automatically adopt new products that we offer even when it will deliver more value than their existing one. Do not assume…

RELATIVE ADVANTAGE Most critical driver for new product adoption.

How dentists make choices, Let’s learn…

And why dentists deviate from what appears to be rational economic sense.

Dentists respond in 4 different ways: 1  Value the attractiveness of the new product not on the actual value, but on its perceived value. Distinct characteristics of human nature.. 2.  Value a new product relative to a product they already use. 3.  View any improvements as gains and any shortcomings as losses. 4.  Losses have a far greater impact on dentists than similar sized gains.

“Loss Aversion” Losses loom larger than gains.

The ENDOWMENT Effect Loss aversion leads dentists to value what they already have—that is part of their endowment— more than that of which they don’t have.

Measure the magnitude of the endowment effect:.25 ¢ - $9. 25 Group 1: Sellers Experiment

Measure the magnitude of the endowment effect: Money or Mug? Group 2: Choosers Experiment

Measure the magnitude of the endowment effect: Priced it at $7. 12 Group 1: Sellers Experiment

Measure the magnitude of the endowment effect: Group 2: Choosers Priced it at $3. 12 Experiment

Measure the magnitude of the endowment effect: Sellers always demanded at least twice as much to give up the mugs as the choosers would pay to get one. $3. 12 vs. $7. 12

Studies Show People demand 2-4 times more compensation to give up products that they already possess than they are willing to pay to obtain these items in the first place. Dentists irrationally overvalue their current products over those they don’t have by a factor by three.

.. THE 9x EFFECT DENTISTS ARE USUALLY… HOW WE SEE IT…  Skeptical about a new product’s performance  Unable to see the need for it  Satisfied with the existing tool/technology  Quick to see what they already own as the status quo  Convinced the innovation works best  Sees the need  Dissatisfied with the existing treatment  Set on viewing the innovation as the benchmark 3 x 3 9x Dentists overweig ht the current technolo gy benefits by a factor of 3. Most reps overweig ht the new product’ s benefits by a factor of 3. Fundamental problem for embracing new products:

Status Quo Bias People tend to stick with what they have even if a better alternative exists.

CAPTURING VALUE FROM OUR TECHNOLOGY EASY SELLS LOW Limited product changes and behavior changes We can create value through our innovation, but we can capture it most easily by minimizing the need for dentists to change. HIGH LOW HIGH SURE FAILURES LONG HAULS SMASH HITS Limited product changes, significant behavior changes Significant product changes and behavior changes Significant product changes and limited behavior changes Degree of behavio r change require d Degree of product change involved

GROWTH as a Process

Success is merely a matter of buying an experience and selling it at a profit.

Learning is a series of changes that take place in the individual nerve cells. Learning is a series of changes that take place in the individual nerve cells.

When learning is taking place, a cell literally grows.

The process is not exactly analogous to what happens when we exercise a muscle, but it’s pretty close.

In an “educated” neuron it develops new synaptic terminals. In an “educated” neuron it develops new synaptic terminals.

In physiological terms

Learning is when our brains have done some exercise.

Digested information, connected concepts in new ways, and our nerve cells have thereby been altered.