As a parent of small children, I have a keen interest in the small, expensive, painful-to-step-on plastic building blocks called Legos. In 2011, Legos brought in $3.5 billion in revenue. It’s nearest competitor, Mega Bloks, earned a comparatively measly $400 million, reported NPR’s Planet Money recently.
Legos should by all rights be a commodity. The patent on the blocks expired long ago and courts all over the world have thrown out suits to prevent other companies from making blocks that connect with Lego blocks.
Conventional wisdom would say that the moment Legos’ patents expired, competitors inexpensive generic blocks should have taken over the market. Yet today, 70% of toy construction blocks sold are Lego blocks despite costing around 50 cents per individual block. (A price point that really makes you reconsider the impulse to toss the darn thing when you step on one in the middle of the night.)
As radiology seeks to avoid commoditization, it is useful to look at what Lego did to avoid having building blocks become a commodity that is purchased on price alone.
First of all, long before six-sigma and lean process improvement ideas came about, the company focused obsessively on quality. Inside every Lego brick, there are numbers that identify the mold the brick came from and what position it was in in that mold. This makes identifying the source of any defective brick quick and easy.
Obviously ensuring quality in radiology is a hundred times more complicated than turning out little plastic blocks. However, the principle of quality as the foundation for any industry is as true for toys as it is for health care. Standardization of practices, variation reduction and learning from mistakes through a system that focuses obsessively on continuous improvement is key.
On the foundation of quality, the Lego company then built up the “experience” of using Legos. When courts denied the company’s efforts to prevent competitors from making cheap building blocks that would work with Lego blocks, it got exclusive licenses to make Star Wars, Indiana Jones, Winnie the Pooh, Toy Story and Harry Potter sets. It also developed its own lines, like the pink Lego “Friends” sets for girls that are selling out this holiday season. (Just try finding Lego Friends: Olivia’s Treehouse online to see what I mean -- and apologies to my niece who will be getting something else for Christmas this year.)
Mark Weiss calls this an “experience monopoly” and it is applicable to radiology practices as to building blocks. When a practice that is associated with exceptional quality is able to create real and deep relationships with the facilities and referring physicians it serves, it becomes no mere commodity that is purchased on price alone.
As health care organizations at all levels focus on affordability, it is easy to lose sight of quality and experience. One may even start to feel that commoditization is inevitable. As Lego shows, it isn’t.