Steve Jobs once described Apple as the world’s biggest startup, and that mentality is what sets great businesses apart. An entrepreneurial spirit is often associated with small firms and yet, companies of all sizes need to take risks, seek out fresh opportunities for growth, evolve and innovate to stay ahead of the curve. Healthcare places the same demands on its actors, but because human lives are at question, it is also an ecosystem that is very risk-averse. The consequences of failure are “life and death” in ways that are simply not true in other sectors. So how do entrepreneurs in healthcare balance the twin demands of innovation and risk-aversion?
- Entrepreneurs take risks
Nothing ventured, nothing gained. Entrepreneurs take risks as a consequence of their desire to earn economic profits in an environment of uncertainty. Without a willingness to confront uncertainty and experiment with different solutions to the problems and opportunities being tackled, it is hard to succeed without a huge dose of luck. Nevertheless, healthcare is a hyperconservatyive industry. Not only is there a natural desire to not risk other people’s lives, there is a fear of being held liable for negative outcomes in a highly litigious system. De-risking is the most important thing for businesses in the healthcare sector and it is done through rigorous testing and going through multiple layers of approval. Risk is a dirty word in healthcare.
However, this is not the end of risk. Medical device manufacturer, Titan Spine, has found a way to balance the conservatism of the industry with the need to take risks. The company takes on more risk when it comes to promoting its products, while reducing risks for patients and providers who use their device. They do this by offering a five year warranty on the application of their device. So, if a patient who uses one of their interbody spinal fusion devices requires a revision surgery within five years, the company will issue a new replacement device for free. This demonstrates to users that Titan Spine believes in their product enough to take on this huge risk. The warranty also serves to de-risk providers and the patient, and so help the firm increase market share.
- Entrepreneurs move fast
Research shows that it takes around 12 years for a drug to get to market. The process to get to market is grueling. First off, only 5 in 5,000 drugs that make it into preclinical testing progress to human testing. Of these drugs, only one in 5 is approved. So the odds of a new drug making it to market are 1 in 5000. Consequently, the onus is on entrepreneurs to go fast and be nimble, because the system is designed to be slow.
- Entrepreneurs are focused
Great businesses are focused businesses. Spreading resources thinly to chase multiple targets is a sure fire way of failing. Titan Spine and Skylark Senior Care are both examples of companies focused on specific healthcare areas. Titan Spine produces just seven devices used in back surgeries. Skylark Senior Care focuses on personalised senior care. Focus engenders the development of niche skills and gives fertile ground for novel ideas, ideas which do not have to compete for nourishment ideas in other areas.