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Start-ups: four ways to avoid failing at the first hurdle

nov 30, 2017

Start-ups: four ways to avoid failing at the first hurdle

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Author

Alberto Prado

Alberto Prado

Head of R&D Digital Innovation at Unilever

Alberto Prado is a seasoned executive leader with strong strategic sense of how to link technology and business in the areas of digital innovation and entrepreneurship.

Being an entrepreneur in health technology can be the best of times and the worst of times. The best because you’re surrounded by people who share your passion for an idea that could literally save lives. The worst because it’s one heck of a tough gig, with 60 to 90% of start-ups failing in the first 18 months, depending on who you believe.

 

I’ve been lucky enough to work with dozens of entrepreneurs, most recently through the Start-up Program at Philips HealthWorks, who share our vision of developing connected solutions to radically improve care for our growing and aging global population. And I’ve noticed that teams often come unstuck over the same challenges. So here’s the advice I’d give anyone starting out.

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1. Triple check your problem-solution fit. 

This might seem like a no-brainer, but you’d be surprised how many start-ups we see who haven’t nailed down and truly validated the customer need and willingness to pay for their solution. It often means they hugely overestimate the size of their potential business. Don’t assume that just because you love your amazing new technology, any potential customers out there will too. Doing so might mean you scale too early and fail big.

 

Our research at HealthWorks suggests it takes two-to-three times longer than most founders expect to validate their market. Solid validation with customers and domain experts right from the very beginning is critical to ensure that your idea makes it out into the world. And when you are ready to scale, accessing the right technology platforms and partners to connect you to the healthcare ecosystem can make all the difference.

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2. Work out where you fit within the healthcare system.

Healthcare systems can be complex and challenging to navigate, with historical legacies and substantial differences depending on the region. At a time when new players are arriving from all sides, it’s even more vital that start-ups understand how they fit into the connected healthcare system they are targeting whilst ensuring scalability to other markets.

 

For example, this can mean working out the difference between who uses the innovation, who benefits from it, who pays for it, how much they pay and why. Is it reimbursable? Does it have an appropriate code? Patients and consumers, employers, hospitals, insurance companies could all be answers, and those answers can all change depending on the country you’re selling to, making it sometimes challenging to scale. That’s why it’s important to find a partner who understands the full ecosystem and its interdependencies — rather than operating with point solutions — at a global scale.

 

Even selling an innovation into one single hospital is tough — I should know because I’ve been in your shoes and (hopefully) learned from my successes and failures. Finding a partner who understands hospital workflows, clinical pathways and overall priorities in hospital management around delivering improved clinical outcomes for lower cost can help you to link the value of your innovation with the priorities of your potential customer.

Three innovators with laptops have an intense discussion

3. Don’t let regulatory kill you. 

I have seen a large number of start-ups fail between seed and alpha (typically around 12 to 18 months), primarily trying to get past the regulatory burden and long and expensive clinical trials. The cash simply runs out before they can build enough clinical validation for their great idea to reach the next fundable milestone. At HealthWorks, we challenge our start-ups to find ways to evolve their solution and business model, to accelerate time-to-revenue, get proof of value and de-risk earlier. Can the claims be softened so that, whilst still delivering commercial value, we can reduce regulatory requirements? As a result, can we push medical-grade capability (and the investment that goes with it) to a later point? Regulatory is not the enemy — it is there for a good reason, but you need to carefully balance your claims with the investments necessary to comply, whilst building a compelling MVP right from the start.

Two participants in a workshop look at a wall covered in sticky notes

4. Figure out your data strategy. 

And finally, you may well have a fantastic AI-based healthcare solution, but if you can’t feed, train, improve and validate your smart algorithms, they will be worthless. It is essential to figure out your data strategy right from the start. Specifically, who owns the data and how you can access it, under what conditions — for example, whether it’s related to privacy or security — and how you can best leverage different collaboration models around data so that you can take your innovation to the next stage.

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