Wednesday, November 4, 2015

Startup Strategy: The Case of the Medical Device



Strategic planning can be overwhelming and it can be a meaningless ritual. In both cases it is inefficient. In order to navigate the ocean of possible strategies, an executive must first set a direction. But what information should be utilized to set out on any given path? In the article “Your Strategy Needs a Strategy,” Reeves, Love, and Tillmanns map out 4 broad strategic directions based on two characteristics of any given industry: predictability and malleability.
Earlier this year, I became a first-time entrepreneur, and strategic planning has seemed overwhelming. Using the predictability/malleability framework to place the industry in which we work, I can identify a domain in which my strategic planning should exist. We are a medical device company, which is part of an industry that is highly predictable in sales cycles, purchase volume, delivery logistics, and other characteristics. Though some would argue that FDA has led to a less predictable environment, the regulations create a high level of predictability compared to many industries. Regarding malleability, the industry has two faces. On the one hand, medical device companies have little power to change regulations, rarely can increase the size of the total market, and have little power to effect demand (though demand in-elasticity has a clear benefit for the industry). However, innovation can quickly capture huge chunks of market share and create brand new markets. For example, neurologists have tried to use catheter based treatments to manage stroke for 10 years, and despite many design iterations, they have achieved only mixed success. This spring, 5 independent randomized-controlled trials showed dramatic improvements in stroke outcomes using the Medtronic Solitaire stent retriever catheter. By June of this year, the American Heart and Stroke Association had changed the guideline for stroke care and Medtronic immediately dominated the stroke catheter market.
               In my relatively short experience since I started my company, I have felt overwhelmed by strategic possibilities, like standing in a circle from which hundreds of paths stretch out in front of me. Placing the industry in the context of the predictable/malleable framework has, thankfully, removed many of the seemingly endless options. Going deeper to place my company and its goals in the same framework has even further narrowed my options. Depending on the goals of a company, the placement on the malleability continuum swings far to one side or to the other. For us, and I assume for most startup companies in this space, we are trying to create a new market, rather than compete in an established market with mountainous barriers to entry. This places are strategic pathway squarely in the visionary quadrant of the matrix.

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