Essentials of entrepreneurship

Hello!

We are back at our Moebio blog and ready to start the first edition of Design Health Barcelona next Friday (check out our agenda for event details)!

They are exciting times for us… and for our fellows! From September 2013 to May 2014, all of them, young talented men and women, will receive the necessary knowledge to identify unmet clinical needs and design and develop innovative solutions… in one form or another. At the end of the program, some of the fellows will found their own start-up, some will join already existing companies… Whatever the situation, being an entrepreneur, an innovator, as amazing as it is, it is not an easy task. It requires both hard work and a big dose of realism. And this is our first post after summer about.

There are plenty of ideas and opinions about how best to focus an organization’s resources and efforts for success. Some years ago, management guru Peter Drucker wrote an intriguing little book titled The Five Most Important Questions You Will Ever Ask About Your Organization. In just under 100 pages, Drucker tells everything a person will never need to know about where to focus his/her organization and how to do it. The 5 crucial questions Drucker poses are:

–       What is your business’ reason to be?

–       Who is your customer?

–       What does your customer value?

–       What are your results?

–       What is your plan?

Taken together, Peter Drucker’s five questions are powerful. Try answering them (and, if curious, read Drucker’s answers to them here) and you will get a clear roadmap right to the heart of what makes a business successful.

If you have 12 minutes more we encourage you to watch also Mark Suster’s (an American entrepreneur, angel investor and investment partner at GRP Partners and also a prominent blogger) TechCrunch interview about… failure. Yes, no one likes to fail but failure is part of the process of being an entrepreneur… Failure is ok. It’s not the same as losing or being a loser. It’s a set back. In fact, great entrepreneurs such as Steve Blank and Richard Branson have made millions from failure.

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In the video Suster explains his “classic, first-time stupid mistakes” and how it uses this knowledge as a warning signal of which teams to avoid funding and to coach first-time founders or university students who want to pursue entrepreneurship.

Survival of the fittest

The goal of a startup is to find the right thing to build as quickly as possible. However, the vast majority of startups fail, that’s a fact. As a new research by Harvard Business School shows 75% of all start-ups don’t succeed. According to the researcher Shikhar Ghosh, startups fail not because the product is bad but because the market it is not adequate, it does not exist or it is insufficient, customers don’t buy therefore less revenue than expenses. The Startup Genome Project has also analyzed data from 3.200 companies and came up with some answers summarized in the following infographic:

Why Startups Fail

Healthcare startups are among the ones that fail most. According to a study by University of Tennessee, 56% of startups in education and health still operate four years after launching.

The cost of startup failure in med tech is high: It throws away $10 to $200 million dollars, the time of 20 to 120 people, between 3 to 20 years of work and 3% to 25% of your life!

Recently, a couple of approaches have emerged that can make the process of starting a company less risky. The first one involves identifying unsolved problems because a well-characterized need is the DNA of a good innovation. This is what biodesign process is about, a needs-based invention process for medical device innovation aligned with an attractive market opportunity so that is sustainable. Developed by Stanford University in 2001, it has already launched 26 companies, raising over $200 million, creating over 500 new jobs and treating more than 150.000 patients.

The second approach that could reduce the failure rate of new ventures and help launch a new, more entrepreneurial economy, is a methodology called the “Lean Startup”. According to conventional wisdom, the first thing every founder must do is create a business plan, a static document that describes the size of an opportunity, the problem to be solved, and the solution that the new venture will provide. Typically it includes a five-year forecast for income, profits, and cash flow. Instead of executing business plans, operating in stealth mode, and releasing fully functional prototypes, young ventures based on the Lean Startup test hypotheses, gather early and frequent customer feedback, and show “minimum viable products” to prospects. This new methodology states that treating new ventures as established firms is a mistake.

d·HEALTH Barcelona has incorporated both approaches, biodesign and lean start-up, to its training process. Fellows will get immersed for eight weeks in a clinical setting, observe everything that happens and detect what does not happen, interact with professionals and with patients while working in a multidisciplinary team and learning about science, technology, business and design with internationally renowned experts and entrepreneurs. They will acquire the skills to select the best observed needs based on clinical impact, stakeholders, the treatment options and market’s characteristics to later build prototypes, present them in front of a panel of investors and get the funding to make them real.

For further reading check it out: