Business Encounters: Life Scientist

Strategic Partnerships in an Ecosystem Model (Part 4 of 5)

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A collection of strategic partnerships is an excellent addition to a company and indeed essential. A standard partnership model focuses on elements of customer need directly related to your product and finding partners that enhance product benefits and address those needs. Partnerships serve to further the impression that one’s product provides benefit and successfully addresses the need you are targeting.

Example Product-Focused Strategic Partnerships
Chapter 14 of It’s a Jungle in There discusses the value of the strategic partnerships. Schussler provides an example of a “jungle” retail experience that is enhanced by partnering with company skilled in a process by which the customer (children and their parents) “produce” the product they buy – in that case, a plush dinosaur.

Collaboration with a non-profit such as with fundraising 5K and similar event can also be a valuable strategic partnership. For a health-related product, such as one focused on providing dietary advice, an active experience offers access to an energetic audience seeking a healthful lifestyle.

Need fulfillment often requires strategic partnerships. Even the behemoth Amazon has a dependency on others to fulfill a need. Until Amazon has its own delivery service for 100% of its products, it must engage shipping companies to bring the product purchased to the customer, or return it if it isn’t acceptable. The financial success of the shipping companies (UPS, FedEx, USPS, etc.) is essential to Amazon’s success.

However, this is an inadequate way of seeing the customer need. Customers have more complicated needs outside of the requirements your product addresses. Thus, your product only fulfills a small proportion of the consumer’s needs.

Meeting the Broader Needs of the Customer
In fact, the need associated with your product is a subset of related demands to accomplish a customer’s larger goal. An alternative strategy requires a broader investigation of one’s product as a component of a more extensive customer experience.

For example, you need to keep your home clean. This makes the logic of Amazon’s Prime Pantry, and it’s push for users to have scheduled and automatic deliveries, more clear. All those items in the Prime Pantry are solving the more substantial need to keep your home clean by making sure you list everything you might need and Amazon provides it; potentially without you asking for it. The Amazon approach to meeting broader needs is to expand and consume other companies related to that need. As an example, Amazon created AWS (its own cloud-based IT system) and is developing its private distribution network with individual drivers and airplanes. They also recently purchased Whole Foods after buying a slew of other online providers.

Amazon’s strategy isn’t always possible. As an example, you don’t “need” a video from Netflix. You need entertainment for a few hours on Saturday night. A chain of elements, including an Internet service provider and a seller of a TV, are essential to your being able to watch a movie. Netflix must consider those aspects if it is going to succeed, and it cannot incorporate those elements into its product. So, for Netflix, involving other organizations is critical.

A strategy must then identify an entire chain of needs and efforts/purchases that the customer deploys to accomplish the greater need. And then form relationships as a part of a broader ecosystem of customers and providers, including values outside of one’s immediate product value. For the company, the main difference, as compared to strategic partnerships, is that the overall goal is to ensure that the chain of needs is met.

The Ecosystem Also Affects Your Success

Companies are used to battling competitors who aim to steal their market by offering more value or a lower cost or both. But, in a broader chain, your competitive disadvantage may not be due to your competitor. If, in the case of Netflix, the need to “find a movie I want to see” may be determined by some other participant in the ecosystem. There is a chance that the customer identifies a movie that isn’t available on Netflix, but is available at a nearby Redbox. The ecosystem has just redirected the “get a movie” need away from Netflix. Netflix lost a customer to Redbox because of someone’s else’s search engine. This lost sale potential explains why a recommendation engine is vital to Netflix; it ensures that the movie the customer decides to watch is determined by Netflix, not by someone else in the ecosystem.

The success of the company thus depends on:

  • awareness of the complete customer experience including broader needs related to the specific product needs
  • the ability of the provider elements to meet the overall requirement of the customers
  • your utility to satisfy a particular component need versus someone else in the ecosystem
  • attention to the broader ecosystem, so you reinforce the value of their product to meet a specific requirement in the chain

 Final Thought: Who to Engage?

An ecosystem model also provides guidance regarding the need for and extent of strategic partners. The chain of providers must have enough alliances to meet the overall demand, yet partnerships outside of that greater need are potentially unnecessary and a distraction. With each coalition, you may be enhancing profitability, but you may also be providing a competitor with the information they need to undermine your product. The strategy of identifying the broader need helps you optimize strategic partnerships to achieve the highest benefit regarding cost reduction and improved pricing.

Further Reading

Photo Credit: Twisted link chain.jpg. Author KDS444. 20 June 2012. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license.

About Health Impact Studio

We are a dedicated team of developers and researchers with the mission to improve the health of individuals through novel technology including games, virtual reality, and role-playing simulations. We welcome input from the full range of stakeholders to create a customer experience with the broadest applicability to improving health outcomes.

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Maintaining Control Versus Maximizing Wealth

It’s your idea and your company, right? You instinctively hold onto your creation. Like a little kid holding onto a toy, you won’t let anyone play with it. Unfortunately, stubbornness and entitlement is not exactly a recipe for entrepreneurial success.

You have a lot of competition, and they have teams of smart, dedicated people working in tandem toward a common goal. By the time you let someone else play with your toy, the market may have moved on to something else. As you probably learned a long time ago, you are going to have to share. And sharing means sharing ownership of your idea.

You might say, “Fine, but I’m in charge.” Does that mean you are in charge of the development process, the employees, the marketing plan, the sales effort, and the oversight of the finances? Leaving aside the issue of who would want to work with someone who is such a control freak, do you really think that your skills in all these domains are better than every other person out there?

You are going to have to give up some control as well. The individuals who work for you will need to feel like they have some control. More importantly, your company cannot grow if every single component requires your input, vision, and guidance. The question then becomes how much power to give up.

Let’s say you are a person with excellent leadership skills and the CEO task is what you are best suited for. Perhaps you have a technical background, but others have more technical expertise than you have. You hire a CTO.

You don’t have to give complete control over the technology to the future CTO. Maybe the CTO is a “pie in the sky” early adopter of the latest technology. They might choose the most expensive, cutting-edge technology, with the most exciting and trendy features. Is that the best way to deliver a viable product that meets customer needs on time and on a budget?

Probably not. So you still need to have some control over technical development and set the overall goal and limiting parameters. But recognize that there is an end to your power. Eventually, you have to let your CTO make some specific decisions based on their expertise. And some decisions may be a mistake. That’s the risk you take. But the danger of disempowering people is higher. You don’t want to be the only one who cares about your toy and kid that no one plays with.

Further Reading

Photo Credits: Max Pixel (CC0 Public Domain) and Donnie Ray Jones on Flickr (CC BY 2.0)

How Else Can Innovation Come to Stagnant Markets? (Part 3 of 3)

We’ve been discussing creative destruction theories and come to the conclusion that no matter what theory you use, there is not the proper condition for a paradigm shift in medical education. For those of us who feel that a paradigm shift in the process of medical education would be a good thing, this is indeed bad news. It means that creative destruction can’t and won’t happen. The “Normal Science” of medical education will continue unabated and unchallenged until a recession in the health care market takes place. And if the latter theory is true, destruction will only occur on the upswing AFTER the downturn. And ONLY if the recession is so bad that it instills fear that another will come. It sounds hopeless.

Perhaps other factors that enable creative destruction can take hold with, say, the help of competition. Think digital cameras from Canon and Nikon vs. the old film based ones from Kodak (which by the way had digital technology that it chose not to use). Competition pushed creative destruction. Medical schools sadly don’t compete with each other. No hope there. Strike one.

How about unstable labor markets? A stable labor market discourages creative destruction as people stay with what they have and few are incentivized to become entrepreneurs. Although there has been some upheaval in term of PhDs at medical schools, most jobs are pretty secure. That security translates again to less anxiety and less interest in and support for creative destruction. Another dead end. Strike two.

Excess regulation inhibits creative destruction. Examples include cities that are trying to halt AirBNB and Uber with laws that were written 50 years ago, or laws that require Tesla to use dealerships. Medical education is so controlled by government regulations (OSHA, HIPAA, access rules) and systematized by non-governmental organizations that it is indeed highly regulated. Can it be that the original paradigm shift that started with the Flexner Report is now part of the problem? That is, in seeking “consistency” and “quality” we created a system that highlights banality, caution, and a lack of innovation? It seems we have squelched creative destruction in the process just as is seen in markets with excessive government regulation. Is the solution then to loosen standards and dissolve organizational bodies so that schools (like states in the US) can be incubators or novel ideas? Since institutions come but rarely go, this seems rather unlikely. Strike three.

The depressing conclusion (for folks who want change to happen) is that the “creative destruction” model is stymied from action because of the following:

  1. lack of a downturn
  2. lack of a fear of a downturn because of incessant growth and easy access to money
  3. no competition, a comfortable and stable labor market, and tight regulation

It makes sense. Nonetheless, it’s depressing that the environment for creative destruction and subsequent paradigm shift in medical education is extremely poor.

Picture Credit: CC BY-SA 3.0 Nick Youngson

Lessons Learned From It’s A Jungle In There (Part 5 of 5)

Overall, It’s a Jungle in There had some interesting ideas that can apply to building your business. Chapter-by-chapter ideas included:

  1. Be a risk-taker.
  2. Be passionate.
  3. Don’t fall for “Get a life” or “Take it easy.“ Be ambitious (see passion).
  4. Dream about the future.
  5. Multitask.
  6. Come up with a product, believe in it, and sell it.
  7. Be the best you can be.
  8. Pay attention to detail.
  9. Look out for the next big thing.
  10. Do R&D and learn new things.
  11. Make improvements.
  12. Make sure folks can find your product and go to the customer to make a sale.
  13. Pay attention to the budget and spend wisely, but don’t cheap out.
  14. Improve efficiency through strategic partnerships.
  15. You, the entrepreneur, are a product. Sell yourself.
  16. Don’t quit – persevere. Clear objectives should guide you. Set a goal and clear objectives. Use them to tell you when you have arrived. A setback can be assessed against the purpose and objectives. If the impediment is that Google is doing it now, your goal just got stomped on and it’s time to create another goal. If your goal was to create an app and you found out four others already exist, then persevering is foolish. If your objective was to be done in two weeks, and you are only half done, then adjust your schedule and get moving. Figure out what got in the way.
  17. Don’t accept a rejection from someone; don’t quit too early. Sure, hit the wall, step back, and then try again. There are situations where you can ask 100 people. A rejection from one means there are 99 other people to ask. You can ask that first person again, or you can move on. In other cases, there are only one or two people (say, you invited your state’s senators to come to your launch and both rejected you). Dig deep and keep trying. You only have two options.
  18. Failure is just success in disguise. The business world is full of “learn from your failures” advice. It makes sense. But learn from your successes, too. Learn from other people’s failures. Learn from their successes, too.The broader statement is “learn.” Every chance you get, see what you can learn and apply that to your next activity.
  19. Be positive. That’s easier said than done. The author says “I’ve never had a bad day.” Most of us cannot say that; self-deception is not easy. But, the point is, don’t get down on yourself or your situation. Take each challenge as an opportunity to see something new. But, really, it’s okay to have a bad day. The good news is that the sun seems to keep rising every morning. Tomorrow (if this is not the movie Groundhog Day) there will be a new day.
  20. Care about people and things.
  21. Make people feel good. Praise is cheap and useful.
  22. Help others out
  23. Shape your image of yourself.
  24. Connect with the media.
  25. Be truthful.
  26. Don’t burn bridges. Don’t throw away things in anger. Don’t keep everything either, but pause before you discard your creation.
  27. Be socially responsible.
  28. Give something back. What comes around goes around.

Further Reading

Picture Credit: Wikipedia user Roehrsb under the Creative Commons Attribution-Share Alike 4.0 International license

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