Fishing ideas

Most of healthcare ideas start when physicians identify a process they can do better. It happens every day, believe me. When one has identified a process, the most straightforward way of turning it into revenues is by converting the process into a service. For example, a microbiologist may identify a process that enables to diagnose faster a microorganism. He could offer from that moment on a service to diagnose this microorganism. Send me the samples, and I’ll give you the diagnose. But this is a mistake. No good.

As we have been discussing in some of the last posts, a service is not precisely what investors are looking for. A service grows by adding more “manpower” into it, that is, by hiring more people (as the service usually involves “people” that we need to pay). It usually cannot grow exponentially as fast as a product can, and its costs always increase largely when we increase production.

To build value, the physician could try to turn the process into a product (see my diagram). Following the previous example, the microbiologist may design a “diagnostic kit” to facilitate the process he created, and then sell the kit to allow different hospitals to perform the diagnostic faster. Or maybe he can design a medical device, a machine meant for executing the very same process he identified, and then sell this machine. By doing this he has generated a new business model that now sells a product, a tangible thing, that can be produced in large quantities and grow much, much faster. No need to say venture capital loves this.

To build value he can try either to get strong intellectual protection by patenting the process (whenever possible). When he does this, he is creating barriers of entry that other potential competitors will need to break before entering the same market. Venture capital loves this as well.

But of course, doing both things at the same time creates the most value. The value is in the upper right quadrant. Next time you have an idea, try using this framework to add value.