The med-tech industry seems to be awash with innovation at the moment, with most of the plethora of startups that have emerged in this space having doctors or some other medical professional on the startup team. Intuitively this makes a lot of sense. After all, you want high levels of medical knowledge on board to ensure the product is clinically sound.
Alas, a recent Stanford study suggests that diversity is also important, and having a start-up team that is solely comprised of medics, or indeed having a doctor as CEO, can significantly hamper the growth of the start-up.
The study finds that whilst medical expertise is crucial to the invention of new technology, those same inventors then often lack the skills required to grow that invention into a successful business.
“Diversity of expertise fuels innovation, and doctors are great at bringing that variety to technology-focused startups,” the authors say. “But you also need diversity of expertise in selecting which ideas to implement.”
The authors examined 231 startups in the medical device field who had received venture funding from 1985 to 2009. The success of each company was measured in part by things such as the approval their devices received from the FDA.
When the data was analyzed, it emerged that having doctors on the team boosted the creation of new ideas, but the development of those ideas suffered when teams were full of medics as the teams lack sufficient thought diversity to make the best decisions, especially in areas requiring radical innovation.
“CEOs in young firms are not supposed fall in love with any one idea,” the authors say. “Their job is to consider many points of view in deciding where to commit precious resources. Professional doctors and surgeons aren’t usually as well suited to that.”
The study finds that the growth in doctor entrepreneurs is largely a part of government regulations that were designed to promote authenticity in decision making by doctors by ensuring transparency in relations between clinicians and device companies. What it also ended up doing however was reducing the collaboration between each party.
The analysis reveals that 59% of medical start-ups employed at least one surgeon-inventor. To an extent, this helped the company gain regulatory approval, but the researchers found that the sweetspot was a team whereby 40% were surgeons. More than that and things started going downhill, both in terms of FDA approval and wider success.
Central to this issue was myopia. Success depended heavily on the ability of those surgeon-inventors to be challenged by other members of the team from differing backgrounds. Without this, progress would be very incremental and the start-up would not really grow. Equally, excessive medical expertise at a startup can often see ideas run wild as there is little experience of how to turn ideas into functioning products.
Indeed, startups whereby the CEO was a non-surgeon had significantly higher growth than those with practicing surgeons in the top job. Surgeons were constructive, however, when they were on the board of directors as they could provide valuable input without concerning themselves too much with operational decisions.
Of course, such problems are not confined to doctors. Indeed, any profession with deep expertise can easily fall into the trap of relying upon what has worked in the past rather than what will work in the future. With physicians, they clearly have exceptional knowledge on both medical needs and the existing technology to service those needs. What they need though is some help in turning those great ideas into products, and for that they need expertise in engineering and business.