Why Slow and Steady Wins the Race in Healthcare
Blitz-scaling may seem enticing, but it's not the best strategy for establishing a foothold in the healthcare industry. Why not?
Dr. Harry Lykostratis, the founder and CEO of Open Medical, a healthtech company that has achieved steady organic growth and is now present in over 150 healthcare sites across the UK and Europe, shares his practical insights.
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Firstly, what is blitz-scaling?
Blitz-scaling is a term used in the startup world to describe rapid and aggressive growth. In essence, it is a rapid invasion of whatever market you are trying to enter. It prioritises speed over quality. You buy your growth, lose money at first to kick out the competition, and then start to generate revenue once you establish your dominance.
To give you an idea, that’s what Amazon did and it worked wonders for them. It’s also what the digital health company Babylon Health did; they were valued at $4.2 billion in June 2021, and in just over two years, Babylon Health filed for bankruptcy, and its UK telemedicine service was sold for only $620,000 (£500,000).
So why isn’t blitz-scaling the golden ticket to success in the healthcare industry?
It neglects what healthcare values most
There are several factors associated with blitz-scaling that prove incompatible with the conservative and highly regulated healthcare market.
Let me put it this way:
You’re walking down the street, and a man stops you and asks for your wallet. He promises to return it tomorrow with an additional £100 in it. You politely decline, so he raises the offer to £1,000. Still, you refuse. Undeterred, he increases his offer to £1 million. But your scepticism remains because you have no idea who this person is. Your wallet has £50, and the logical thought given the circumstances is that giving it away could result in a £50 loss.
But now imagine an altered scenario: you know this man. You've heard about his brilliance and proven abilities from multiple reputable news sources. And in addition to monetary gain, he also promises to save the planet from climate change.
This time, you willingly give him your wallet.
What swayed you to shift from reluctance to compliance? It's the fusion of credibility and a shared vision. And within healthcare, this principle is incredibly important. A united objective must be established, and the foundation of trust is indispensable.
Miscalculations
In a dynamic sector like healthcare, the aspect of visionary alignment is often a problem. I have witnessed many companies attempt to enter the healthcare market with substantial investments, only to fail due to a misalignment of their vision with the intricacies of the market.
In some cases, however, it's due to overestimating the vision. They had the vision and believed they could achieve it, not realising the market is more nuanced. Eventually, unable to grow at the pace they had anticipated, they became victims of the narrative they created as much as the investors.
This is where blitz-scaling becomes a dangerous game; it’s a high-stakes gamble with no room for retreat. Blitz-scaling demands an all-or-nothing scenario, which means that if the vision is wrong, everything falls apart.
Take the scenic route
While the concept of blitz-scaling may thrive within sectors like consumer goods, as it did with Amazon, it rarely does well in highly regulated and conservative domains such as healthcare.
As an entrepreneur myself, I can't say that blitz-scaling wasn’t tempting. However, I’ve been developing and selling software since I was 14, and I am also a practicing orthopaedic surgeon. Since I knew the industry inside-out with extensive experience in both healthcare and technology, I knew that the traditional way would be the most effective. Why?
Coming out of the gate with a blitz doesn’t give you any credibility. You’re more likely to succeed if you have a track record in the market.
The heart of success in healthcare lies in understanding the industry's complexities, allocating resources wisely, and knowing what truly generates a robust return on investment. Building credibility, learning the nuances of the industry, and bringing the two together require time and effort; patience becomes necessary.
Final thoughts
Healthcare has its own distinct beat in the chaotic rhythm of business. Blitz-scaling may be a catchy song, but it is not a tune that works well with healthcare's conservative values. Instead, the fundamental keys are credibility and a shared vision, which require patience to learn how the industry operates so you can align seamlessly. It's not about the immediate impact; it's about the long-term consequences.
So, for those navigating the healthcare landscape, keep in mind that it’s a marathon, not a sprint.