Seeing an idea go from the lab or clinic to the wider world is exciting. However, clinicians, researchers and administrators don’t always have the time or resources to take their innovations to the next step — that is, build them to scale. At Boston Children’s Hospital, the Innovation & Digital Health Accelerator (IDHA), comprised of 50+ researchers, business strategists and technologists, is dedicated to just that: We identify and vet high-priority health technology innovations at the hospital and provide the resources, funding and momentum to accelerate their development and commercialization.
To date, Boston Children’s has spun off more than 25 startup companies developed directly from clinical and research pain points. Some startups, like Neuromotion and Circulation, stand on their own. Others, including Epidemico, have been acquired by industry leaders. Through this experience, IDHA created the Innovator’s Roadmap – a comprehensive resource for taking ideas from concept to commercially available, impactful, economically sustainable products.
In this first installment, we look at the critical first step: understanding and justifying the business value of a technology or service by developing a business model.
What is a business model?
A business model is a hypothesis for how to successfully operationalize, monetize and develop a product or service. At an early stage, a business model is your story for how you plan to develop and sustain your innovation. It’s critical step in creating an impactful commercial venture, and it requires an understanding of markets and companies far beyond the walls of a hospital or academic center.
What makes a successful business model isn’t always straightforward. In the world of truly novel innovation, you must answer many questions. Will users adopt your new product? Will a future trend impact your product? Does the technology necessary to build your product exist today?
For early-stage innovations, the business model is often difficult to fully conceptualize, and many of the answers to these questions won’t be immediately apparent. Often, these questions are completely separate from the science or clinical observations that got you to the idea.
Tips for creating a healthcare innovation business model
1) Start your market research early
Step back from your own work and get an early understanding of how others are attempting to solve the same problem. This will guide you to best practices and pitfalls to avoid as you iterate on your innovation.
How: Do a simple keyword search for comparable products or services already on the market. Crunchbase is another easy way to identify similar early-stage or venture-backed startups
2) Structure your idea and choose a framework
A business model framework is essentially a worksheet — a set of questions and boxes to be checked in figuring out how to organize your initial research. There are multiple frameworks available; choosing one will help structure the research you have completed – and the research you still have to complete. Keep in mind, though, that no single framework will answer every business question.
How: We recommend LEANSTACK’s business model canvas as a starting point. It’s a great catch-all framework that forces you to consider many of the key variables of a sustainable business model and will force you to answer critical questions early on. It’s also a great tool for compiling your research in steps 3 and 4.
3) Understand the competition
Develop a deeper commercial understanding of the competition your innovation faces.
How: Analyze industry analogs, or competitive products and services. Identify three target companies, and gather the following information about each company:
- Its key customers
- How the company markets to those customers
- Key value propositions (why the company thinks it’s better)
- Its fundraising activity
- Its revenue model (what it charges and how often)
- Background on the management team.
4) Put everything together
Research into your market, and competition, is critical as you work to develop, operationalize and monetize your innovation. Now, it’s time to leverage your research to define a commercial approach — at this point, a hypothesis for how your innovation will get into the hands of users.
How: Begin with a blank business model framework. This will become your working hypothesis for your business model. Next, draft your unique value proposition: the most important part of your canvas that describes what you will offer your users or customers. Working from a strong value proposition, complete the remainder of your business model. Be sure to complete the cost and revenue sections of your worksheet to determine whether your hypothesis is economically sustainable.
Completing these last two sections will require a deep understanding of your market. In our next post we’ll dive into how to research the size of your intended market.