It is well known that the start-up phenomenon is probably the most disruptive source of innovation on the planet today. The fact is that the democratization of technology and the drive to somehow change the status quo has fragmented the ability to innovate to the point that it is no longer a laboratory discipline or exclusive to large corporations but a possibility that is available to anyone with imagination and connections (especially to the internet).
There are already many cases of the famous ‘unicorns’ – companies valued at over $1 billion which have impacted on consolidated sectors such as travel, entertainment, communications, mobility and finance to such an extent that they are now game changers that enjoy dominant positions in these markets. The healthcare sector, where innovation has traditionally been centred on laboratories, at the start of the industry’s value chain, is no exception and has witnessed the emergence of different stakeholders trying to take their share in a sector that has traditionally been a late-adopter in digital terms.
The truth is that in every company, in the healthcare sector or any other, there is strong pressure to innovate, whether this is in order to develop the current business (incremental innovation), or to transform it, or to generate a new business (disruptive innovation). But it is also true that internal R&D departments tend to focus on core business and are not always plugged into the external innovation ecosystem, apart from obviously having limited resources available. Ultimately, the speed at which innovation runs internally in corporations is, by definition, very much slower than in the outside world.
At Almirall, as part of the commitment to innovation spearheaded by the Digital Office, we have developed the Digital Garden. This program, which may well dovetail with the cliché of what is understood by a corporate accelerator, does not seek short-term financial return but rather aims to speed up the process of internal adoption of innovation, to implement more agile working methodologies, and to promote the company’s digital transformation. I have been fortunate enough to form part of this program, and I have experienced the end-to-end process in person: from its conception, to the scouting of potential partners, the advertising campaign, the selection of participants and their onboarding within the organization through an internal mentoring system.
Over the course of this nine-month relationship with start-ups, I have learnt several things that I would like to share with you:
- There are many start-ups, and their scope is global. With a call open for just over one month, we obtained more than 50 applications for the program, from niche-type segments to more general proposals, but always leveraged by clear digital drivers (AI, NLP, Telemedicine, etc.) that generate business. We received proposals from +25 countries which clearly shows that there is no geographical limitation to their business: the world is their playing field.
- They always react to market opportunities. They have a ‘technological’ vision of the market in the sense that they are not necessarily sector experts or perfect masters of an industry’s value chain, but instead identify certain points in that chain which are not working properly or could clearly be optimized. And that is their focus.
- They have a focus, yes, but it is not set in stone. Their priority is to have a Minimum Viable Product (MVP) that demonstrates that there is an opportunity for disruption in an industry. Iterating to achieve it, or pivoting to change course if things go wrong, is the order of the day. Both options are equally valid provided that there is still an opportunity to release a value that, until that time, had remained hidden in the industry in question.
- The value is provided by the user. The user might be a patient, a healthcare professional, a public administration, a CRO… that is the least of it. Putting yourself in the shoes of the user, understanding their problem and proposing an alternative – usually leveraged in a technological solution that generates less friction in the process and is therefore more highly valued by the user than the market standard – is their obsession. This user-centric vision is clearly one of their added value.
- Focus on a niche for subsequent escalation. In contrast to a corporation, which has an end-to-end vision of its value chain, a start-up is an expert in a niche within that chain, looking for its competitive position – if it survives, because many fall along the way – and then upscaling (geographically, in an industry, or cross-industry) to potentially create a new business model.
- They have a nose for business, but they need help. Often their business plan is based on a few facts and a lot of intuition. Unearthing uncertainties and iterating on-project is often their ‘scientific method’ of refining their product or service. For this reason, they often need help from the industry itself in which they want to position themselves.
- They learn fast, and execute even faster. This partial ignorance of the industry is offset by a huge capacity to learn, hard work and a dynamic attitude. Their ability to adapt to change, to evolve, and to perfect their product is infinitely faster than a corporation. The case of Intrepida, which in the middle of lockdown adapted its portal to include all the clinical trials related to Covid-19 being conducted worldwide in just ten days is an excellent example of this ability.
- They are brave, but they are also afraid. They are chasing a dream, fighting for it; they are unwavering and tenacious… but they often experience an emotional roller coaster because they are risking their own money, because they have the talent but have to make decisions in areas they are unfamiliar with, or because any investment round could be either their salvation or their downfall in equal measure. Generally speaking they have very good technical profiles, but they have very little knowledge of legal, intellectual property and branding aspects, as well as the specifics of each industry (in the case of the health sector, we have seen that the regulatory, promotional compliance and clinical development aspects, to mention just a few, are real unknowns for them).
- They are appreciative. In general I have only come across good people who are grateful for your help, however limited this may be. They are committed to their project and have good collaborative chemistry, both internal and external. This is essential for managing stress peaks at the core of the start-up and to build collaborative networks with the innovation ecosystem or the corporate mentoring system.
- No income, but no legacy. They are literally starting from scratch. The main headache of start-ups is knowing when they will be able to raise the next round of investment (or, in other words, but with less cachet, how long they can manage to survive). Despite the fact that there are numerous sources of funding, both public and private, this is their main challenge. The other side of the coin is that they do not have operating costs to deal with in order to sustain their core business, but can devote all their resources to building in a single direction. Thus when the economic resources come in, there is no discussion of where to invest them: in developing their product.
And as a company, what have we learned?
It is probably still too early to say. We are barely finishing the first ‘harvest’ of our Digital Garden and it could be too hasty to draw conclusions now. What we can say without fear of being mistaken is that they are a breath of fresh air and an inspiration for their dynamism, their processes, and the way in which they work. Furthermore, something I think all of us have realized is that start-ups are a source of innovation and an opportunity to optimize processes and unlock value that we were unable to do with the talent within the four walls of our company (which is a lot!).
So, if they can also be a driver of corporate innovation, what is the challenge? It is clear that we need to be aware of our value proposition with regard to start-ups, of the type of collaboration model we can offer that will be attractive to them and, above all, how we can link this collaboration with the corporation’s strategic objectives to be able to generate more value. These are, in my opinion, the challenges posed by the second edition of our Digital Garden, as well as starting to incorporate this digital mindset that we have seen in our first batch of start-ups.
Oriol Boira, Corporate Digital Manager
The Digital Office – Almirall