1 week Ago
Dr. Aasim Saeed, Founder and CEO of Amenities Health . Business leaders face a dilemma.
They know their fields are going to continue to be disrupted by rapidly evolving technology. But as incumbents, they’re poorly positioned to be the ones leading that disruption—the same way it would have been unreasonable to expect a buggy whip manufacturer to usher in the automobile age a century ago. We see this starkly in my field, healthcare.
Patients crave the ease of virtual care and intuitive digital interfaces, but hospitals struggle to deliver anything resembling a modern consumer experience. Even when health systems have offered these solutions, the tools and features have often felt “bolted on” because they were created by people looking to bolster the status quo instead of disrupting it. One solution should be as obvious as it is familiar: joint ventures.
Like corporations that merge or acquire other organizations to expand their footprints and capabilities, hospitals already partner with outside organizations to deliver services like medication fulfillment and physical therapy. But for some reason, similar partnerships for new consumer technology and services are scarce. By bringing a tried and true partnership approach to digitization, organizations in healthcare and other sectors can both leverage their existing advantages and prevent themselves from being outpaced by the competition.
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And, frankly, a rural hospital in Indiana is in no position to compete for these employees against fast-paced startups in Silicon Valley. By entering into a joint venture with a partner, organizations can access the sort of talent that they would otherwise never be able to bring on board. In addition to high-value skills, these external employees will also bring a different mindset with them—one in which new ways of doing things are seen as exciting rather than scary.
Imagine you were the head of a company that built sailboats, and you wanted to transition to building speedboats. It would be complete madness to try doing this with your existing team. Instead of (metaphorically) training a team of sailors how to build and maintain engines, businesses and health systems would do well to partner with an organization that already has the necessary skill set—and mindset—in-house.
Eliminating Technical Barriers Incumbent organizations have technology environments that were, by and large, designed to address the problems of the past. Take electronic medical records (EMRs) in healthcare, for instance. These represented an enormous leap forward from the paper-based processes of the past.
But, in general, they were built specifically to digitize those paper-based workflows that hospitals have always engaged in rather than supporting disruptive new care delivery models. For example, allowing a new patient to self-enroll in an EMR system is extremely cumbersome, if not impossible, as these tools were created mostly to help health systems manage their existing patient records and optimize them for security rather than ease of use. We see this tension in other industries, as well.
For instance, incumbent car makers are playing catch-up with electric vehicles—a challenge made more difficult by the fact that their existing infrastructure was all designed to build internal combustion engines. Some manufacturers have entered into joint ventures specifically to solve this problem, relying on emerging players for their battery technology. By partnering with young, tech-savvy companies that are focused on innovation, incumbents can avoid the struggle of retrofitting outdated systems and leapfrog directly to the state-of-the-art solutions they’ll need going forward.
Managing Costs There’s no denying that the per-employee costs of partnering with—or acquiring—a digital startup can be high. When Instagram was bought by Facebook (now Meta) for $1 billion in 2012, the company had only 13 employees. But consider the fact that Instagram is worth more than $70 billion just over a decade later , and I doubt Mark Zuckerberg regrets the decision.
And in any event, it likely would have cost Facebook far more to try to build and scale its own Instagram clone, with no guarantee of success. (Anyone remember Google’s failed attempt to enter the social media sphere with Google Plus around that same time?) Businesses and health systems are accustomed to partnerships that require them to spend nine figures on new construction projects and pay ongoing salaries to hundreds or thousands of new employees. By comparison, partnering with a tech startup would undeniably be much less expensive.
Navigating A Changing Landscape Organizations that fail to at least consider joint partnerships risk missing out on significant growth in the future. For some businesses, the risk is existential (think Netflix slaying Blockbuster). Others will continue to do well—but not as well as the startups who come along to eat their lunch (think Walmart losing its retail throne to Amazon).
In healthcare, as well as some other highly specialized sectors, the risk calculus is a bit different. People will always need hospitals to perform surgeries, for instance. But if incumbent organizations don’t keep pace with evolving technologies and consumer expectations, they’ll find themselves viewed as commodities while their customers build loyalty to new startups that dramatically simplify their everyday lives.
What’s worse: Even if they don’t go out of business, these organizations will severely limit their opportunities for growth. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?.
