4.4 Business Models

What Is a Business Model?

Josh Makower, CEO of ExploraMed, defines a business model and talks about its critical role in ensuring the sustainability of an organization.

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•  4.4 Business Models •  Josh Makower • 

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Getting Started

The choice of a business model is as important as the choice of the technology that the innovators decide to take forward. Use the following process to guide the assessment and selection of an appropriate business model.

Understand Characteristics of Different Business Models

What to Cover

Develop an understanding of each type of business model. Determine which characteristics are the most important (i.e., those that truly define each model). These are the characteristics that will be most important to consider when selecting a business model in the next step.

Where to Look

Unlike many other steps in the biodesign innovation process, there are not many comprehensive references that can be used to assist in understanding various business models. Internet searches and business texts can be a good source of information regarding the general concept of business models. When seeking medtech-specific information, get input from other innovators, entrepreneurs, and advisors with experience in the field. Venture capitalists can also be a good source of information based on their experience in evaluating the business models of different device companies.

Choose a Business Model

What to Cover

Look at the most important characteristics or criteria for each business model and compare these requirements to the innovation under development, as well as the underlying need. Eliminate those business models that are an obvious mismatch with the given innovation and need (e.g., do not pursue a business model that relies on strong IP protection if such coverage is impossible to achieve). Then, perform more detailed analysis and research until the best choice can be made.

Where to Look

See the guidelines in online Appendix 4.4.1 for a list of critical business model elements to help with this important decision and general rules-of-thumb to validate each approach. Again, seek the counsel of other entrepreneurs, advisors, and venture capitalists before deciding which business model to adopt.

Validate the Preferred Business Model and Identify Risks

What to Cover

Perform a secondary analysis of the chosen business model to identify any “fatal flaws” that may be associated with the approach. Seek input from experts to validate that the chosen model represents the best possible approach. Identify any “soft spots” in the model and develop plans for minimizing, eliminating, and/or managing these risks.

Where to Look

Leverage personal networks to help validate the intended approach. Utilize standard risk management constructs to begin thinking about and minimizing risks.

Determine What New Expertise Will Be Required to Operationalize the Model

What to Cover

Assess the current skills sets and expertise that the innovator and any other members of the team currently possess. Evaluate these competencies against the critical competencies necessary to implement and execute the chosen business model. Initiate a search to identify individuals with the skills and experience that make them suitable to hire, serve as a consultant, or advise the company as a member of the board.

Where to Look

Involve all members of the team in assessing its skills and competencies and identifying needs. Refer back to 1.1 Strategic Focus for information about strengths and weaknesses. Again, leverage personal networks to make contact with candidates with the right skills and experiences to assist.