GUEST POST from Arlen Meyers

Creating a digital health company these days is easy. Creating one that adds value and that is scaleable is not. The process is fail it, nail it, scale and sale it and that means you have to climb the various rungs of the value building ladder.

Creating, developing and harvesting value begins with defining it. Value is the user defined multiple of the difference between the perceived tangible and intangible benefits less the similar costs when compared to the competitive offering or the status quo.

Value is measured in different ways by different users. For a company, it is dollar value investors place on a company. For a house, the value is what the buyer is willing to pay. For a customeri looking for a product or service, the value is the value factor they prefer, like quality, convenience, experience, service or speed per unit price.

Here are some other things physician entrepreneurs should know about value and how it differentiates tinkering from improvement from innovation

An inflection point is an event that results in a significant change in the progress of a company, industry, sector, economy, or geopolitical situation and can be considered a turning point after which a dramatic change, with either positive or negative results, is expected to result.

Bruce Cleveland, in his book, Traversing the Traction Gap, divides the framework into three stages with several inflection points.-go to product, go to market and go to scale. The value inflection points are :

Minimum viable category: the name and definition of the industry category

Initial product release:first publicly deployed product

Minimum viable product: you have achieved customer validation and product-market fit

Minimum viable repeatability: you have a solutin grade product, business model and repeatable sales and marketing

Minimum viable traction:minimal viable repeatabililty + multiple quarters of growth

You do that by:

1. Creating product-market fit
2. Creating a VAST business model
3. Protecting your intellectual property, if necessary, and knowing options to monetize them
4. Getting regulatory approval, if necessary
5. Demonstrating a reimbursement or recurrent revenue model, like consumables, XaaS, razor-blade model, subscription, auto renewal or contract model
6. Having positive cash flow
7. Demonstrating that you have improved quality, lowered costs, improved access or improved the doctor and patient experience with data driven pilots or proof of concept
8. Published your results to show that you have not only solved a technical and business problem, but a clinical problem as well
9. Integrated your solution into legacy EMRs or information systems
10. Overcoming the barriers to dissemination and implementation
11. You have an exit strategy, whether you execute or not
12. If you don’t do these things, you will fail
13. Perhaps the best measure of the value you have created is 1) how many customers you have created, and 2) how much is someone willing to pay to buy your company.

Putting the ladder in the right place is the first step. For example, The Market Opportunity Navigator provides a visual framework to discover, compare and prioritize different market domains and business contexts. It helps you to think about your arena, rather than your industry – a key mindset shift in today’s competitive landscape.

The Navigator walks you through a three-step process that helps you to make a more informed choice. It does so in a friendly, intuitive manner, with a visual design board and 3 worksheets to guide the process.

Climbing the value ladder will be a lot easier if you are careful to pick a spot that is not crowded. Start with getting to why.

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