February 28, 2019
By Matthew Johnson
Travel in innovation circles as I do, and you’ll certainly find that there’s much ado about “ecosystems”. Across Canada and beyond, cities and regions intent on economic diversification are investing heavily in support resources for health innovation and entrepreneurship – pitch competitions, incubators, clinical demonstration projects, entrepreneurship training, seed funds, etc. – with the best intentions to create new healthcare companies and also fill all the gaps they could encounter in their start-up journeys.
I wonder, though, if this reliance on highly localized support is counterproductive to healthcare sector growth in Canada, and is actually holding many early stage companies back from pursuing global opportunities. I’m calling this specific strain of malaise ecosystemitis.
Let’s first consider the word “ecosystem”, which implies a collection of entities interacting within a defined physical space and set of conditions, such as in a pond or on an island. In these closed systems, success is molded by very limited selection pressures.
In the typical innovation ecosystem, companies access publicly-funded programs and support from various local organizations that are not well integrated with the broader healthcare market, and are thus ill-equipped to apply a global lens to their assessments and advice (in fact, as most support organizations are driven by volume-based metrics – number of innovators supported, number of jobs created, number of projects funded – they are disincentivized to perform rigorous due diligence). When a company’s strategies and competencies are shaped by these inputs, of course they’ll struggle to find traction in complex international healthcare markets, with their variable demographics, priorities, health system structures, regulatory requirements, reimbursement schemes, procurement policies, etc.
As companies consistently fail to break into the global markets that are essential for sustained growth, they can drift around an ecosystem for years, tapping program after program, looking for little bumps of money and validation in a cruel false-positive feedback loop. Meanwhile, competitors race ahead capturing global investment and market share, and the window of opportunity closes. This is the essence of ecosystemitis, and at its worst it is a fatal condition for our homegrown companies.
So what to do?
Cities and regions should reconsider their ecosystem strategies, and instead focus on connectivity, integration, and communication with a broad network of global market players. It is absolutely critical that health innovation programs and supports are informed by diverse international perspectives in real time, so that they create opportunities for innovators to develop commercial strategies that translate globally.
This pivot will be challenging for support organizations; it will require performing meticulous market assessments, engaging with well-connected experts and partners from outside their region, and probably being far more discriminating of the companies seeking their support.
The result of this change in approach, however, will be companies that are properly equipped to compete and scale globally, which is the only result that matters.
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