In the world of orthopedic innovation, success stories like Danek, Kyphon, and Mako often take center stage in our collective memory.
These company triumphs shine brightly, but beneath them lies a shadow of thousands of startup failures, their lessons often forgotten.
Anyone remember… Amedica, LinkSpine, Carevature, Intellirod, Bio2Tech, Titan Medical, Conformis, Wishbone Medical, ReJoint Orthopedics, TranS1, etc ?
Why don’t we remember the failures?
Well, we all carry a “Survivorship Bias”.
In a nutshell…
• We “see” startups that encountered challenges that were survivable.
• We “don’t see” startups that encountered challenges that were not survivable.
Below is a deeper dive, followed by a classic example of survivorship bias.
Survivorship bias, a cognitive bias that skews our perception by focusing on the survivors and successes while sidelining the failures, can deceive us all when evaluating the true landscape of orthopedic company success.
To unravel the impact of survivorship bias on our understanding of the orthopedic industry, let’s explore the following key insights:
- A Partial Picture of Success: The orthopedic startups that have successfully navigated the market undoubtedly offer valuable insights. However, it’s vital to remember that behind these triumphs lie numerous startups that faltered for diverse reasons. Neglecting these failures can lead to unrealistic expectations and a skewed perspective.
- The Trap of Sampling Bias: Survivorship bias can create a biased dataset dominated by companies that surmounted initial challenges. To counteract this distortion, it is imperative to delve into the stories of both successful and unsuccessful orthopedic startups. Examining the reasons behind failures can be just as enlightening as analyzing success stories.
- Guard Against Survivor Traits Overemphasis: The inclination to focus on specific traits or strategies shared by successful startups may mislead us. What worked for one orthopedic startup might not be universally applicable to others. A cookie-cutter approach may lead to failure.
- Embracing Risk Management and Adaptation: Surviving orthopedic startups often excel in risk management and adaptability. They might have faced setbacks, but their ability to pivot and recover holds valuable lessons for all startups, irrespective of their initial outcomes.
- Embrace Diverse Pathways: Success in the orthopedic industry takes various forms. Some startups secure substantial funding early on, while others bootstrap their way to triumph. Exploring these diverse approaches can broaden the horizons of aspiring entrepreneurs.
- Acknowledging External Factors: Survivorship bias tends to downplay external influences such as market conditions, regulatory shifts, and economic factors. These external forces can significantly shape a startup’s destiny, and it is crucial to incorporate them into our analyses.
- Longevity vs. Quick Gains: Survivorship bias often steers us towards focusing on short-term successes, but the sustainability of a startup over the long haul is equally, if not more, important. Startups that thrive for years may face distinct challenges and adopt unique strategies compared to those that experience rapid success followed by decline.
In summary, survivorship bias has the potential to illuminate the path to success for orthopedic startups but should be wielded with caution. To paint a more complete picture, entrepreneurs, investors, and researchers should explore the narratives of unsuccessful startups, consider the broader context, and remain mindful of the limitations of survivorship bias. Only by embracing a balanced perspective can we truly understand the intricate tapestry of orthopedic company success.
In order to better understand the concept of Survivorship Bias, read this classic story.
During World War II, the U.S. wanted to add reinforcement armor to specific areas of its planes.
Analysts examined returning bombers and plotted the bullet holes and damage on them (as in the image below).
Based on this analysis, they came to the conclusion that adding armor to the tail, body, and wings would improve their odds of survival.
But a young statistician named Abraham Wald noted that this would be a tragic mistake.
By only plotting data on the planes that returned, they were systematically omitting the data on a critical, informative subset:
The planes that were damaged and unable to return.
Abraham Wald recognized a key fact:
• “Seen” planes had sustained damage that was survivable.
• “Unseen” planes had sustained damage that was not survivable.
Wald concluded that armor should be added to the *unharmed* regions of the returning planes (the areas without bullet holes on the image below).
His profound logic:
Where the survivors were unharmed was actually where the planes were most vulnerable.
Based on his insight, the military reinforced the engine and other vulnerable parts, significantly improving the safety of the crews during combat and saving thousands of lives.
Abraham Wald had identified a cognitive bias called “Survivorship Bias”:
The error resulting from systematically focusing on survivors (successes) and ignoring casualties (failures) that causes us to miss the true base rates of survival (the actual probability of success) and arrive at flawed conclusions.
We see examples of Survivorship Bias all around us:
1. We read books on the common traits of successful people, but fail to consider all of the unsuccessful people who possessed those same traits.
2. We applaud the belief when we hear that an entrepreneur took out a second mortgage and succeeded, but fail to consider all of the entrepreneurs who did the same and went bankrupt.
3. We study the cultural strategies of the most successful companies, but fail to consider all of the companies that followed those same strategies and fell apart.
When we fail to consider the range of outcomes and the hidden evidence, we develop a skewed (and often incorrect) view of reality.
It cannot be avoided altogether, because the vast majority of books and history are written by and about the survivors and victors, but wherever possible, consider the unseen evidence.