The secret weapon for Orthopedic startups |

The secret weapon for Orthopedic startups

We had a secret weapon at Ellipse Technologies.

Ellipse was a VC-funded startup with zero bench strength in orthopedics. I joined in 2012 as the VP R&D. On paper, we had nothing. We had meager sales, finite funding, very few employees, few products, few customers and few regulatory clearances. However, we had a secret weapon. Our CEO coached us regularly that we had a weapon that we could leverage against the competition every day – a high tolerance for risk.

We had the ability to take on extreme RISK…  and we knew our competitors did not. We could try anything to see if it worked.  We embraced a high-risk culture to blow past the competition.

How did Ellipse use risk?

A few real examples.

  • We redesigned our implant systems weekly. Can we make it better for our customers?
  • We experimented with creative regulatory strategies. How do we find the way to receive 510(k) clearances for remote control implants in kids?
  • We redesigned the product assembly and testing processes weekly. Can we build the products faster and with less waste?
  • We experimented with borderless sales strategies that quickly put us into 20 countries. Where are our evangelist customers and how do we best serve them?
  • We reorganized the company every few months for speed. What is the best organizational structure and physical layout to go faster in the next six months?

The result was that we outran the big Orthos with a rapid development of new technologies that solved unique clinical problems. After a couple of years, we literally had zero competition in our two market niches – remote control spinal growing rods and remote control limb lengthening.  In a span of 6 months, we had accomplished what Smith and Nephew had struggled to do in 6 years and countnig with limb lengthening.  The competition was in the rearview mirror and we never looked back. We booked annual sales of $1M, 6M, 12M, 24M, and 42M before being acquired by NUVA for $410M. During this exponential doubling of sales, the employee count grew from 12 to 120.

The Competition

The Big Orthos avoids risk at all costs. They play “not to lose”.  As a recruiter, I talk to good people stuck in these Big Ortho companies each week. Even though they have massive resources to work with, they spend their time doing group think exercises in endless meetings. Nobody can make a decision. Nobody is willing to stand up and take a chance because:
  • management has to protect earnings and the shareholders first,
  • management has to protect the zillions of dollars of legacy products out in the field,
  • management has to protect their jobs by not taking chances and screwing up.
The big Orthos have completely forgotten how to innovate.  All new products are incremental improvements.  It is no longer in their DNA to innovate. Their innovation strategy has defaulted down to a single tactic – acquiring innovative Orthos.

Contrasting Cultures

Today, the big and small Orthos have inverted cultures.
In a small Ortho, you are applauded for promoting creative ideas that challenge the way things are done. The result is that you will be given the latitude to test your crazy idea out. You may go down a rat hole and learn something for the company, or you may be a hero.
In the big Ortho, you are slowly pushed out (or fired) for promoting creative ideas that challenge the way things are done. The result is that you will undermine your career there.
In small Ortho, plans are fluid. What can we do this week to create value?
In big Ortho, you develop annual plans and five-year plans.
In small Ortho, success comes from identifying a worthy risk and having the courage to embrace it.
In big Ortho, success comes from growing the top line with existed products.

In small Ortho, employees are evaluated based on what they are going to do for the company today, tomorrow, and this week. This is forward-looking.
In big Ortho, employees are evaluated based on what they did do for the company last year. This is backward looking.

I could go on and on here, but you can feel the cultural differences.

The Takehome Message for Small Orthopedic Companies

If you are leading a small orthopedic company, you must NEVER FORGET the unique leverage that you have over the competition is the ability to take on RISK.
Win by embracing a culture of risk taking!


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