I enjoyed reading this post in part because it highlights an emerging pathway for innovation within large institutions. It has long been recognized that small companies, funded by venture capitalists, tend to pursue high-risk projects that lead to innovation. Here we see a new channel for innovation, sponsored by a large institution with significant resources and an established business to reduce risk. As shown by HSS, these centers provide a pathway to understand medical needs of patients/physicians, and establish a process to develop technology. The innovation model has been duplicated by many private companies (e.g. Johnson and Johnson, Dupont, Wal-Mart) with varying levels of success. Internal venture arms of large companies (e.g. SR1 at GlaxoSmithKline) are another example of this trend.
I came across this article a while back which provides some broader context for this post: http://techcrunch.com/2015/10/05/why-businesses-back-innovation-centers/
Superb job breaking down The Hospital for Special Surgery through the lens of the TOM class. This post, as well as our early case on narayana hrudayalaya highlight an interesting operating model that can be applied to surgery. As you point out above, HSS has done a good job outsourcing the diagnosis process to other institutions, allowing them to focus on cranking out high quality / high rate operations. I’m curious if this process can be applied to other areas of medicine. For instance, can cancer centers benefit from studying the HSS model? Or is there too much heterogenity in the pathology, diagnosis, treatment, and follow-up care for these patients and this disease?
Another interesting topic of discussion would be HSS’s opportunities for growth? Should they leverage their operating model by building additional capacity in New York? Should they export the model to other locations? Or should they continue to optimize their processes, improve outcomes, and focus on excellence in their current operations?
Overall very interesting post and effective model for the surgery field.
Anyone who has ever walked into a FedEx-Kinkos store with the hopes of getting something done rapidly or efficiently will appreciate this post. This analysis brings up some insightful limitations of the FedEx model. Rapid transit of important business documents overnight seems to be a niche that FedEx will occupy for the foreseeable future. As you bring up, their ability to adapt to new technologies and our increasingly digitally-oriented society has been relatively poor. In light of these pressures it will be interesting to see if FedEx looks to double-down on physical space or seeks to divest Kinkos.
Nice touch with the office space image.
Insightful points on the scalability of the operating model.
I am an unsophisticated investor with a small amount of wealth. With that out there, I believe Betterment’s model can capture a significant amount of value from users like me, and/or those new to investing money in public markets. As a first mover in this field, Betterment will have to continue to invest aggressively in acquiring new users – there is a significant potential upside in network effects for this business.
It will be interesting to see if Betterment can continue to be successful with their 0.35% fee, in the face of similar, even lower priced offerings with institutions like Vanguard or Schwab’s Intelligent portfolios (which charge no fee, but keep an above-average amount of wealth in cash).
Insightful and topical post. A key part of the value proposition of online learning platforms is the certification of course completion. Coursera developed an effective technological solution to this problem in a way that does not burden the student. It seems the more challenging proposition will be to convince employers or other academic institution that these credentials are meaningful.
I find it interesting to compare coursera against other popular online learning platforms. Their operational model as a content platform yields a significant amount of variability in educational content. Contrast this with HBX Core, a carefully curated, online specific, and structurally consistent offering from HBS. Another competitor, MIT’s Open Courseware, offers science, engineering, and management content free of charge. Can coursera, or other MOOC’s compete with a product offered for free? In this case perhaps the credentialing service you mentioned is their most important contribution.