There’s an explosion of innovation in healthcare and with that comes a plethora of incubators, accelerators, pitches, challenges, prizes, awards, and competitions. Trying to sort through which ones are worth paying attention to can be a full-time job. At Wellpepper we’ve tried to be selective about which ones we enter. A recent post by Sara Holoubeck, CEO and founder of Luminary Labs about the outcomes of challenges got me thinking about the cost/benefit analysis of entering challenges. Both costs and benefits come in hard and soft varieties.
If you want to be scientific, you can assign a score to each of the costs and the benefits, and use it to decide whether to throw your hat in the ring. (For the purposes of this blog post, we’ll use the term “challenge” to refer broadly to all of these opportunities.)
- Time: How many hours will your team need to put into this challenge? How much of your team needs to be involved?
- Focus: Does the focus on this challenge distract your team from core customer or revenue priorities?
- Financial: Is there an entry fee to participate? What other costs, like travel, may you need to incur to deliver on the challenge?
- Strategy: Is this challenge aligned with your
- IP: Do you have to give up intellectual property rights as part of this challenge? Do you have to give away any confidential information that you are not yet ready to share publically?
- Financial: Is there prize money? Does it cover your expected costs? Could you actually profit from entering? If winner receives funding who decides the terms? Is this an organization that would be beneficial to have on your cap table?
- Focus: Does this challenge provide the team with a forcing function to deliver innovation in an area that is aligned with your overall strategy?
- Innovation: Does this challenge take your team in stretch direction or enable you to demonstrate a direction on your roadmap that you may otherwise not immediately approach due to market issues?
- Publicity: Where will the winner be announced? Is there a PR strategy for the entire process or just the winner? Does it help your organization to be aligned with the content or sponsors of this challenge?
- Introductions: Who will this challenge help you meet that can further your business goals?
It’s up to you to consider the cost/benefit analysis. Both may not have to be high, but when they are the opportunity can be high if you have the ability to put in the effort. You may also consider your chances of winning if it’s defined as a competition, and whether there is any drawback to losing, or if just participating provides enough benefit.
Here are a few examples from our own history that may help illustrate the tradeoffs.
Low cost/medium benefit
We entered a local pitch event for a national organization. The effort to pitch was minimal: we had case studies and examples that fit the thesis directly. The event was nearby and there was no cost to enter. The pitch was short. We won this pitch and got some local awareness and leads. However, when we were offered to go to the national conference and pitch for an even shorter period in a showcase held simultaneously with other conference activities and with no actual competition, we declined as the cost/benefit was not there.
Medium cost/medium benefit
Each year HIMSS has a venture competition at the annual conference. We won this event in 2015, and received PR as well as in-kind benefits at HIMSS conferences including booth space. The effort to prepare was medium: any startup should be prepared for an onstage venture pitch, and the audience was exactly right. As a follow on from this event we’ve been involved in panels showcasing our progress.
High cost/migh benefit
Both the Mayo Clinic ThinkBIG challenge, and the Alexa Diabetes Challenge had a relatively high effort and opportunity cost to participate and high rewards, but both were aligned with directions our company had already embarked on, and both resulted in deeper connections for us with the sponsoring organizations, positive press, validation of our company and solution, and financial support.
In the case of the Mayo Clinic ThinkBIG challenge, we received investment on our convertible note for winning, and the challenge afforded us introductions to important clinical and IT contacts at Mayo Clinic. We were also able to showcase our solution to other potential customers live at the annual Transform event.
Our team put in a tremendous effort on our winning entry for the Alexa Diabetes Challenge but the pay-off was worth it in a number of ways. Certainly the prize money and publicity was welcome, but more importantly, we have created new IP and also come to a whole new understanding of how people can move through their daily lives with technology to support them in managing chronic conditions.
Both of these challenges have afforded us ongoing opportunities for engagement and awareness as a result our participation, and our positive outcomes.
One thing to note, none of these challenges I mention had an entry fee. Sometimes nominal entry fees are used to deter casual entries, but for the most part if a challenge is seeking to fund itself by charging the startups to participate, it’s the wrong model.
While you don’t have to be this explicit when making your decisions about entering a challenge, consideration of the costs and opportunity cost of either participating or not, can help you sort through the ever increasing number of grand challenges.