Read the AFR article for Field Orthopaedics as linked to understand the position
ID: 396890 • Letter: R
Question
Read the AFR article for Field Orthopaedics as linked to understand the position this new design venture currently occupies.From your reading of the Strategy for Startups paper contained within the HBR set, apply the entrepreneurial strategy compass to the case in response to the quiz question.
Field Orthopaedics
The Australian Financial Review – Thursday 16 August 2018 – page 51 Page 1 of 4 • Updated Aug 15 2018 at 11:49 AM Field Orthopaedics gets FDA approval for world's smallest orthopaedic screw Dr Chris Jeffery, the founder of Field Orthopaedics, which has, won FDA approval for a tiny screw that it claims allows faster and more accurate repairs of delicate hand fractures. by Michael Bailey The Brisbane-based designer of the world's smallest orthopaedic screw has invoiced US hospital suppliers $900,000 in the three weeks since the device gained Food & Drug Administration approval, and he hopes it can soon be made in Brisbane too. Field Orthopaedics, founded in 2016 by former Army doctor Chris Jeffery alongside a team of doctors and engineers including hand surgeon Greg Couzens, has spent $600,000 and 18 months taking its "micro screw" from concept to FDA clearance, which was officially granted on July 17. This compares with the average $39 million and 31 months that medical device makers in the micro screws' low-to-moderate risk category (or 510-k in FDA jargon) spend getting approval, according to a major Stanford University study from 2010. The Australian Financial Review – Thursday 16 August 2018 – page 51 Page 2 of 4 Field's micro screw is 1.5 millimetres long versus the 2 millimetres standard for orthopaedic screws, Dr Jeffery claimed, and half its 1.2 millimetre diameter is canulated so that it can be inserted over wires, allowing surgeons to make faster and more accurate repairs of delicate bone fractures. Dr Chris Jeffery and the Field Orthopaedics team at work on the Field Micro Screw in Spring Hill, Brisbane.Supplied "Half of the shaft is air and that's where our advanced prototyping came in, developing a material that was strong enough to withstand our design," Dr Jeffery said. "Our doctors drive the surgical outcomes we want, but every step of the way they are working with the engineers to understand the limits of the materials." Field's screws are sold in "trays" containing 200 screws and equipment for their insertion such as countersinks, drill bits, wires and soft tissue protectors, which wholesale to distributors for $20,000. Inspired by the "tools as a service" model of Liechenstein's Hilti Corporation, Dr Jeffery is allowing distributors to either buy the trays outright or pay $2000 a month to have the kits replaced each time the Brisbane design team engineers an upgrade. The Australian Financial Review – Thursday 16 August 2018 – page 51 Page 3 of 4 "Five of the 20 distributors we've contracted so far have chosen the subscription option, and eventually we expect 90 per cent will go that way because they'd rather take a smaller cut of the sales in return for less financial risk," he said. "And we'd rather not have hospital managers wondering whether they can use that worn-down drill bit a couple more times because they don't want to pay the higher outright price." 'Insignificant compared to what's coming' Field Orthopaedics has just inked a partnership with Arizona-based Ortho Sales Partners, whose network reaches every US hospital and to which it has outsourced most elements of distribution, such as logistics, marketing, training, recalls and supply chain surveillance. "Our sales to date are insignificant compared to what's coming," Dr Jeffery said. Field's equipment is today made in several factories in the Asia-Pacific - Dr Jeffery won't say exactly where - but he is working with Queensland University Of Technology, from where he got an electrical and medical engineering degree in the 2000s, to eventually manufacture locally. "We're not talking about metal bashing, we're talking quite technical jobs," he said. "Australia can be an answer to some of the problems we're seeing in the medical device industry, where manufacturing mistakes now account for 50 per cent of all product recalls, and there's growing issues around security of intellectual property." After the micro screw, Dr Jeffery said Field had 11 more products in its development pipeline, for which doctors from specialties are invited to collaborate with Field's engineering team. The next products being developed include a new range of medical power tools, and a coated bone cement aimed at eliminating infections following orthopaedic surgeries. Field has raised $2.3 million so far, with major shareholders outside the founders including mining entrepreneurs David Trimboli and Brian Flannery. Field's lean methodology meant the start-up would not require more funding in the foreseeable future, Dr Jeffery said. The Australian Financial Review – Thursday 16 August 2018 – page 51 Page 4 of 4 "Our total cashflow burn for the past 12 months has been less than $1 million, so given we've got $900,000 of receivables there on 30-day invoices since FDA approval, we're almost cashflow positive and that's not factoring in re-orders and the scale we'll get through the Ortho Sales partnership."
Strategy for Startups
Strategic opportunities for new ventures can be categorized along two dimensions: attitude toward incumbents (collaborate or compete?) and attitude toward the innovation (build a moat or storm a hill?). This produces four distinct strategies that will guide a venture’s decisions regarding customers, technologies, identity, and competitive space:
Question
Choose ONE of the categories presented by the entrepreneurial strategy compass to interpret a promising pathway Field Orthopaedics may choose to adopt to to continue their growth trajectory. Align the factors outlined in the Strategy for Startups article to the data offered by the AFR article to validate your choice.
In expressing this interpretation, make comment on which of the TWO business models best fits with your chosen strategic direction for the venture.
Read the AFR article for Field Orthopaedics as linked to understand the position this new design venture currently occupies.From your reading of the Strategy for Startups paper contained within the HBR set, apply the entrepreneurial strategy compass to the case in response to the quiz question.
Maintain control of the innovation and find a way ^ to create value within the o Create and control a new value chain, often using a platform business. Protect intellectual property. existing marketplace. Focus on being an idea factory. For example, Dolby is the global standard setter for sound technology; it licenses proprietary technology to Sony, Bose, Apple, and others. Rapidsos could keep the technology proprietary and work with existing 911 equipment suppliers such as Motorola to modernize operations. For example, OpenTable developed a proprietary platform that allowed diners to make reservations efficiently and in so doing established influence over customer flow to restaurants. INTELLECTUAL PROPERTY Rapidsos could replace the existing emergency response system altogether ARCHITECTURAL Focus on creating value for partners in the existing value chain. Execute quickly. For example, Peapod became the leading U.S. internet grocer by fitting into-and improving- the grocery industry. Rapidsos could partner with insurance companies (which Compete directly with incumbents. Take them by surprise with fast execution For example, Rent the Runway challenged high-end retailers by offering aspiring fashion-oriented women the ability to rent rather than buy designer clothes. Rapidsos could first target poorly served populations (such as epilepsy patients) and later serve a larger swath of customers. 8 ultimately pay for ambulance - services); the product might take i the form of a smartphone app. X VALUE CHAIN DISRUPTION COLLABORATE COMPETEExplanation / Answer
I suggest architectural strategy for Field Orthopaedics to choose. In this startegy Field Orthopaedics can create value in its operation through protecting the intellectual property it has and expanding the scope and area of operation it currently have. Being a startup it should not aim for sudden spurt in growth because it will become risky for it to sustain in the future. From the AFR article we have read the direction of the company in this way. They are not seeking more funds because they know they have to expand gradually.
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