Managing our service portfolio is a continual process of staying new, relevant and competitive. Discovering medical and surgical innovations in ophthalmology are my passion. As the business founder and leader of our practice, I am excited to describe the systematic way I have kept my practice young and on the cutting edge for the past two decades using innovation, renewal and improved productivity to implement organic growth.
Organic growth is the process of business expansion achieved through increasing output, augmenting the customer base or developing new products or services. All three strategies should simultaneously target revenue enhancement, cost contraction or both. Success results in increased market share, increased share of wallet and expansion into new markets.
PORTER’S FIVE FORCES FRAMEWORK
Identifying organic growth opportunities is not easy and takes discipline. The first step is to look at the forces that shape the competitive external environment of the industry, whether it be cataract surgery or laser vision correction or anything else. Using a tool called the Porter’s Five Forces Framework, we evaluate the strength of current rivals, the power of suppliers, the power of buyers, the threat of substitutes (such as glasses over LASIK), and the threat of new entrants into the market. Described by Harvard economist Michael E. Porter in a 1979 Harvard Business Review article,1 the Porter Five Forces mandate that every business first ask: How do we measure up against each of these competitive forces? So, each practice should go through the Porter analysis as the first step in evaluating a growth opportunity.
In the health-care industry, rivalry and the threat of substitutes are the top two Porter forces most ophthalmologists need to consider. However, in eye care, suppliers are limited as well and can wield significant power in raising costs, thereby making profitability more difficult. Every practice should consider not only the big picture of the marketplace, but also the nuances of the local community.
After the Porter’s analysis of the target industry, a strategic advantage exploration will identify if your practice is in a strong position to engage. The growth prospect financials and opportunity costs should be rigorously reviewed and fit with the current business mission, values and core competencies.2 If competitive forces are favorable, the financial projections sound and the venture fits the practice, the organization can move forward. If not, then don’t.
DEFINE YOUR VALUE PROPOSITION
Providing service to customers in better more efficient ways than competitors in your community is essential for success. In ophthalmology, there are many ways to differentiate a value proposition. Our practice distinguisher is our commitment to providing the best surgical outcomes with the latest techniques. Every practice must find its unique distinguisher, or DNA, that makes it competitive.
For example, the year I opened our practice, cataract surgery was quite involved, requiring stitches and a retrobulbar injection. Newer more complex skills enabled surgeons to eliminate both. I was one of the first in my area to adopt this method successfully. As a result, my customer base grew exponentially. As other surgeons in the community also became adept in the same techniques, our growth leveled off. However, we actively looked for new opportunities to present themselves every few years.
To stay new, relevant and competitive, practices must pay attention and evaluate each new prospect for viability, not only as a surgically successful method (good medicine) but also for social and financial fit in the community.
For example, around the year 2000, laser vision correction was our next big investment. Then we built an ambulatory surgical facility. Laser refractive cataract surgery followed and took four years to fully develop. Now we are moving into even more groundbreaking technologies, such as SMILE.
Each new technology requires two processes of integration: business and clinical. For the business process to be successful, clinical outcomes must deliver. Once the clinical outcomes have been refined, the business can expand into marketing internally through further education practices and externally through media sources and networking.
EXECUTION IS EVERYTHING
The significant financial investment required for many innovative ventures is a big deterrent, and fear of failure plagues many physician entrepreneurs. After deciding to engage an opportunity and defining your value proposition, digging into the clinical methods and employing best practices to optimize outcomes will set the groundwork for success.
Execution is a critical piece of strategy that is often forgotten and the reason we sometimes fail. Great analysis and visionary leadership may produce plans with tremendous potential. But success ultimately lies in the hand of your people.3
Execution capabilities must be considered prior to moving forward with any strategic plans for growth. In my company, we thoroughly examine our value chain, which is the series of activities by which we add value to our service. Our staff makes sure we can deliver on execution prior to the implementation of new procedures and services. At times our practice has required significant training and changes in our workflow; at other times, the course was easier.
For our laser refractive cataract procedures, we engage a clinical system using lean methods for each segment of patient flow: education, measuring/testing, treatment, results and refinement. Our practice is now working on establishing the same for our new LVC offering. Time and the preparation of your team are part of the investment. Each practice will develop unique but similar processes that fit the organizational culture. The goal is to deliver a distinctive value proposition consistent with your mission and values in serving patients.
BECOMING AN ORGANIC GROWTH MACHINE
So how can your practice exploit new technologies and generate growth? By adopting four rules of discipline, you can develop a corporate culture that creates and supports growth opportunities.4
- The first rule is keeping your eye on the big picture. This involves setting the bar appropriately for your front-line managers, looking at data correctly for growth opportunities and looking across business markets.
- Fight the business cycle of only engaging growth investment in times of boom and contracting growth investments in times of bust. Your practice should have a budget for routine capital investment. Performance standards should be aligned with consistent investments for growth.
- Resist typecasting where growth is only expected in certain areas. Instead, expect all business areas to create new benefits for current customers or find new customers for the benefits provided.
- Create a “language for growth” by investing time in developing sound concepts and articulating them with well-chosen words supported by leadership. Change should be received as a routine and exciting aspect of daily practice, not an imposition.
Obviously, there are no lack of growth options. The ability to generate growth involves the disciplined process of identifying those prospects the company can execute successfully. Understanding Porter’s five forces, using cores competencies and developing new ones, evaluating data, thinking outside the box and investing regularly comprise a culture that pursues best practices.3 Leadership needs to ensure that every piece of the puzzle is in place to win. OM
- Porter ME. The Five Forces - Institute For Strategy And Competitiveness - Harvard Business School. Available at: www.ibbusinessandmanagement.com/uploads/1/1/7/5/11758934/porters_five_forces_analysis_and_strategy.pdf . Accessed Mar. 5, 2018.
- Rothaermel FT. Strategic Management: Concepts. 3rd ed. New York, NY: McGraw-Hill; 2017.
- Welch J, Welch S. Winning (1st ed.). New York: HarperBusiness Publishers; 2005.
- Favaro K, Meer D, Sharma S. Creating an organic growth machine. Harvard Business Review. 2012;5:1-10.