Building Management Teams in Orthopedics

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“I hear that Brad from the Billion Dollar Computer Company is looking for a job…must be good if he reached management there. And he can probably get up to speed on spine pretty fast. Or there’s that star researcher from Mega Ortho…but I hear he takes a long time to make decisions.”

Such thinking makes Drue De Angelis shudder. De Angelis, President and Managing Partner of The De Angelis Group, an executive search and consulting firm serving the orthopedic and spine industries, says, “There are many different facets to consider in assessing the right fit for a start-up orthopedic company. The fundamental question is, ‘What makes a person fit into a start-up vs. a billion dollar company?’ Perhaps the person is flexible enough to thrive in both scenarios…but maybe their personality is only built for the mega company with the big bureaucracy. The fact is that any new hire carries an inherent risk. In the end, you must quantify and minimize the risks and try to find the most talented person that you can to lead your young company. What background is best suited to have a strong impact and lead a company though the minefields of today’s tumultuous market? Do you hire on ‘talent’ or ‘experience?’ That’s the million dollar question. With little to no learning-curve, an experienced leader can make things happen at a faster rate. Many other issues arise, such as, ‘What is the value of the on-the-job-MBA? How will non-orthopedic experience transfer to your company? How well will someone mesh with the existing management team and avoid any derailment of your current momentum?’ These are some of the questions one should be asking as he or she delves into developing a strategy to build a strong management team at a startup.”

Generally speaking, a veteran of the spine or hip trenches can get things off the ground much more quickly. Drue De Angelis: “We’ve seen companies hire executives who lack orthopedic or spine experience and then are pleased with what these individuals can deliver. This seems to happen in larger organizations where the role requires more of a general management skill-set, as opposed to in an early stage company where the senior management provides much more ‘hands on’ functions in the day to day operations of the company. Unfortunately, if a start-up hires someone inexperienced in orthopedics/spine, etc., the new recruit usually struggles to learn the unique challenges and nuances that are specific to the particular specialty. Simply stated, orthopedic and spine surgeons are quite different than urologists or cardiovascular surgeons. There are unique challenges in our industry having to do with reimbursement and distribution that are best learned through experience and observation. While a billion dollar company can more easily ‘fuse’ someone from outside the specialty due to its existing infrastructure, a lean, cash conserving start-up has more difficulty with this. Additionally, people coming from large companies tend to have a broad range of resources available to them that do not exist in a start-up. Some people can thrive in a lean, scarce environment (i.e., they can ‘build a log cabin with a pocketknife.).’ This type of individual is perfect for young companies because luxuries such as market research, competitive product analysis, and training programs are simply not an option for many start-ups with a limited amount of cash and a swift burn rate.”

Having an experienced leader in place can mean an enormous dollar difference when it comes time to commercialize a product. According to Drue De Angelis, “A manager who knows the field can accelerate the revenue of a start-up, meaning that the company is able to become cash positive much faster. This individual does this by navigating the complex labyrinth and unique challenges and by exploiting existing relationships and networks. This may seem obvious and intuitive, yet it is frequently ignored. When you need results in the early stages, what start-up can afford to delay the company’s results, sometimes by months? No other medical specialty is as crowded as orthopedics, which leads to a pretty risky proposition. More companies competing for fewer people means that there is a true shortage of experienced managers. It is invaluable to have talented managers who have closely watched the industry through its growth spurt, its M&A activity, as well as some of the recent financial troubles of once promising emerging companies. There is no shortage of risks that might cost a start-up more than they can afford. Having more positions in the market than experienced people to fill them inevitably leads to unqualified people being thrust into leadership roles for which they are unprepared. We’ve all seen those people get hired and were left wondering, what were they thinking? Was that the best that they could do? Who better to navigate these treacherous landscapes than someone who has observed the market through its ‘Gold Rush’ days and seen the mistakes of some companies that have rendered untold millions of investors’ dollars only a memory?”

With the expansion of the number of companies in recent years in the orthopedic space, it is no wonder that boards are looking outside the orthopedic industry to find strong leadership talent. Especially when one considers the non-competes and the costs associated with taking on a ‘giant’ of the field. But Drue De Angelis is convinced that all the effort involved in bringing on experienced talent is worth it. “In the past few years, we’ve seen some companies’ appetite for enforcement of their non-competes diminish. In California, for instance, non-competes were ruled invalid in a recent court decision. What was once used to intimidate employees into compliance is now considered by some to be merely a hurdle to be overcome. But still some companies will hire people from outside the orthopedic specialty to avoid a costly legal battle.”

And while you don’t have to send the person for a full psychological workup, you should attempt to ensure that his or her personality will be one that resonates with your start-up culture. Drue De Angelis explains, “In addition to the experience concerns, you must also consider the recruit’s capacity to thrive in a start-up. Can this person successfully transition from a large, slow moving organization with its bureaucracy to a fast moving environment where he or she wears multiple hats and has to make decisions without all of the information? Executives in small companies need to be able to use guts and grit to make decisions without the benefit of a support staff of researchers. This is precisely why it is so important that managers have prior spine/ortho experience. They are going to have to make decisions quickly in order to react to the market and seize opportunities…and they won’t have much time to ponder the decisions without losing momentum or sales. The bottom line is that not everyone can flourish in a start-up setting. It requires someone with an entrepreneurial spirit and an appetite for excitement. It takes the kind of person who in the last few seconds of a ‘nail biter’ game says to the coach, ‘give me the ball!’ Many companies fail to perform the necessary due diligence on a recruit before extending an offer. Some of the questions that need to be explored are, ‘Is this person better suited for a large company with a variety of programs and resources than he or she is for a lean start-up? What are their leadership qualities? What prior experiences have uniquely equipped them for the new opportunity in your company? Furthermore, do their colleagues corroborate their stories? I have heard it said that it is really expensive to hire someone today. The truth is that it is infinitely more expensive to hire the wrong person.”

Do it yourself or hire a recruiter. But whichever one you select, do it right. “To increase your odds of success, first determine which hires are critical to the company’s future. Then follow that up with a detailed profile of the individual who would bring great value to the company and give it a jumpstart. Once you have prioritized these positions, begin to execute a strategy to find the ‘best of the best’ with the requisite experience who are uniquely qualified for your company. You may indeed find the appropriate hire within your executive network. Or, you may find that the time and opportunity costs associated with this strategy may exceed what is reasonable. The recruiting process is complicated, and when added to the responsibilities that the management team already has, can be overwhelming at times and ultimately derail the process. Partnering with a search expert can allow a company to build a solid roadmap to find, vet and hire great people with all the critical experiences and necessary skills. I have heard it said that recruiters are often better at selling you on hiring them than they are at recruiting good people. But this is neither the time, nor the market to cut corners and take short cuts. With the right partner, it shouldn’t take more than four to six weeks to deliver solid talent with the right composition and pedigree and bring them to the table for a discussion.”

So to go for the green, best to avoid someone who is green in the field. And no shortcuts. Take the time—and resources—to get the right person. The funds you save in the long-run can be invested in growing the company

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