DISCUSS PROJECT

Should your Medtech Team Bulk Up or Stay Lean?

team development Jun 01, 2022
Medtech outsourcing vs in-house

Medtech teams have a critical decision to make at the early stages. Should the strategy be to build a robust in-house team or leverage outsourced experts to achieve medtech milestones. Here's an honest look at both approaches.

Bulk Up:

The in-house team approach

Most companies opt for the in-house team. They recruit a group of talented individuals that are committed to the long-term goals of the company. 

Pros

  • Retained knowledge and know-how: Any pioneering medtech venture will be capturing knowledge and know-how throughout the course of business. This could relate to new technology, novel processes, customer insights, etc. With an in-house team, you will be able to retain this knowledge and know-how within your team members. Sure, this information can be documented and distributed to other people within your organization now or in the future, but nothing replaces the knowledge and experience gained first-hand by your team members.   
  • People 100% focused on your company's success: When you build an in-house team, your people are 100% focused on the mission of the organization. They came on-board, at least in part, because they believed in your vision. They understand the strategic goals of the organization and will contribute to achieving these goals. Often, incentives are in-place, such as stock-options or bonus pools, that further align internal team member interests with the long-term success of the company.
  • Builds Culture: Most team members want to share in the success (and challenges) of a growing business. Often culture gets positioned as dogs in the office, kegs, and post-it notes. But culture is more about how teams work together. Can a team get through thorny issues with focus and efficiency? Can a team engage in the necessary conflict that's needed to arrive at the right decisions? It's easier to build the trust needed to get through challenges with individuals that are in the trenches with you, rather than outsiders that will be moving on to their next gig right afterward.  

Cons

  • Stretching skillsets: Often, medtech teams are small for financial reasons. That means that the internal team member skillsets are stretched -- often overstretched. Could the internal team members figure out the specialized skills? Probably, but not nearly as quickly as someone that has already focused on that specific skillset for several years. As a result, small in-house teams often produce deliverables that lack the same precision and polish that could be gained through collaborations with experts. Furthermore, the speed of producing these deliverables is often much slower when stretching skillsets than plugging experts into specific roles.
  • Management headaches: There's a lot of buzz out there about the joys of teamwork. And much of it is true. But managers that have built businesses have also seen the darker side. If you ask a CEO what the most challenging part of running the business is, chances are, they'll say "the people." Sure, teams are great and critical in most cases, but they come with headaches. Often, huge headaches. There's an ugly part of management that most people like to keep under the rug. Some people underperform. Some people are political. Some people aren't the right fit and need to move on. Unfortunately, most managers spend the bulk of their time dealing with underperformers rather than supporting overperformers. Management headaches are real and shouldn't be ignored when considering the in-house team strategy.
  • Hidden costs and inefficiencies: Most people think it's less expensive to hire in-house employees than external consultants. If you're comparing an hour of salary to the billable hour of a consultant, then your math is generally correct. But, that thinking is very flawed. When you on-board a new employee, there are many other costs that come with that employee. The obvious ones are medical insurance, 401k match, employment tax, vacation, and holiday pay. Those generally stack up to 40% of an employee's salary. But even more expensive is the overhead that goes to support the employee. This includes recruiting fees, onboarding time, professional development time, IT support time, HR time, management time, equipment, software, office space, coffee, and more. But that's not all. The biggest hit to in-house team costs are the inefficiencies. When outsourcing a task or project, a management team will be laser focused on the time and cost that it takes to achieve a deliverable. When a timeline is missed or a deliverable is sub-par, it gets flagged right away, and the service provider gets some heat. Working with in-house teams is typically more laxed. In-house team members are often pulled in 20 different directions. As a result, management is typically not so hyper-focused on the accountability for time and outputs of in-house team members. This often means that in-house development efforts are less efficient than contracted ones.

Stay Lean:

The outsourced team approach

The outsourced team approach is one where the internal team is kept small and focused on a core set of functions. Expert resources are engaged on a temporary or fractional basis to carry significant portions of project and/or operational work.

Pros

  • Precision skillsets: When you are engaging consultants or contracted resources, you are often able to find one with specific domain knowledge and relevant expertise for the deliverable that you are aiming to produce. Moreover, when you are engaging a services based firm, you are most often getting access to numerous experts that may be able to provide you with an array of capabilities. Maybe you don't need all of those capabilities now, but you may be likely to need them 6-months from now. Outsourcing projects to individuals or companies that have the specific skillset(s) needed can give you a greater degree of precision in achieving your medtech milestones.
  • Accelerates timelines: Since you are engaging experts in the outsourced model, it will typically take less time for those experts to produce the deliverables than it would for an in-house team that may be stretching their skillsets. In the case of larger development projects, you may need to engage a team of experts that would be impossible for you to hire internally due to the associated fixed costs. This larger team of temporary resources can accelerate your timeline in a way that would be impossible to match with a small in-house team.
  • Only pay for what you need: When you hire an in-house team member, they are on the payroll for the long-haul. They will be considered a fixed-cost that will be carried indefinitely. Contracted services, on the other hand, are variable costs. When the project is over, they go away, and you don't need to pay them any longer. I'm stating the obvious here, but it's a concept that is often neglected in hiring considerations. It is often far better for the financial health of an organization to keep internal teams (fixed costs) low, while leveraging contracted resources (variable costs) for project related work. Furthermore, there may be certain functions that don't require a full-time employee. For instance, if you are a startup, you may not need a full-time quality manager at the early stages. But, you should probably have a fractional resource that is able to put a basic QMS in-place and manage document control and design control. In cases like these, it often makes sense to engage a fractional resource to support this need until your business has grown and can justify and support a full-time quality manager.

Cons

  • Investing in external knowledge and know-how: Even though you aim to plug-and-play expertise with an outsourced based approach, there will still be ramp-up time required for resources to understand your technology, application, and customer needs. So, you'll need to be willing to invest this knowledge and know-how in the service provider that you leverage. This investment may not yield returns if your engagement with the service provider is short-lived.  
  • Your project may not be the top priority: At the end of the day, a service provider is primarily focused on growing their own business - not yours. Ensuring that you are receiving value in the engagement is critical to the success of the service provider's business, but the reality is that any company has its own issues to manage. So, while there may be heavy focus on your project, this will be competing with other projects and internal initiatives that may be higher on the prioritization list of the contracted services organization. 
  • Less control: When you are working with another organization for design, testing, manufacturing, you'll need to be willing to let go of the reins a bit. Contracted service organizations have unique ways of operating that afford their success. The processes and methodologies used within these organizations may differ from the ones that you have at your own company. You need to be ok with that difference when working with an outside group. Often, these unique processes are part of the reason that a contracted group may be able to provide value to your organization. But, if maintaining complete control of the process is just how you are wired, then engaging external resources may not be the right fit.

Not a one-size-fits-all decision

The list of pros and cons above are certainly not exhaustive. There are many factors to consider when thinking through your team building approach. It's an important decision that has lasting consequences, so think through these options carefully before committing to one direction or another.

But if you do end up taking the "Stay Lean" approach, make sure Archimedic is at the top of your list of contract partners to help you rapidly achieve your medtech milestones.

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