It’s time to innovate, not stagnate
It’s time to innovate, not stagnate
Creative destruction can be a force for good – but only if you’re willing to innovate

We all know that the brightest and most successful minds are often those that think differently, buck trends, and subvert the system. Innovation and the importance of embracing change are themes that we regularly touch upon, and with good reason.

Among entrepreneurs, innovation is the disruptive force that fuels economic growth. To understand why, we can turn to the theory of “creative destruction”, popularised by Joseph Schumpeter in the 1950s. This refers to the way in which innovators grasp market share, with new concepts and technologies continually replacing the old. The only way to keep up with this is to play new innovators at their own game by refusing to “settle” for too long with any idea.

Take, for example, Kodak: a company that unequivocally dominated the photography market for decades (once selling 90% of all film used in the United States), but was eventually brought down by failing to invest in innovation. Kodak had everything that it needed to succeed, but unfortunately became protective to the extent of entrenchment. The man who invented the digital camera even worked for them, but the company squashed the tech for fear it would cannibalise sales. Blockbuster also famously turned down the opportunity to buy Netflix.

We can also see this in the dental industry, where – and it’s tough to swallow –change and destruction can actually be a positive force. While measures such as furlough, and reduced UDAs (Units of Dental Activity) in NHS practices, can be a short-term solution, they can also foster the conditions for a far larger earthquake later on.

This is a similar situation to forest fires, which form a strong example of creative destruction at play in the natural world. Smaller or controlled forest fires are used to clear away the old, dead wood and allow for growth; effectively, resetting the ecosystem. If this doesn’t happen, the accumulation of vegetation can lead to uncontrolled fires, which cause extensive damage. While reducing UDAs made good sense in March 2020, it’s more problematic eighteen months down the line. Put simply, by overly protecting ourselves, we create an environment for even greater turmoil.

Dental plans are also worth scrutinising. These are beloved of many private practices because they’re seen as ensuring a “safe” source of income, much like an NHS contract. However, relying too heavily on plans can lead to dangerous stagnation.

Plan prices may be set at, for instance, £16 per month, but this is an issue when the cost of dentistry is now significantly increasing. Lab bills are up, staff are in short supply, and wages are on the rise, and that’s before we consider the need to scale up to retain market share… Together, these factors are contributing to far higher overheads, which outstrip plan payments. And of course, there’s inflation: £1,000 now won’t be worth the same in five years’ time. I’m positing that very few plans are actually profitable for dental practices now.

Practices with a large plan list haven’t had to innovate, but they’re also unlikely to succeed in the long run; after all, you can’t move forward while standing still. Instead, as we see with forest fires, it’s better to push for innovation. This may be tough, and it may mean placing yourself out of your comfort zone – remember the outrage among London taxi drivers when Uber became ‘a thing’ – but this is where Hive can help.

For a review of your practice and its strategy, get in touch.

The information contained in this article is based on the opinion of Hive Business and does not constitute formal tax advice. Any tax outcomes will be based on individual circumstances, tax legislation and regulation, which are subject to change in the future. You should seek specific advice before embarking on any course of action. Hive Business does not provide regulated Financial Advice, including advice on investment, insurance or lending products or their suitability for you. This article is provided for information only and does not constitute, and should not be interpreted as, investment advice or a recommendation to buy, sell or otherwise transact, or not transact, in any investment including Bitcoin and other crypto. Any use you wish to make of any information contained within this article is, therefore, entirely at your own risk.

By Ross Martin Group Chairman
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