Entrepreneurship Guest Lecture Series: You won’t be able to change anything, unless you change everything
By Wendy J Tester, on 17 March 2011
This week’s ‘Entrepreneurship Guest Lecture Series’ talk was given by UCL alumnus Ali Parsa, Managing Director, Circle (health care venture). UCL students Mansour Abdulghaffar and Carolina Mostert summarise his lecture below.
Ali Parsa, who studied Civil Engineering at UCL as an undergraduate and became head of the Student Union, gave this week’s guest lecture. Parsa returned to UCL later and received a PhD in Hydraulic Physics. During his PhD, Parsa became an entrepreneur by establishing his first venture in media promotion. Although the company started off disastrously, organising a trip to Greece for 3,000 students during the first Gulf War, he was later entitled entrepreneur of the year for it. Parsa moved to investment banking to gain valuable experience and joined Credit Suisse, Goldman Sachs and Merrill Lynch. During his time at Goldman Sachs, Parsa’s first child was born and he took a one-week paternity leave, resigning shortly afterwards. Six months later he set up Circle, the largest clinical partnerships after America. Although Circle started with no revenue three years ago, revenues have been doubling year-on-year, reaching £80 million this year, and are expected to reach £150–£200 million next year.
What is the need Circle must fill and how will it be done?
Parsa asked four questions: ‘what need is Circle going to fulfill?’, ‘what can we offer a better value-proposition?’, ‘how do we do it?’ and ‘what’s the whole point?’. He then presented alarming statistics on the proportion of GDP currently spent on health care. At one point Britain spent a minute 3% of its GDP on health care, which has now risen to 9% and is expected to reach 12% by 2020. Similarly, in the USA, it is expected to reach 40% by 2050, suggesting that it is a very unsustainable market. Parsa added that by the time most of us (i.e. students) grow up, health care will be unsustainable and not free. This is the need Circle must fulfill, the unsustainability of the health care market.
In terms of how this need will be fulfilled, Parsa asked two questions. Firstly, ‘what is the economic value equation?’, and secondly, ‘how can this be done?’. The economic value equation, as he explains, is: quality/price, where quality is clinical outcome + patients’ experience, and price is the cost of health care. By increasing the spending on health care, the denominator in the equation grows and is “the root cause of the unsustainability”. As far as the how is concerned, we must “significantly improve the nominator to improve the equation”.
An example of this is the CircleBath hospital, in which Circle hired top architects, interior designers and a Michelin-starred chef, whilst still being able to deliver at NHS prices. The hospital follows a partnership model, where all the staff are partners and are awarded shares based on their performance appraisals. Not only did this model increase productivity by 22%, but also solved the usual “zero sum game” culture in hospitals, where hostility exists among staff due to unaligned goals. Staff are given more autonomy, allowing them to be closer to their patients and deliver a better service, increasing patient satisfaction to over 99%. This hospital was nominated the best building and hospital in Britain as well as the best public space in the world. As a consequence of his success, Ali was invited to be a member of the World Economic Forum.
Ali then mentioned the example of Sony: Japan had just been bombed, but the founders of Sony had the vision to change the world. Similarly, at Circle, the founding ideologies are based on the following: purposes, parameters and principles. In terms of the purpose, Circle had to be a great company for patients. Parsa highlighted that the opposite of great is not terrible but good enough. In terms of parameters, being passionate is the key to success. Thirdly, in terms of principles, every time a new idea arises, it must meet the following criteria: What is the need? Who’s passionate about it (i.e. within Circle)? Can we do it better than anyone? And, is it sustainable?
Parsa concluded by stating that the world we live in today is reigned by mediocrity which tends to keep people’s minds grounded and static. He firmly believes that to be entrepreneurial, one must “let those feet off the ground and let your head well into the clouds”.
The UCL Entrepreneurship Guest Lecture Series is organised UCL Advances.