You won’t be able to change anything, unless you change everything
7 March 2011
Ali Parsa, who studied Civil Engineering at UCL as 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 Merill
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 is expected to reach
£150-£200 next year.
Parsa asked four
questions: what need is Circle going to fulfil?, what can we offer a better
value-proposition?, how do we do it?, 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 + patience 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 and 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 mentions the
example of Sony: Japan had just been bombed, but its 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 highlights 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”.
Written by Mansour Abdulghaffar and Carolina Mostert