Executive Summary
MedTech and Life Sciences are fast-paced, innovation-driven industries where success demands continuous technological breakthroughs. Yet, many companies frequently find themselves trapped in short-term thinking—driven by quarterly earnings pressure and immediate market demands. This narrow focus on short-term gain inhibits long-term growth, particularly in sectors where sustained innovation is critical to competitiveness. We believe that companies can achieve outsized returns by strategically investing in mid-term R&D projects with a 2- to 4-year horizon. Triple Ring’s Corporate Growth Lab offers a proven pathway to break free from short-term pressures and unlock sustainable innovation.
The Innovation Dilemma: Incremental vs. Disruptive
In science-based industries, balancing short-term performance with long-term innovation is a constant challenge. Companies driven by quarterly earnings often prioritize incremental improvements to existing products to satisfy current customers. This strategy leaves little room for the kind of breakthrough innovation that significantly grows market share. Faced with gaps in long-term growth potential, executives turn to expensive and often risky acquisition strategies to target novel technologies and markets.
Short-termism and innovation through acquisition combine to starve corporations of the benefits of mid-term innovation projects—those that develop new products for existing customers or adapt current technologies for adjacent markets. Typically spanning 2 to 4 years, these mid-term initiatives strike a balance between immediate returns and long-term growth, offering companies a critical opportunity to innovate and create valuable intellectual property without the high risks associated with M&A or moonshot projects.
The Impact of Short-Termism on Economic Growth
Short-termism is more than just a corporate issue—it has macroeconomic consequences. Research by FCLT Global [1,3] highlights that companies with a short-term focus significantly under-perform in revenue growth, job creation, and shareholder value compared to their long-term-focused peers. While emphasis on quarterly shareholder returns has dominated the US business landscape for decades, the nation has fallen behind countries like Israel and Korea in R&D intensity and lags behind China in publications and patents. [2].
The financial impact of R&D short-termism on corporate growth can be estimated by using portfolio allocation models. FCLT Global has developed a tool that treats R&D projects as options that can be described by a Black-Scholes options model. They show that investment in mid-term innovation can increase portfolio returns.
Analogously, Triple Ring has developed a Monte Carlo portfolio tool that allows R&D executives to model their portfolio returns. The model considers “projects” where projects have multiple stages and each stage has probabilities of success, of failure, and of needing to be repeated. Later roll-out stages, in addition to the probabilities, have attached revenue. A simulated project history can be constructed by drawing random numbers and comparing them to the probabilities for the stage we’re in and thus deciding what to do next. Finally, we may construct portfolios of different types of projects, typically short-term sustaining, mid-term R&D, and (longer term) M&A. By simulating a large number of project histories we can evaluate the statistics of particular outcomes of a choice of portfolio. For example, we can find the average revenue of the portfolio as well as its standard deviation.
The figure above illustrates possible outcomes of two types of portfolios, one where mid-term R&D is included and one where it is not. Evidently, including mid-term R&D increases the likelihood of higher revenues. An unsurprising but still key finding of the model is that improving the probabilities of success in stages has a profound impact on the value derived from the portfolio. We discuss this concept of de-risking below. Another finding has to do with the relatively high probability and modest incremental value of short-term R&D. Precisely because it is likely to succeed, the modest yearly gains provided by short-term R&D rapidly get baked into expectations and so start to look less like “real” R&D.
Mid-Term Projects: The Missing Link in Corporate Innovation
A look through the archives of the Harvard Business Review shows that the need to focus on the mid-term is a long-recognized, but challenging, problem. For example, Geoffrey Moore, author of Crossing the Chasm, researched portfolio planning [4] and concluded that “to succeed in the long term, focus on the middle term.” He explained that corporate failures often arise due to a “vacuum” in the area of mid-term programs. Similarly, Regina Herzlinger and her collaborators urged business leaders to take “the middle path of innovation” in a July 2024 article. [5] Herzlinger described the Ajax Health model, an approach that pursues a portfolio of mid-term innovation projects (called “growth drivers”) to drive revenue growth in a commercial platform (a“chassis”). Focusing only on near-term activity plus a plan for M&A is a bit like paying one’s bills on time but then hoping for the lottery for secure one’s retirement. We all know that one must put money into their 401k and invest it, at some risk, in order to have a likelihood of anything in the end.
Good examples of well-executed and successful mid-term innovation strategies include Grail’s pursuit of liquid biopsy and Abbott’s entry into the continuous glucose monitoring (CGM) market. Grail’s Galleri platform was transformative in nature, not Incremental. The integration of emerging technologies like cfDNA methylation analysis, next-generation sequencing, and machine learning allowed their customers to detect multiple cancers significantly earlier than ever before. Galleri has launched in the U.S., is generating revenue, and is supporting large-scale clinical trials like the NHS-Galleri study (140,000 participants), with pivotal data expected in 2026. This positions the product between early-stage research and long-term, system-wide adoption. Grail’s efforts required purposeful investment, operational discipline, and new partnerships (e.g., EHR integration, public awareness campaigns), all hallmarks of a mid-term innovation strategy aimed at scaling a disruptive technology. Grail’s Galleri leveraged recent scientific advances to create a new market solution, moved rapidly from concept to clinical reality, and is now poised for broader market impact.
Abbott started their journey into the CGM space with the acquisition of TheraSense and the FreeStyle Navigator, a product that struggled in the market. After assessing the specific challenges facing FreeStyle Navigator, Abbott reinvented the product’s approach, focusing on user-centric design and technological refinement, leading to the launch of FreeStyle Libre in Europe in 2014 and in the U.S. in 2017. FreeStyle Libre was a major update to existing glucose meters; it replaced fingerstick testing with a wearable sensor delivering real-time, painless, and continuous glucose data. The system has demonstrated substantial benefits, including an 80% reduction in heart-related hospitalizations for Type 1 diabetes patients without prior cardiovascular disease, and significant cost savings for healthcare systems. Abbott’s CGM technology is now used by millions of patients worldwide and is projected to add over $10 billion in value to Abbott’s business by 2030. Abbott’s CGM initiative is a textbook case of mid-term innovation: it involved a multi-year, iterative development process that led to a breakthrough product, transformed patient care, and created significant market value in a relatively short time frame.
Triple Ring’s De-Risked Approach to Mid-Term Innovation
Triple Ring offers models that allow corporations to invest in mid-term innovation without jeopardizing financial performance. Our Corporate Growth Lab and co-development models are built around two main elements. First, high-potential mid-term projects are housed in stand-alone or semi-autonomous entities (which can be formal or informal structures). By distancing these projects from the demands of day-to-day sustaining engineering, project teams can focus on innovation. Second, the separate structure allows for co-investment by Triple Ring and/or its investment partners alongside the corporate sponsor. This “skin-in-the-game” approach shares risks across partnerships and robustly aligns incentives.
Some key features of Triple Ring’s model include:
- De-risked Execution: Rather than undertaking the time-consuming and risky task of building or expanding a new team for a project, a corporation’s existing resources can work in conjunction with Triple Ring’s proven team of 100+ scientists, engineers, and innovators. From our two decades of experience starting new ventures and launching breakthrough products, we know what it takes to bring innovations to market.
- Balance-Sheet-Based Funding: By keeping the financing of mid-term projects off the income statement, Triple Ring helps protect a company’s core financial EPS and EBITDA metrics, thereby preserving shareholder value in the short-term and providing breakthrough growth opportunities in the mid- and long-terms.
- Optimal Balance of Integration and Autonomy: Projects can be housed at a corporate site, at Triple Ring’s extensive incubation and lab facilities in Silicon Valley and Boston or blended across multiple sites. Flexibility in resource utilization and infrastructure allows a corporation to choose optimal levels of autonomy for a given project.
- Strategic Partnerships: Triple Ring leverages our network of investors, venture capitalists, and corporate partners to fund and accelerate high-potential projects, enabling companies to bring innovation to market faster and more efficiently. Our investment partners include the Courtney Group, General Inception, and 1540 Ventures. For technical project execution, we have augmented our own extensive technology and product development team with a network that includes Novo Engineering, Product Creation Studios, Cortex Design, and Evolve Manufacturing. With this network, we can bring a right-sized entrepreneurial team to even the largest projects. In the strategy and regulatory domains, we work with partners ranging from top management consulting organizations to boutique specialist firms including Mind Machine and ID8 Innovation.
Embracing our models, companies in science-driven industries can tap into extensive resources to pursue sophisticated innovation projects while minimizing risk.
Conclusion: The Future Belongs to Mid-Term Innovators
The time has come for companies to rethink their approach to R&D. While short-term gains are essential, reliance on short-termism can stifle long-term growth. Similarly, high-cost acquisitions are also high risk. By investing in mid-term innovation, companies can achieve sustainable growth, stay ahead of competitors, and position themselves for long-term success.
Triple Ring’s Corporate Growth Lab and co-development models offer a proven framework for companies to capitalize on mid-term opportunities while simultaneously mitigating product-development risk. It’s time to strike a balance between short-term pressures and long-term ambitions—mid-term innovation is the way forward.
- [1] https://www.fcltglobal.org/
- [2] https://ssti.org/blog/useful-stats-us-leads-world-gdp-falls-behind-rd-intensity
- [3] https://www.fcltglobal.org/resource/study-shows-corporate-rd-investments-suffer-from-short-term-approach/#0
- [4] Moore, G.A. (2007) ‘To succeed in the long term, focus on the middle term’, Harvard Business Review, July-August, pp. 84-90. Available at: https://hbr.org/2007/07/to-succeed-in-the-long-term-focus-on-the-middle-term
- [5] Herzlinger, R. (2024) ‘The middle path to innovation’, Harvard Business Review, July. Available at: https://hbr.org/2024/07/the-middle-path-to-innovation
FAQ
What is Short-Termism?
Short-termism is the tendency to prioritize immediate or near-term results at the expense of long-term robustness and stability. Whether in business, investment, or politics, short-termism results in unbalanced strategies that emphasize quick solutions and quick wins over strategies that are beneficial over the mid- and long-term.
In innovation-driven industries, like medtech and life sciences, short-termism harms companies by driving decisions that boost profits or stock prices immediately but erode value over time. For example, under-investing in R&D might result in short-term financial gain but damages a company’s future competitiveness and innovation capacity. Similarly, short-termism often compels large corporations to adopt expensive and risky acquisition strategies that fail upon integration and scale up. Triple Ring’s Corporate Growth Lab mitigates the negative consequences of short-termism by focusing on the 2–4-year innovation horizon and building partnerships that share product development risk.
What is Triple Ring’s Corporate Growth Lab and how does it decrease new product introduction (NPI) risk?
Triple Ring’s Corporate Growth Lab is built around two main elements. First, high-potential mid-term projects are housed in stand-alone or semi-autonomous entities (which can be formal or informal structures). By distancing these projects from the demands of day-to-day sustaining engineering, project teams can focus on true innovation. Second, the separate structure allows for co-investment by Triple Ring and/or its investment partners alongside the corporate sponsor. This “skin-in-the-game” approach shares risks across partnerships, robustly aligns incentives, and advances products to market quicker.
How does investment in midterm innovation strengthen corporations?
Midterm innovation and strategic initiatives, designed to deliver results in the 2-4-years, significantly strengthen corporations in multiple ways, including improved market positioning, stronger financial performance over time, adaptation to market changes, risk mitigation, stronger customer loyalty, sustainability and long-term resilience. This kind of innovation is crucial for bridging the gap between short-term profits and long-term growth, creating a competitive edge and positioning a company for sustained success.
