Harnessing the Power of AI in System Mapping
SIIFIC partnered with Orthorebirth in March 2024. Orthorebirth, founded in June 2011, is a medical device startup, renowned for its flagship product, the cottony-type, synthetic bone-void-filling material “ReBOSSIS.”
With this funding, Orthorebirth aims to develop a drug that promotes bone formation using Bone Morphogenetic Protein (BMP). Although this project might initially seem understated, SIIFIC’s impact due diligence (Impact DD) has highlighted its significant potential. In this Impact DD, SIIFIC incorporated new initiatives leveraging AI, building on the experience from the first investment.
J-Pharma System Map Arouses Engaging Responses
Nanako: Our first investment, J-Pharma, is developing a drug that maintains the quality of life (QOL) for terminal cancer patients. When we introduced the Impact DD for this investment on our blog, we received unexpected responses, didn’t we?
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Yes, we received a feedback from our reader who lost both her parents to cancer. Although she is not our investor nor invest, she read our blog and wrote to us, “I saw the system map on your blog and it made me cry.”
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“Emotionless medical care” loop in the bottom left of this map represented her real experience. She said, “Doctors were constantly looking at laptop screens instead of patients, following treatment guidelines without any empathy.” The map mentions “aiming for medical care that gives hope til the last moment,” which deeply resonated with her and moved her to tears.
I’m a 20 years healthcare investment veteran, but this was the first time I received feedback from end beneficiaries. The fact that our meticulously crafted system map resonated with her and others made us incredibly happy and moved us to tears as well.
Nanako: The goal of investment is to reach the end beneficiaries, but receiving direct feedback from them is indeed rare.
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The system map clarified the unique features of J Pharma and the drug. One such feature was the “physician satisfaction rate” set as a short-term impact KPI. Being able to prescribe a drug with minimal side-effect to terminal cancer patients, who previously had no such option, provides physicians with a sense of purpose and satisfaction.
Nanako Kudo: By conceptualising cancer treatment challenges as a system, we were able to focus on both patients and healthcare providers.
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Through this exercise of System Mapping, we clearly distinguished between business KPIs and impact KPIs. Here, one of the business KPIs will be “the number of patients treated with the drug” In contrast, the impact KPIs will be “physician satisfaction rate” and “improved leisure time for patients,” which qualitatively differ from and often trade off against business KPIs. This distinction solidified our understanding of impact investing.
Discovering Solutions to Social Issues in Bone Healing
Nanako: Can you tell me meow about Orthorebirth?
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Orthorebirth is a company in the orthopaedic field, developing, manufacturing, and selling synthetic bone “ReBOSSIS”. They are currently developing a drug containing Bone Morphogenetic Protein (BMP), which promotes bone formation. BMP is already approved in countries like the United States.
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Source: Orthorebirth Website
Nanako Kudo: You mentioned that this is a relatively understated field.
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Compared to cutting-edge technologies like regenerative medicine and AI, it might not attract much attention. Initially, we struggled with how to approach this. However, while gathering data, we focused on the issue of caregiving, a major issue in aging country like Japan.
The top three causes of long-term care are dementia, cerebrovascular disease (stroke), and fracture/fall. Elders who fracture bones take a long time to heal, reducing their activity levels, leading to cognitive and physical decline, eventually requiring care. In Japan, where the population is rapidly aging, fractures are a major social issue.
BMP can speed up bone formation, avoiding the need to harvest bone from other parts of the body, thus reducing treatment risks and damage. Patients can start rehabilitation sooner, decreasing the likelihood of becoming bedridden.
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Source: Ministry of Health, Labour and Welfare, Comprehensive Survey of Living Conditions 2022
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This aligns with SIIF’s Healthcare Vision Paper, depicted in our “Healthcare Issue Map – Elderly.” We integrated elements from this map into Orthorebirth’s system map and updated it.
Harnessing the Power of AI in System Mapping
Nanako: You also refined the method for creating the system diagram based on the first investment’s experience.
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While creating the system map for J Pharma, we wondered if our method of identifying elements, or more specifically variables, might be biased. Although we interviewed many people to identify these variables the choice of interviewees and the interviews themselves were conducted by us, which might have introduced bias.
To avoid this bias, we considered web scraping, extracting and collecting data from the web. With help from AI engineers, we learned that AI such as ChatGPT could perform web scraping. Working with the engineers, we developed an optimal prompt. This led to the discovery of the overlooked variable “pain.”
Physicians often say, “Pain can be controlled with medication, so it’s not an issue.” However, patients still experience pain, which can prevent them from sleeping, leading to weakness. AI helped us identify this crucial variable.
Nanako: You mentioned concerns about bias beyond variable extraction.
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Yes, we were also concerned about where to place variables within the map. As long as we arranged them based on our thinking, we tended to position them in a way that suited us. We sought advice from experts in mathematics and physics to objectively calculate the coordinates for these variables. They suggested using co-occurrence analysis.
Co-occurrence analysis identifies pairs of words frequently used together, indicating their closeness. We applied this to arrange variables that should be positioned close together in the system diagram.
For example, in our fund’s Theory of Change (ToC), we identified two leverage points “wellness literacy” and “social capital.” These variables, crucial to our investment themes and deal sourcing, should appear in the system map.
Initially, we placed these two variables at opposite ends of the map, thinking it was easier to address challenges from two leverage points. However, co-occurrence analysis revealed their close relationship, prompting a significant redesign of the system diagram.
After completing the system map, we met with Orthorebirth’s management. We explained, “Based on our research and analysis, we believe your product can improve fracture treatment in the elderly and prevent them from becoming bedridden, thus addressing caregiving issues.” Their enthusiasm was palpable as they began passionately discussing their product’s mission, leading to the new keyword “social pain.”
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Nanako: What does “social pain” mean?
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When the elderly require care, it gives rise to issues like caregiver resignation and young carers. Orthorebirth’s CEO termed this “social pain.” He said, “Our goal is to alleviate not only physical pain but also social pain through our research and development.” We incorporated this philosophy into the final system map.
Insights Gained from Creating System Maps
Nanako: What improvements or goals do you have for the next investment?
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For Orthrebirth, we thoroughly avoided bias by scraping the entire web. However, some level of bias might be necessary. For the next investment, we plan to input all related texts, including interviews and business content, into AI and see how it learns from this database.
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Engaging deeply with the founders and management of investee companies is essential. In both investments, their words gave us the hints for impact KPIs. When we identified keywords like “physician satisfaction” or “social pain,” their facial expressions noticeably changed. They transitioned from a professional to a person passionate about the issue they are tackling. They enthusiastically and eloquently told us their sense of purpose and mission. We believe similar insights will emerge with future investees.
Nanako: It’s fascinating that a system map, created objectively and with AI assistance to eliminate bias, can evoke engagement and inspire vision and ideas. What does this mean?
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When creating a system map we should depict the current state rather than make value judgments, allowing for an honest engagement with the issues.
Nanako: Do you think this aligns well with the fund’s Theory of Change?
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Yes, every investment’s system map includes “wellness literacy” and “social capital.” As we continue to build our portfolio, we will understand holistic wellness system better