Fail Fast, Fail Early

Not the most inspiring of titles, but ask any medicinal chemist what the chances of his or her lead molecule making it through clinical trials and it's about one in ten (and falling). And no matter what anyone tells you, no one knows which development projects will fail when on the journey from the lab to your bathroom cabinet. Yes, that pill you pop for hay fever or hypertension is the result of a whole lot of great science and one big dose of good fortune.

The development strategy of big pharma embraces this fact as they seek to spend the least amount of money on the ones that don't make it. Fail fast, fail early is their mantra. So why don't they run tests in parallel (assuming it's ethical and legal) and speed up the process? Unfortunately, with these odds history and a few calculations in Excel tells you its a mug's game to try to rush perfection to much. What you need is a development pipeline (which is what equity analysts sweat about as the last blockbuster goes off patent) and then you can play the numbers game and be reasonably patient.

But wait, what about small guy who just has one or two throws of the dice and mix in a doze of commercial reality that their wonder drug or medical device has a limited market potential? And what if they don't have the luxury of funding their development from previous successes? Then they have to raise funding from VCs who don't want to wait a decade to see a return and even then the market potential may not give sufficient returns to make the investment add up financially. This is the problem facing many Healthcare Technology companies and it ain't easy to beat the numbers.

Complaining about the short time horizon and greediness of VCs is about as useful as trying to rush a product through clinical trials (and by that I mean spend more money on failures faster). It just isn't that productive. So what is the answer to this connundrum? The obvious answer is to licence more things earlier and accept a smaller slice of the pie if they make it through to market - which is what most smaller biotechs do. Alternatively, you can find a friendly source of development funds that is prepared to wait for a return and see your project through from cradle to grave - it's called working for Glaxo! But is there a third way?

InvestorQuest Final

The Saturday Yorkshire Post featured our Red Carpet Day where the 10 InvestorQuest finalists fought it out for a slice of the £1M of funding on offer. Whether they are successful in their quest only time will tell, but four walked away with £1K of consultancy support kindly donated by the event's sponsors Clarion solicitors (who hosted the event), Murgitroyd & Co, Mazars and Turnkey.

It was interesting reviewing the initial comments of the panel of investors. There concerns were less about how clever the technology was, but more about whether the IP was protectable, barriers to entry, routes to market, vertical market focus vs infrastructure play, return on investment, etc. Although each presenter was mentored prior to the event, only a minority had developed these aspects sufficiently to satisfy the investors appetite for business strategy, rather than technical detail.

Developing an Innovation Strategy

Rob Hulme from Smith & Nephew spoke at the first of our Business Fitness workshops in Hull on developing an innovation strategy. He emphasised their strategy has moved from closed innovation to a more open approach to embrace ideas from outside. Another of his themes was the concept of teamwork and cross-functional approaches noting that breakthroughs often occur at the interface between two disciplines.

A interesting observation was on the competing pressures of Process & Bureaucracy and Passion & Anarchy that a company needs to find an appropriate balance between to maximise its potential. Too much bureaucracy and innovation risks being stiffled in favour of the status quo. But equally too many mavericks trying to change and tinker with things then chaos reins.

This complemented my discussion in the previous session on Business Strategy & Planning where I focused on the chasm between Visionaries and Pragmatists. Visionaries are by definition more driven by passion and a quest for radical improvement, whereas Pragmatists are looking for more incremental, managed evolution to improve the current situation. Most managers coming from larger companies have these pragmatic skills in spades, but may lack the open mindedness and willingness to experiment and even fail that sets out the visionaries from the rest.

There are four more seminars in the series which promise to be equally inspiring! Click here to find out more...

What Is The Optimal Length Of A Queue?

There is a fine line in business between having satisfied customers and happy ones. If all your customers are too happy you are probably not charging enough for your product and service or indeed doing too much for them for too little. This can be a difficult habit to break, but can be the difference between success and failure.

Early in my career I worked for a software company that everyone loved, they just didn't make any money and were taken over by another company that did. The only difference I could make out between the two was the one that was successful charged their customers for everything they could and should. The other went out of its way to keep its customers happy, but didn't charge them enough for the privilege.

Do you want to be liked or respected in business? If it's the former, you probably think the answer to the question posed is zero. If it's the latter, a better answer is three...