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Roadmap 04/11 (click here to expand/collapse)

Below is the Roadmap for select April 2011 website articles.    Please note  the website contains many more articles covering these same topics. For example, pre-game is integral to our program for attracting better R&D investment opportunities.

Provide Predictable Funding for Unpredictable R&D+
(Introduction to Franchise Capital Mgmt.)

Make funding more predictable (From Unpredictable R&D to Predictable Investor Returns)

  Attract and Retain Long-Term Investors

– Make a Market (You Have to See It to Believe It)

  Reinvest Interim Windfalls+

Make R&D success more frequent * (Execution is the Key to Success)

  Get Smarter at Tracking R&D Advancements+ and Transitions+ (Exits)
  Attract Better R&D-centric Investments
  Increase R&D Productivity (Execution is the Key to Success)

* Although it's still unpredictable

As funding agent+ we match investors and investments (owners of intellectual property+). Our role as funding agent (as middleman) is to keep investors happy, thereby ensuring steady funding for investments. We do this by packaging unpredictable R&D investments into an offering that is more attractive for investors (the perpetual fund). We do this by direct mediation into our unpredictable R&D investments (via franchise operations+), to ensure above-market productivity. Above-market R&D productivity is the only reliable means to ensure predictable funding.

It's a Package Deal

Summary: 

You can’t just take half the recommendations: how research is funded is just as important as how it is executed when it comes to success.

This is a long article. A .pdf is found here for your reading comfort.

Introduction

If you know how to increase R&D productivity just tell me and forget all this funding stuff. I'll finance R&D using tried-and-true methods (e.g., venture capital, corporate funding, bank loans) and be that much more successful in doing so.

It's a package deal. Today's R&D is the way it is largely because of the way it's funded. If funding is driven by deadlines then so will be the research. Alternate scenarios, dissenting voices, and peccadilloes in the data will be ignored or explained away. Harsh questioning of results will be suppressed for the sake of having one voice. Funding agents, only vaguely comprehending the research, view hesitancy in answers as signs of doubt in the results. Better as a researcher to express confidence and assuredness. The reason today's productivity is stagnant is because of the hundreds, if not thousands of self-reinforcing conventions and practices put in place over the years to keep it where it is. To change R&D for the better you must change your spectacles. This starts with the way you fund R&D.

Figure 1. The R&D Bill of Rights and Obligations synthesizes requirements for effectiveness in R&D in terms of requirements for funding (the overlap). In addition to the overlap, additional requirements are needed for effectiveness in R&D. Additional requirements are needed for effectiveness in funding.

There are over a thousand pages of text on the World Class R&D Institute website, mostly discussing how to take a single investment and make it much more successful. What do those thousand pages mean for the funding approach? How do we do funding in such a way it helps (and definitely doesn't hinder) what is needed to make R&D more effective?

For this article we synthesized recommendations of the World Class R&D Institute website, defined what they mean in terms of the funding approach, and compiled the resulting list into an R&D Bill of Rights and Obligations (Exhibit 1, below). Design a funding approach taking this Bill into account and you eliminate all excuses researchers have for not being successful. Skip a few of the articles and you open up loopholes for failures and poor performance. The Bill of Rights and Obligations sets up funding in a way that enables researchers to succeed. But it's just an enabler. There's still a lot of hard work needed on the part of both the funding agent and the researchers, to make investments successful (illustrated in Figure 1).

Rights and oblications of researchers vis a vis the funding agent

Exhibit 1. R&D Bill of Rights and Obligations. Shows rights and obligations from the standpoint of researchers working in unpredictable R&D: what they expect and what should be expected of them. The articles on this list synthesize what is needed for researchers to achieve a World Class R&D capability, with regard to how their research is managed financially. Design the financial management system for R&D with these articles in mind, and you provide researchers the flexibility and incentives they need to be successful.  Notes: MNLB - Mother Nature Left the Building (here). See here for a description of each item on the exhibit.

R&D Bill of Rights and Obligations

Below we provide the rationale for each of the items included in the R&D Bill of Rights and Obligations. Collectively they define a set of features for the funding approach. For example, Right #1 stipulates we will not mandate or rely upon arbitrary deadlines in the funding approach. If it's unknown whether an investment will take 3, 5, 7, 10, 15 or 20 years, the funding approach must accommodate this uncertainty. Continuous funding must be made available for as long as 20 years, and no questions asked as to 'how much longer is this going to take' at the moment of disbursing the funds. Each item on the Bill can similarly be crafted in terms of features for a funding approach.

Table 1. Rights from the R&D Bill of Rights and Obligations. Click on each item name to read the description of the item. Click again to collapse the description for easier reading of other items.
Rights

(Click each heading to expand and view its description)
Expand all | Collapse all

Table 2. Obligations from the R&D Bill of Rights and Obligations. Click on each article name to read the description of the article. Click again to collapse the description for easier reading of other articles.
Obligations (see also)

(Click each heading to expand and view its description)
Expand all | Collapse all

The Bill of Rights and Obligations informs the design of the financial model. As mentioned above, each article in the Bill can be cross-walked to its financial features within the franchise capital management model.

Conclusion

Set up the funding approach to take into account the R&D Bill of Rights and Obligations and you end up with greater productivity which translates into more blockbuster products. Do this wrong and investments have to work even harder to overcome artificial funding constraints.

We want spontaneity, creativity, tacking and turning, and doing whatever it takes to make franchisees a success. We expect these traits to be built into their operating models. Each franchisee will have a unique approach to its research.

It's not quite the same for the funding agent, the franchise capital management firm+. Researchers sign up for what may be 20+ years of effort and need assurances of continuity and uniformity. They must believe they will not get the financial rug pulled out from underneath them down the road. They need the rule of law, as codified in the Bill of Rights and Obligations.

Adherence to the Bill of Rights and Obligations contributes greatly to making franchisees successful. At times is may seem as though personal intervention (read meddling) by funding agents into franchisee operations can improve results, but that's just because we don't see the harm done by funding agent interventions in a dozen other instances, or the harm that comes from undermining faith in the rule of law. With the R&D Bill of Rights and Obligations we limit many common avenues for meddling. We codify what it takes for the funding approach to enable increased productivity in R&D. We uniformly and universally apply that code across all franchisees.


Home Page April 2011

  • 1. In the pharmaceutical industry research teams are accustomed to setting milestones coinciding with regulatory approvals. These approvals are meaningless from the standpoint of productivity. Mandatory tracking of these approvals is now widely recognized in the industry as detrimental to productivity.
  • 2. Note: there is one funding agent and therefore one set of rules. There are many franchisees, and each has its unique operating model. Funding agent rules can change over time, but they are uniformly applied across all franchisees.
  • 3. They claim this ability, but in the absence of objective measurements, it's their word against yours. Failures are silent, success ring bells.
Further Reading
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