Operating Models Overview

What does it take to make an Investible Unit+ (IU) a success? One vital ingredient will be membership+ to an exclusive club. This is a club that’s hard to get into, but once a member then success is all but assured. You gain access to the unique resources of the club: the best available in the world. As with any exclusive club, your success is assured through its membership standards. You don’t get in unless you’re already a candidate for success. But once your in, the reputation of the club is at stake: the club does everything it can to make sure you succeed.

Exhibit 1. Operating Model within the conceptual framework for World Class R&D. We take the best from Venture Capital, Franchise Management, Portfolio Management, and Commercial Management and meld them into recommendations for World Class R&D operations. We select components for our operating model by reference to the Behavior Fundamentals.
We’re dealing with science at the cutting edge, and the commercial potential of this science is inherently tenuous. No amount of good management or intentions is going to make up for a bad start in the science (at least within commercial timeframes). Our membership policies take this into account. We look for a transition+ period in order to shake out the basic science and demonstrate its potential to spawn multiple blockbuster+ products. Basic science will go through a few rounds of dis-confirming evidence+ before being admitted to the club. Membership can take years.

Once a member you are unfettered by arbitrary rules, conceptions or timelines. Unfettered membership means freedom. You are free to take the science in any direction that has blockbuster potential. A blockbuster is a blockbuster, regardless of its form and market. You needn’t operate with one hand tied behind your back. You are not forced down any one path.

Freedom means freedom to fail. You can and will get kicked out of the club for not living up to its very high standards. This is World Class R&D. If exclusivity is to be maintained, then you can expect to be officially held to these high standards. We expect to walk into your R&D operations at any time and the look and feel of membership will be palpable. For example, cheap heuristics+ are nowhere to be seen or heard. Researchers are just as concerned for the effectiveness as for the outcome of their studies. These are not vestiges of some forgotten ritual: you design and contractually negotiate up-front your own unique approach to World Class R&D. This will be your contribution to the growth and vitality of the intellectual property of the club. You will be deliberately held to your own high standards.

Discussion of the Strategic Direction is found here.

On this month's home page we discuss several R&D operating models and how they can contribute to the success of the Investible Unit. We view four models, which are mutually supportive: Venture Management (VM), Franchise Management (FM), Portfolio Management (PM) and Commercial Management (CM). Roll the mouse across the Hieronymous Bosch background picture and click on the hidden pop-up teasers to explore each of these operating models.

Home Page May 2010