Pre-game Sets the Stage for Success

Much of the work of R&D falls into four categories of investment: pre-game+, mid-game+, end-game+ and commercialization+. Pre-game is concerned with identifying, investigating and deciding whether or not to fund new investments (i.e., a new Investible Unit+). Mid-game is concerned with on-going investments into research efforts already underway. End-game is about investments needed for an orderly shut down or exit from a research effort. Commercialization refers to selection and development of an R&D product or service to turn it into a commercial product. These categories are mutually supportive: get any one of them wrong and you jeopardize the other three. Conversely it's very hard to get any one of them right without the support of the other three.

This month’s front page focuses on pre-game. If we do pre-game well then it makes our work in all the other categories much easier; and much harder. Our investments and the teams managing those investments will be of the highest caliber. This lessens our need to watch over every detail. This sharpens our skills at managing the investments, since we are working with the best. We’ll also be forced to admit that subsequent failures must be much our own fault. It’ll be much harder to point fingers elsewhere.

The first challenge in pre-game is that 80-90% of research that is highly attractive from a scientific standpoint will turn out to have no commercial value. Almost every research article in the authoritative magazine Science of the American Association for the Advancement+ of Science includes the obligatory commercial pitch – how this technology can be used to solve this or that issue in industry. Most go nowhere. How do we identify the 10-20% of research ideas that will have blockbuster+ potential without succumbing to the ever-present temptation of hiding behind falsification bias+?

The next challenge in pre-game is recognition that great research goes nowhere without having a great team to pursue it. And the pursuit is one of tacking and turning towards an endpoint that is only tentatively defined. Merely proving that a technology is not applicable for a particular commercial direction is not enough to justify its dismissal (aka Early Kills+). Instead we must show a technology is not applicable for multiple blockbuster pursuits of any direction. This is a function of the technology and the team. The team must have the skills and passion to push the science into every commercial niche having blockbuster potential.

The World Class R&D approach to these challenges is a grace period / boot-camp / weeding-out period. We provide maintenance funding to demonstrate both the blockbuster potential of the technology and the potential of the team to reach that blockbuster. We’re going to build a business plan that has teeth: hard, empirical evidence that this team can make this technology work. The business plan shows scientific and commercial justification for the launch of a firm that would be expected to last for 10-20 years, producing a steady stream of products, and gaining and maintaining a scientific competitive advantage.

Does this team understand the tacking and turning needed for success? Does this team know when to stop; when the technology will not have commercial applicability down a particular path? Does the team understand the mechanics and significance of disconfirming evidence+, and its role in breakthrough discoveries? Does the team understand the concept of self-funding of their blockbuster pursuits? Some teams and technologies will make it. Many will not.

The end of pre-game is graduation into full-membership+ with all its attendant rights, responsibilities and obligations. Simultaneous to proving their merit in their commercial pursuit, teams must become World Class R&D certified. For example, they must show an understanding of the compulsories+, and what it will take for individuals to be able to perform free-style+. They must understand their obligations to give back to the franchise, so that collectively we all continuously improve. They must know when and how to leverage the resources available as part of their membership. They are subjected to a very significant indoctrination into the ways of the franchise. Pre-game is also when teams get to identify their own unique cultures and means of working together. The end of pre-game is a team that is fully formed and ready to compete within the franchise structure.

The overall goal of all the categories is to ensure the corporation is never held hostage+ to having to choose from sub-standard investments. We have very high hurdles for each stage of promotion of our investments: pre-game, mid-game and commercialization. Pre-game is where this all starts. We have very high hurdles for all its intermediate stages: screening, recruitment into boot-camp and graduation into full membership. Even if a team does not succeed in gaining full membership, we ensure they are much more highly desirable for funding by our competitors, merely as a result of having gone through the indoctrination. Dropouts fare far better than the other 80-90% of investments available in the open market, and we measure ourselves against this contention by the number of dropouts we help get funding by other firms. Merely being selected by our firm for consideration must be viewed in the industry as a highly desirable privilege, even if there were no money involved.

Home Page June 2010