Category Archives: Business Philosophy

The Next Step: Partnership or Business Alliance?

By:  Michael Kaiser

4 people and puzzle

Business partnership or alliance? Get this right and build your company.

Here is an imaginary (yet realistic) scenario: after much effort, your company has earned the “growing business” label in your industry. In order to keep its growth momentum, the time has come to choose one of the two alternatives listed below.

Partnerships
A partnership is an   arrangement where parties agree to cooperate to advance their mutual   interests. In the most frequently associated instance of the term, a   partnership is formed between one or more businesses in which partners   (owners) co-labor to achieve and share profits and losses.

A business partner is a commercial entity with which   another commercial entity has some form of alliance. This relationship may be   a contractual, exclusive bond in which both entities commit not to ally with   third parties. Alternatively, it may be a very loose arrangement designed   largely to impress customers and competitors with the size of the network the   business partners belong to.

Of course, there are also downsides to partnerships, the   most significant ones being:

“1) The business-related acts of one partner can legally   bind all other partners. So it’s essential that you enter into partnerships   only with people you trust. It is equally essential that, no matter how much   you trust your partners, you execute a written partnership agreement   establishing each partner’s share of profits or losses, day-to-day duties,   and what happens if one partner dies or retires.

2) A disadvantage of doing business as a general   partnership is that all partners are potentially personally liable for all   business debts and lawsuits. Each partner is financially responsible for his   or her share of the business debt. But in many cases, it is the partner with   the greatest assets who loses the most if the business fails. Of course, a   good insurance policy can help reduce lawsuit worries, and many small, savvy   businesses don’t have debt problems.” (Yahoo)

However, to make up for the above, one of the most   important aspects (and advantage) of a partnership is the ability to work   under the umbrella of a Limited Liability Company (LLC), described as a   flexible form of enterprise that blends elements of partnership and corporate   structures.

“An LLC is not a corporation; it is a legal form of company that   provides limited liability to its owners in the vast majority of United   States jurisdictions. LLCs do not need to be organized for profit. Certain   types of businesses that provide professional services requiring a state   professional license, such as legal or medical services, may not form an LLC   but use a very similar form called a Professional Limited Liability Company   (PLLC).” (Wikipedia)

Business alliance
A business alliance is an agreement between businesses, usually motivated by cost reduction and improved service for the customer. Alliances are often bounded by a single agreement with equitable risk and opportunity share for all parties involved and are typically managed by an integrated project team. There are five basic categories or types of alliances:

  • Sales alliance
  • Solution-specific alliance
  • Geographic-specific alliance
  • Investment alliance
  • Joint venture alliance

“In many cases, alliances between companies can involve two or more categories or types of alliances.” (Wikipedia)

A sales alliance occurs when two companies agree to go to market together to sell complementary products and services. A solution-specific alliance occurs when two companies agree to jointly develop and sell a specific marketplace solution.

A geographic-specific alliance is developed when two companies agree to jointly market or co-brand their products and services in a specific geographic region. An investment alliance occurs when two companies agree to join their funds for mutual investment.

A joint venture is an alliance that occurs when two or more companies agree to undertake economic activity together. It is an agreement whereby the parties agree to develop, for a specific time, a new business entity and new assets by contributing equity, i.e., they share revenues, expenses and assets.

There is a difference between a partnership and an alliance as described below:

“An arrangement between two companies that have decided to share resources to undertake a specific, mutually beneficial project. A strategic alliance is less involved and less permanent than a joint venture, in which two companies typically pool resources to create a separate business entity. In a strategic alliance, each company maintains its autonomy while gaining a new opportunity. A strategic alliance could help a company develop a more effective process, expand into a new market or develop an advantage over a competitor, among other possibilities.” (Investopedia)

Epilogue
There are specific advantages for a growing company to either seek a partnership or a business alliance, but it must be remembered that those advantages are quite different, one from the other. In general, a business alliance should not be undertaken unless you started with a partnership and are protected either by and LLC or S-Corporation shield.
 
Recommended sources

Picture Credit:  lumaxart via photopin cc

The Startup Business Plan: Charting Your Path to Success without Wasting Time

Treasure Map

Your startup business plan will be like a treasure map to show you and the team the shortest path to the gold while avoiding dangerous traps.

By:  Andrew Johnson, Ph.D.

It might seem trendy to ‘just do it’ but it is pretty difficult to make sure that you are ‘doing’ the right things if little forethought has gone into what is critical for your company’s success.   There are those who propose skipping this step, calling it a waste of time.  The reasons given are that as soon as the plan is ready it is already out of date or “we know what we need to do already”.  Many of these views come about from a misconception of what a business plan really is and what it can do.

A business plan is…
A good business plan gives founders the opportunity to clearly state and communicate their vision of the company with the rest of the team,  investors, key opinion leaders and other VIP’s that are critical to the success of the company.  The founder, his senior team and trusted advisors will be able to use the exercise of preparing a solid business plan to simulate how the proposed company will ultimately achieve success.  Think of it as a dry-run.  Gaps in the business model, feasibility issues with the underlying technology, manufacturing scale-up issues and other key elements that are critical for success will easily be uncovered during this effort.  Since this is essentially a simulation of how you envision things to go, any gaps and pitfalls can be identified early before any time, effort or money is wasted.  In addition to this, the business plan will allow the senior team to get valuable feedback from outside industry experts that will have a direct bearing on the company.

A business plan is not…
Having a clear understanding of what does not constitute a good business plan will not only help you in the preparation of the right plan for your organization but allow you to avoid wasting time.

  • Needed only to attract investors:  Yes, it is true that most investors will insist on reviewing your business plan (often they only read the executive summary) before deciding whether they have any interest in a further relationship (never mind making an investment).  However, the real value here is that you will have a detailed strategy mapped out to guide your progress and even a detailed task list for the team.
  • A long, boring document for ‘business types’:  Nobody wants to read or review anything that is boring or valueless.  If you can cover all of the essentials of your business in 5 pages then that is how long your plan will be.  In fact, it is better to start with a shorter plan in the beginning and then amend it as you make progress and learn more about the things that are most important for your success.
  • A static document:  The preparation of a business plan it not something that you complete and then file away for posterity.  It should be a living document that changes as your company grows and as market conditions that impact it are uncovered.  The key here is that with a good plan in place, you and the team will make conscious decisions to make a change rather than just changing course every time something new comes along.  A business without an ‘Evolving Business Plan’ is doomed to run out of time and money by constantly chasing issues that really should be ignored.
  • Something that can be outsourced:  Some of the hard work here can be defrayed by hiring an experienced consultant.  The founder and the senior leadership team will need to work closely with this ‘hired gun’ to make sure that the final product is a business plan that will drive the success of the company rather than a generic business plan (a true waste of time and money) that has little to do with the particulars of your company.

Spending your time creating the world’s best business plan is a waste of time and money
You don’t need the world’s best business plan.  You need the business plan that will provide you with the details and guidance to chart your company’s path to growth and success.  It should be no longer than that and it need not be fancy looking or printed on heavy bond, acid-free paper.  Spend the quality time you need with your leadership team (and consultant if needed) to draft up the best plan you can in a week or less.  You will need to keep updating it and filling gaps but get at least a reasonable one in place early.  The leadership team will frequently make changes to it as progress is made and new findings are uncovered.  Someone with expertise in creating effective business plans can be a great asset to your team in terms of creating a version of it that will be most appealing to potential investors in your market.

Take Home Points:
You need a right-sized plan to help you avoid wasting time and money and…

  • Avoid creating a great product that does not have a ready market
  • Discover that a huge need in the marketplace does not have a viable business model for growing a profitable company
  • Identify what  the next most important tasks are
  • Reveal underlying risks and opportunities that may not be obvious at first

Resources:

Picture Credit:  nicora via photopin cc

The Challenge of Ethics and Integrity in Business

clip art ethical man

High standards of business and personal ethics and integrity are inevitably challenged, sooner or later, to handle difficult decisions prompted by a ‘survival-of-the-fittest’ doctrine.

By: Michael Kaiser

Do you remember the Enron Corporation and other similar energy scandals? And the financial ones that precipitated the 2008 “Great Recession”? And the automotive and the health care industries ones? In all cases, one factor stood out: the lack of intertwining ethics and personal integrity from senior executives, who either ended up in jail or were removed from their positions. Alas, for all the laudable concepts of business ethics, we can expect that established corporate codes of conduct will be violated sooner or later. Not surprisingly, many executives who rigorously adhere to the highest standards of ethics and integrity encounter the total opposite in many of their transactions.

And how can we not mention the famous 1970’s Watergate Scandal (even if you were not born then), one of the worst and most blatant ones in US political history. For the perpetrators, the words Ethics or Integrity had been erased from their lexicon.

How does an ethical business executive deal when confronted with quite the opposite?
Some years ago, during one of my visits to a client known to my former employer’s executives for his business ethics in a country where business and political corruption where one and the same, I asked him how he managed to confront and survive in such a difficult environment without becoming “one of the others”; he looked at me, somehow surprised at my question, and replied:
“Well, first of all, this is the reason why I choose to deal with your company and similar ones outside my country”, which he expanded with another reason: “Recently, when I complained to a local company executive about his commercial subterfuges, he replied that I should ‘not try to play being God in the Devil’s den’, and therefore I select foreign companies with an ethical reputation”. Some answer, rather shocking but one that described the rift that exists between rigorous ethical business codes and those operating under the more common or acceptable “survival-of-the fittest” rationale.

The challenge: Leadership and ethics
The above mentioned experience, and the retort my client received, merits revisiting James MacGregor Burns, who in his book “Leadership”, (1978), cites the sociologist Max Weber:

“In a famous distinction Max Weber contrasted the “ethic of responsibility” with the “ethic of ultimate ends”. The latter measured persons’ behavior by the extent of their adherence to good or high purposes; the former measured actions by persons’ capacity to take a calculating, prudential, rationalistic approach, making choices in terms of not one supreme value or value hierarchy alone but many values, attitudes, and interests, seeing the implication of choice for the means of attaining it … the relation of one goal to another, the direct and indirect effects of different goals for different persons and interests, all in a context of specificity and immediacy, and with an eye to actual consequences rather than lofty intent.”

Ethics, integrity or “survival-of-the fittest”?
The role of advanced IT communication, media reports or instrumentation and financial controls, forced (to some extent) a standard code of business conduct across the globe, reflected in the fact that no matter their geographic location, or their membership with EU, ASEAN or NAFTA, when a day does not go by without car manufacturers, pharmaceutical companies and food companies announcing a recall of one or more products; in some cases, a quality or contamination recall could actually usher the end of a company.

More often than not, the opposite takes place and reinforces consumer confidence. A couple of years ago a massive recall by an international car manufacturer led to a significant market share loss, but because the company executives freely admitted that manufacturing errors led to the crisis and were being corrected, the company has regained its sales leadership. Was that a case of corporate ethics in synch with executive integrity, or just a plain “survival-of-the-fittest” action?  When a pharmaceutical company is ordered by the FDA or EMEA to withdraw a medication with significant side-effects for the patient, is that to be perceived as a case of institutional ethics versus a “survival-of-the-fittest” strategy for the affected company?

Just implementing an ISO 9000 Quality Management control does not address the essence of human behavior on the issues of positive or negative tendencies.

Although ethics and integrity in business reflect a clear similarity as far as trust and truth are concerned, there are differences that rest on two Aristotelian demarcations, whereby Ethos reflects a community or national character that propel ethical standards on the individual, and Pathos reflects the passions or emotions of the individual, which builds integrity, or dismisses it. Therefore, in general, it can be argued that the CEO of a start-up company will be more prone to promote his personal integrity, whereas a counterpart in a large international corporation must promote both the corporate ethics as well as his personal integrity. In both cases, sooner or later they could confront the “survival-of-the fittest” dilemma, and then what would they do? The Case 1.2 on page 10 of “Defining Business Ethics” describes that quandary with a dramatic example.

Epilogue
The subject of this article is too complex for a minimalist description, and for the underlying interpretations we search. We may be tempted to choose this simple solution: that an organic business enterprise or a startup one are both correct, however one could, or can benefit if they adopt and display a code of ethics and that its top executive echelon stands out for their professional and personal integrity. But that is too easy a choice if a strategy to counteract the appeal emanating from a “survival-of-the-fittest” is not taken into consideration.

Recommended links and reading resources

Picture Credit:  Business metaphor of a question mark in front of a man’s head, Microsoft Word 2010, Clip Art

The Mind of the Startup CEO: Why a Little Crazy is Good

Person thinking

The successful startup CEO has a particular mindset that tends to favor the chaos and excitement that are typical in the early days.

By:  Andrew Johnson, Ph.D.

We have all heard stories about the ousting of the Founder and his team once their business has proven itself to be a winner.  Steve Jobs was kicked out of Apple (though famously brought back for a second act), Ben Cohen and Jerry Greenfield (The Ben & Jerry of premium ice cream fame) were ultimately replaced when the company was sold to Unilever.  This phenomenon can be scary to many new entrepreneurs.  However, a closer look at the differences between what makes a successful entrepreneur different from a successful manager not only shows why this is a logical progression but also something that should not be feared.

It is extremely rare to find a person that has the mental makeup and desire to be both an entrepreneur and a manager.  The following points show why this is.

The Mind of a Startup CEO

  • Deals with chaos with calmness:  The startup CEO not only has the resilience to withstand the unpredictability and risk associated with a new company but actually thrives in this environment.  Here are a few examples of the things that can keep you up at night with a startup; making payroll, cash flow, technical setbacks, opportunity costs, launching into an unknown market, threats from competitors, dysfunctional boards etc.  The startup CEO actually thrives with these challenges by finding creative ways to resolve these issues while sleeping soundly at night.
  • Doesn’t shy from risk:  The stakes are often very high.  You only have so much time to prove that you have a viable business before either you lose the support of your investors and/or miss your moment to enter the market.  Being comfortable with taking prudent risks allows the startup CEO to move faster towards success or failure.
  • Is creative, resilient and realistic: The startup CEO can maintain a certain amount of detachment from the pressures that are part of launching a successful startup (resilience).  They will look for non-traditional ways of solving problems (creativity). However, they are also realistic.  This crucial balance between Cassandra and Pollyanna (too pessimistic or optimistic) can be the key leadership difference between a commercial success and failure.

The Mind of an Established Company CEO

  • Skilled at maintaining and growing existing business with the least amount of risk:  The market and business of an established company are well known.  Success here is about strong and steady growth that is scalable.  The successful CEO of an established company knows how to execute on the business plan and provides the calm and methodical leadership it takes to keep everyone on track.  There is much less unpredictability here and this type of leader will look to avoid risks when possible and maintain a strong and steady growth trajectory.
  • Generally most effective when things are good – fails terribly when things go bad:  The CEO’s of established companies are excellent managers.  When things are good, they shine at steadily improving the performance of the company using tried and true procedures and policies that can be easily scaled to grow the company.  When things start to go wrong, (e.g. technical problems, labor issues, and/or entry of a powerful competitor into the market) executing on existing plans only makes things worse.  This is a time for innovation and risk-taking, this is a situation where the startup CEO thrives (turn-around experts are often former startup CEO’s).
  • More risk averse, steady hand on the tiller:  Decisions are made after careful and thorough analysis.  If there is not enough data to guide a decision, these CEO’s will defer making a decision and look to gather more information.  This is often the right thing to do in a successful established company where there are fewer unknowns.

Why you want to be replaced
Once a company has seen some success it needs to focus on execution and getting every last drop of profit from its established products.  This is where the mentality of an Established Company CEO is needed.  The startup CEO can find this environment to be stifling and may feel constrained.  The ‘seat-of-the –pants’ style of leadership that worked in the early days must give way to new processes and procedures.  This allows the business to scale up quickly and efficiently with a much larger team.  At this stage, even new product launches will feel different than your earlier efforts.  Phased gate reviews, shareholder communications management etc. will need to be part of the process now.

Know thyself and gun for your exit
The chaotic realm of the life science startup is a fast moving, passionate ride with thrilling highs (achieved profitability) and crushing lows (great tech but no market for it).  This is where the ‘Fail Fast” moniker is celebrated.  If you thrive in the worlds of chaos and speed, you will find the life of a manager to be slow and plodding.  You will no longer be as free to innovate as you were before.  If you know this about yourself, you can start to build in how and when you will exit the company.  Keeping this in mind can even be helpful with investors as they look for entrepreneurs with the foresight to put the well-being of the company above their own ambitions.  Stay as long as it is a fit and plan to leave when it is your time.  With a little planning, you can still participate in the success of the company with good exit terms (seat on the board, profit sharing, valuable equity holdings).  By planning for your exit you will now have even more resources to ease the burdens of starting your next company.

Suggested Reading:

A First-Rate Madness: Uncovering the Links between Leadership and Mental Illness by Nassir Ghaemi, Penguin Books Ltd, 2012. | A New York Times Bestseller.

Picture Credit:  © Sklemin | Dreamstime Stock Photos & Stock Free Images

No Lab? No Problem! Leveraging the Power of the Biotech Incubator for Startup Success

Cracked eggs graphic

Get more bang for your buck! Biotech incubators not only free you from the expense, time and effort of establishing a lab but also can provide access to technical expertise and fellow entrepreneurs that can give you a powerful competitive edge.

By:  Roger Frechette, Ph.D.

Business incubators are loosely defined as supportive environments helping entrepreneurs to launch and grow successful businesses. Whether for-profit or non-profit, spawned by commercial real estate firms, state/local governments, academic officials or entrepreneurs, business incubation on the rise with an increasing variety of offerings to suit virtually any aspiring entrepreneur.  The National Business Incubator Association, and numerous state and local affiliates, offer loads of information for incubators and entrepreneurs alike.

Why this works
A critical advantage that business incubators offer is the availability of fully functional infrastructure – enabling entrepreneurs to focus on their fledgling businesses without having to worry about time-consuming operational bits like setting up permits, licenses, internet access, waste disposal, meeting space, security, vendor negotiations etc.

Successful companies paying it forward
As an active member of the Massachusetts biotech community, I’m delighted that biotech incubation is experiencing a significant growth spurt within the already prodigious life sciences ecosystem.  I wish this had been the case when we started MaxThera in the last decade.  Beginning with an idea in 2003, we landed at Inotek Pharmaceuticals, along with other startups, including Smart Cells. Inotek happened to have a bit of extra lab space and equipment available, and was willing to lend a hand to startups.  Other companies have offered shared space to startups as well, but such arrangements can be difficult to find are not always well-suited to the incubator role.

Massachusetts biotech incubators: A model for success
The Massachusetts Biomedical Initiatives (MBI) is sort of a granddaddy of biotech incubation – launched in the 1980’s, MBI provides office and laboratory space, including some basic lab equipment.  Centrally located in Worcester, MBI has grown considerably over the years, is housed in several buildings and has tenants ranging from innovative biotechs to research service providers. The Cambridge innovation Center (CIC) is another mature entity that offers amazing office facilities and resources to startups of every kind, and is located in Kendall Square (for any readers from another planet, that’s in Cambridge, Massachusetts).  Until now, CIC has not had direct access to laboratory space, but that is going to change soon with the launch of Lab Central expected later this year.

The future of biotech incubators is now
A few new breeds of biotech incubator are on the rise though.  A leader of one such new breed is North Shore InnoVentures, with thoroughly equipped biological laboratory facilities and a host of added value services (Note: NEPA is actively involved with NSIV as a sponsor and advisor).  As is the case with MBI, NSIV tenants include service providers, such as Hepatochem and Cell Assay Innovations, but here, both share the space with other startups, creating a unique environment for collaboration.  Joel Berniac, Founder and CEO of Akrivis Technologies, a recent NSIV graduate, described his experience in this incubator as follows:

“Being part of North Shore InnoVentures during our critical start-up phase proved to be a key success factor in our transition to commercial operations. The collaboration opportunities we received, along with access to world-class facilities, mentoring and a network of business and investor contacts, gave us an enormous advantage.” – Joel Berniac, Ph.D., MBA

Contract Research Organizations (CRO’s): Mixing business with startups to help entrepreneurs
Another new approach is incubator space offered by a contract research organization (CRO).  TGA Sciences and Cambridge BioLabs are two examples of companies that provide varied biological and/or pharmacological research services as well as offering shared space for startups.  For entrepreneurs, this is a great deal because their teams work in close contact with experienced scientists from the CRO, and they can readily expand their staff capabilities by engaging the CRO for services.

With my background in chemistry, I’m particularly interested in the launch of the CreaGen Chemistry Incubator (C2I) (Note: NEPA is also an advisor to CreaGen).  For entrepreneurs starting a chemistry centric business, C2I offers a unique office and laboratory space that includes access to experienced chemists as well as a full array of chemistry equipment instrumentation and automation equipment.  Biology driven companies might also like this space, especially if they are planning to develop small molecule products or to use chemistry based tools for their work.

Accelerating great science, entrepreneurship and financial outcomes…
Biotech business incubators, both new and established (I have mentioned just a few here), offer amazing facilities and resources with cost structures that cannot be matched by any stand-alone company.  In a world where financing great ideas is increasingly difficult, these facilities give entrepreneurs funding their dream with savings accounts, grants or friends/family a chance to get up and running fast.  Professional investors occasionally find gold in incubators, but anecdotal evidence suggests that incubator residents still represent an emerging opportunity for investors to find the next breakout success for their portfolio.  Some investors might also benefit from exploring incubators as low cost options for developing assets they have already funded. Word is getting around:  MassBio recently launched their Incubators in MA page to make it easier for anybody with an internet connection to find them.

This post was originally published by New England PharmAssociates (NEPA).  Click Here to read other posts from the NEPAblog.

Picture Credit:  New Business Image, Renjith Krishnan, FreeDigitalPhotos.net

Keeping the Patent Wolves at Bay: Three Tips for Protecting the Heart of Your Startup

Grey Wolf

Don’t venture into the ‘wilds’ of commercialization without the protection of rock-solid patent protection. The tips here will insure that the time, effort and cost of doing this will be well worth it.

By:  Andy Golden, Ph.D.

I know several inventors and patent attorneys who have breathed a sigh of relief after realizing that a patent has missed an opportunity to impede their commercialization path.  For example, the patent claims of a prior art patent may contain unnecessary limitations on design or implementation; despite the absence of a preceding prior art landscape.

Although some patents are obtained merely to check a box or promote technology, most are intended to exclude competition from an invention space.  So why spend $10,000 to $100,000 for a patent that does not exclude competition?  Here are three tips for keeping the wolves at bay:

1.  Choose carefully 
Patent attorneys are not commodities so find a good one.  I usually find patent attorneys through the good recommendations of their peers.  Similarly, I have seen several companies benefit from auditing their current patent firm with a second firm.

Select a patent attorney who has the technical background to quickly understand your invention in detail, as well as its role in your business plan.  Understanding the invention is critical for drafting effective claims, enabling the invention and minimizing ‘design-arounds’.  Moreover, time is money and the quicker the patent attorney grasps your invention, the less you spend on patent drafting.

  • Years ago, a research group wanted to patent two inventions earmarked for two academic manuscripts.  The process in the first paper was used in the second to form a material for tissue engineering.  However, the second paper did not require the first, and the first was broader and more valuable than its application in the second.  De-conflating the inventions in the patent application, among other things, wasted many hours and thousands of dollars.  A weak patent application was submitted just before the deadline and then abandoned five years later.

2.  Tear down that wall
Don’t throw the invention over a wall – a good patent requires collaboration with the patent attorney.  Transforming technical details and business objectives into a legal document is an interdisciplinary process.  In particular, the inventor/scientist/engineer must actively participate in identifying novel elements and technical ‘design-arounds’ for protection, so that technically savvy competitors cannot pursue them.  It’s impractical (and costly) to expect the patent lawyer to understand your invention space as well as a specialist who has lived and breathed in the space for years.  A kickoff meeting can be an effective venue for brainstorming potential claims and ‘design-arounds’ with the patent attorney before documentation and billable hours accrue.  Here are a few questions that might lead to anticipation of technical ‘design-arounds’:

  • What are the ways in which you might practice the invention?
  • How might a competitor or potential licensee practice or design around the invention?
  • How might your invention evolve during the R&D process, production scale-up, or post-market surveillance?  In other words, what risks remain and how might they change the course of the product?
  • How might the patent benefit future product lines or adapt to a changing market?
  • What entities are the focus for infringement?  What entities are not the focus (e.g. a medical practitioner or a customer)?

In truth, it is often unlikely that the innovator can anticipate and prevent every creative design-around, but she/he can anticipate much of the low hanging fruit.  The lawyer should capture these technical and legal ‘design-arounds’ in the patent application.

3.  Keep your eyes on the bottleneck
Align your patent application with business objectives.  Focus on identifying the commercially valuable bottlenecks.  These bottlenecks are your invention – not the product that embodies merely an example of the bottlenecks.  Then, instead of describing each component of the product with equal weight and consideration, focus the patent application on protecting the valuable bottlenecks and associated ‘design-around’ risks.  Taking a stab at this in a detailed patent disclosure for the lawyer can improve the final patent application and sometimes reduce the billable hours required for drafting.

  • Theoretical example: An academic group develops a new label-free biosensor for potential use in drug discovery.  The main commercial advantage is that the label-free biosensor is not a destructive test, so, for the first time, the cells can be monitored for days, providing higher quality data.  At the kickoff meeting, the team decides the key bottleneck is long-term monitoring of cells for this particular cell assay.  In contrast, the label-free biosensor is a minor bottleneck; it is treated as one of several possible ways to achieve long-term monitoring, as other companies could conceivably develop labeled tests that are similarly nondestructive.  Although the patent does include claims on the biosensor, it focuses and expands on enablement and valuable embodiments of long-term monitoring, such as previously undetectable cellular events, data analysis, and methods to exclude dedifferentiated cells.

In brief, some people say that a good patent lawyer “gets into the head” of the inventor to extract the invention.  A counterargument is that with good collaboration and alignment of the patent application with business objectives, this may not be necessary.

Picture Credit:  numb – Up All Night to Get Lucky via photopin cc

A Socio-Economic Theory of Emerging Economies and Technology Development

By:  Michael Kaiser

Old Sailing Ship

Understanding the socio-economic forces that drive the economies of international customers will help your company’s growth overseas

The Historical Precedent
In a previous article (New Globalization Trends = New Startup Opportunities) I described
globalization and its continuous fine-tuning of technologies, business and society. But globalization is not a recent geo-political or geo-economic phenomenon. Rather, we can safely say that the concept of trade between nations as we know it started with the Phoenicians, who were among the greatest traders of their time and owed much of their prosperity to their talent for commerce. Centuries later, international trade continued with Marco Polo’s trips to Asia, especially China. They preceded the onset, and set the tone, for present day global business standards by centuries. These two historical examples serve as an advisory to emerging economies that global trade is serious business (pun fully intended).

Two socio-economic theories, and the winner is…?
The late Neil Postman, a professor and media critic at New York University, postulated that “technological change is not additive; it is ecological. A new technology does not merely add something; it changes everything”.

A respected humanist and media critic, one wonders if Postman reluctantly conceded that the old conflict between Dependency (Dependency Theory) and Modernization (Modernization Theory) ended in favor of the latter. Whereas Dependency can be described as a social model that condemned economic colonialism, Modernization is a closer model of evolving economies and technological development. Unlike Dependency, which reached its apogee in the 1960’s and 1970’s, Modernization remains a viable and applicable model to this day.

Basically, Modernization defines the positive impact of technology on societies where poverty is the standard rather than the exception. It is worth mentioning that Modernization preceded the advent of Dependency, but paradoxically, it was its failure of viable social and economic solutions that led to the rebirth of Modernization, with its eye to the future. Dependency had a legitimate socio-political argument, but one that attempted to find solutions to narrow the chasm between developed and under-developed or emerging economies at a time when PC’s, cell phones, internet, and the sundry information technologies assisting international communications in business and social affairs where not even available in developed countries. The first IBM PC was marketed in 1981, and by then Dependency had seen its better days. The next decades, to the present day, witnessed advances in technology and financial clusters that can be best described as moving from days and hours to mere nanoseconds.

The rebirth of Modernization is due to its emphasis on transplanting information and other technologies, higher education and communications to those countries approaching or designated as ‘emerging economies’. It can be argued that one unexpected contribution of Dependency lies in the very targets it was addressing, (the periphery or semi-periphery) because those countries  disavowed the theory itself and were forced by overwhelming new technologies and communication tools to modernize, instead of blaming the wealthy, developed countries for their perceived ‘westernized exploitation’ supremacy.

The example of two BRIC countries
Globalization has been the force that changed the policies of growing economies. Nowhere was the case for Modernization more evident than in two BRIC countries: India and Brazil. The most populated democracy in the world, with a population exceeding 1 billion, India is a country divided by politics, areas of abject poverty or great wealth, religion, social origin and language differences (although English remains the language of business and international relations). Starting in 1991 and continuing to the present day, the two major rival political parties of India committed to improve the economy and development of the country, and thus, India set an example for modernization success. The Indian Institutes of Technology, spread over several locations, not only compare with the most advanced ones in the Western economies, but earned a reputation for their rigorous R&D. The wave of information technology and life sciences specialists from India started in the early 1990’s and created a new wave of entrepreneurship and global companies, e.g., the TATA Group, InfoSys, Wipro, Cognizant, Mahindra Group, and international pharmaceutical companies like Ranbaky, Sun Pharma, Dr. Reddy, Lupin, Torrrent, etc. In addition, India hosts some of the largest American and European corporations.

Brazil is a different case, but equally interesting because it actually used to be at the center of Dependence theory led by local sociologists, as well as André Gunder Frank, Dependency’s most prominent academic author and analyst.

Their very different cultures not withstanding, India and Brazil made the decision to make radical changes to their economies in the early and middle 1990’s. By 1994, when Fernando Henrique Cardoso became the country’s President, the social theory that fought against the imposing strength of developed centers against the countries of the periphery and semi-periphery no longer played a role in the economic future of Brazil. In Henrique Cardoso’s two terms as President, the Brazilian economy took a significant leap forward and when Luiz Inácio Lula da Silva, a union leader and head of the opposition Worker’s Party became President, he kept his country on an evolving economy track. Like India, Brazil is also known for dramatic, visible differences between the poor, the middle class and the well-to-do, despite being ranked as the most important economy in Latin America and one of the largest one in the world (Economy of Brazil) as well as a top automotive and international aerospace manufacturer, Embraer.

The University of São Paulo and the Oswaldo Cruz Foundation are advanced academic institutions of research. The Butantan Institute is the largest producer in Latin America (and one of the largest in the world) of immunobiologicals and biopharmaceuticals. In 2001 it produced approximately 110 million doses of vaccines and 300 thousand vials of hyper immune sera. The institute produces 90% of the vaccines used in Brazil. The anti-hypertensive ACE inhibitor, lisinopril, is a synthetic structural analog of a peptide derived from the venom of the ‘jararaca’, a Brazilian pit viper (Bothrops jararaca). The Vale Corporation and Petrobras (Petroleo Brasileiro, S.A) are global giants, Vale in mining and Petrobras in oil and gas. This year a new wave of social discontent is emerging, one that could compromise Brazil’s hard-won economic growth. Time will tell.

Brazil’s close to 200 million inhabitants cannot compare with India’s 1.2 billion, but it has a significant advantage over its Asian partner: Brazil was and still is a country of immigrants. From the early Dutch and Portuguese, to Italians, French, German, Syrian, Lebanese and other nationalities, Brazil has benefited from that international influx, comparable to the U.S., Canada and Australia. India, on the other hand, stands out for its unique expertise in the field of information technology, pharmaceuticals and its thousands of entrepreneurs spread overseas.

Epilogue
Although the notion that America is the easiest country for technology startups and innovation financing is being challenged, it still deserves its place as the source of opportunities, innovation and entrepreneurial spirit, qualities that seem to hark back to the need for achievement, described by David McClelland in his 1961 magnum opus “The Achieving Society”.  Worth recalling Neil Postman’s observation that: “… A new technology does not merely add something; it changes everything”. Does that mean that we are experiencing Aldous Huxley’s somber, satirical “Brave New World” and “Brave New World Revisited”? Or will countries with different cultures decide to adopt policies of rapid development for the benefit of their people?

Globalization was the target, the objective of both Dependency and Modernization. The evolution of communications and travel facilitated the improvement in the health care of both poor and emerging societies; this in turn increased the number of able workers in countries that could not absorb all of them, forcing large emigrations to the developed countries. By contrast, the developed countries witnessed the meteoric demand of their citizens for more goods and higher living standards as the prerogatives of better education and high-technology. Based on the importance of comparative advantages and their connection with free trade agreements between countries, it is safe to predict that Modernization will continue to fall under the magnifying glass of social and economic analysis and evaluation.

Recommended topical sources

Modernization Theory

Dependency Theory

Globalization

Indian Institutes of Technology

Brazil

Picture credit: Wikimedia Commons, Nanban Carrack