Category Archives: Commercialization

The Startup Product Manager’s Dilemma: Getting the Right Product by Ignoring Some of Your Customers

By:  Andrew Johnson, Ph.D.

swiss army knife

Make sure that your product offering has all of the features that it needs to be successful but no more than that.

Figuring out what you first product or service is going to look like, how it will be priced and how you will sell it is at the top of the ‘to-do’ list for the Product Manager of a startup.  As an experienced startup product manager, you have been very careful to balance the enthusiastic advice and suggestions of the founding team with the wealth of feedback that you have gotten from potential customers in the field.  After getting all of this input, you will rarely have an obvious answer to the ‘What is it?, Who wants it? and How much would they be willing to pay for it?’ questions.

Don’t listen (only) to your Sales or Operations colleagues
Everyone on the team wants what is best for the company but you should be wary of your Sales and Operations team members.  From an operations stand point, the fewer the options the better for them.  They are looking to provide the best product at the lowest manufacturing cost with the highest quality.  Every different version of a product or additional set of features introduces complexity into meeting their goals.  On the other hand, your Sales team, as good representatives of your customers and their wants and needs, will want to have as many versions as possible so that they have the ‘perfect’ solution for every one of their customers.  Simply stated, you need to consider both viewpoints as you determine the final feature set or version options of your initial product offering.  The correct answer, of course, is somewhere between 1 and 100 versions or feature sets.

Determining the right number
You may not get this exactly right but you need to be close.  This is why you need to lean toward determining the smallest feature set of your offering that will be compelling to a large enough number of customers.  Another way of looking at this is that you need to determine what product your development team will most easily and quickly be able to produce that is commercially viable.  Running a well-managed alpha evaluation (see ‘Alpha Evaluations: Going from Great Science to Great Products’) will help you to know if you have got the right offering for your launch or if you will need to make changes.  Steve Blank defines this as the High-Fidelity Minimum Viable Product.

“Minimum Viable Product:  (The) simplest minimum viable product (i.e. a website with the core features implemented, a demo version of a physical product)…”   Steve Blank – The Startup Owner’s Manual

Why go small?
Until you have your first sales with paying customers (free or hugely discounted placements don’t count), you will not know if you have got the right product.  The best feedback that you will ever get is from paying customers.  If everybody tells you that you have a great product but nobody will actually buy it, you have the wrong product.  If only a few people will buy your product or after an initial burst of enthusiasm from ‘early adopters’ you find it difficult to grow your sales, you do not have the right product for the customers that you are targeting.  Going small at the beginning will allow you to get valuable feedback from paying customers as early as possible and limits the amount of effort and resources that could be wasted if your first product to market is not quite right.  This allows you and the team to make changes and/or additional features that will allow you to start winning the sales that your great product deserves.  By keeping the initial offering limited, you will still have the resources to make the changes you need to end up with a winning product.

Selected Tips for Getting the Right Product

  • When talking with potential customers, be sure to determine which of their suggestions for your product or service are ‘needs’ and which are ‘wants’.  Your first product should include the smallest configuration or feature set that will satisfy the majority of the consensus ‘needs’ you learned from this group.
  • Use the ‘wants’ and ‘nice to haves’ from your outside feedback to help you to develop a ‘Product Roadmap’ to guide you with future releases of your offering.
  • Make sure that the issue that your product or service aims to fix is compelling enough for people to want to ‘pay to have it go away’.  A product that is just more convenient may not be seen as worth the additional cost by your future customers.  Your discussions with them should focus as much or more on the problem you aim to fix as you do about your proposed ‘fix’.
  • Have an upgrade strategy worked out in advance of your first product launch.  You need to make sure that your earliest customers will have access to the latest versions of your offering that still makes sense for your Revenue Model.  This will help you to deal with any push back from your first customers who may wish to see your product proven by others first.  Being able to offer the chance to be the first one on the block with a viable path for access to future upgrades and releases will significantly help you to deal with this sales issue.

Highly Suggested Reading:

The Startup Owner’s Manual: The Step-by-Step Guide for Building a Great Company’, By Steve Blank and Bob Dorf, K&S Ranch Publishing Division, 2012.

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The Life Science Innovators Dilemma: Converting Skeptics to Evangelists

By: Andrew Johnson, Ph.D.

Model holding a light bulb

Investing in the tools and resources that will be required for an effective missionary selling campaign will help your customers see the light!

Having a truly innovative, disruptive technology or service is both a blessing and a burden.  A blessing in that you can ‘own the market’ for a period of time if you successfully launch and grow your business.   (This is the good side of being first to market).  The burden is that achieving a successful launch and growing sales effort will often face entrenched skeptical attitudes and outright hostility from the very people you hope to reach with your new offering (The downside of being first to market).

Why does customer resistance exist with innovative and disruptive offerings?
If you have a truly new offering, much of the resistance can come from a lack of understanding of the positive impact that your products and services will have for them. Some may even feel threatened by the new offering if it would seem to decrease their own power or influence particularly when it allows lower skilled workers to produce equivalent or better results once restricted to this individual by their having a ‘hard won’ skill or talent.  This means that your company will need to expend some time and resources to develop an education component to its Sales & Marketing efforts.  This will help transform skeptical leads into satisfied customers.  This is often referred to as missionary selling (and marketing).

“A missionary type of sales job involves convincing someone who has never used a product to buy it. Selling financial planning or life insurance and other financial products typifies the missionary sales job. The metaphor of a missionary involves educating someone about an idea or concept and convincing them to have faith in that concept.” (Answers.com)

What’s an innovator to do?
The rewards of being first to market with a disruptive technology can be significant in financial terms to say the least.  Being aware of some of the resistance that you might face even early in the game will allow you to craft a launch and Sales & Marketing strategy that will be able to handle the additional education burdens that this opportunity presents.  Eventually the burdens of missionary selling will decrease as your customer base grows and evangelizes your innovation.

Tips for Successful Commercialization of Disruptive Life Science Offerings:

  • Use beta evaluation to refine customer segmentation and value proposition. This is where you will learn who you will initially target and get a heads up on what will be the most compelling value proposition for them. (See ‘Beta Testing Checklist Your Competition Doesn’t Want You to Have’)
  • Prepare a Scientific Road Show to connect with scientists through their research.  You have some great science.  Why not leverage that to connect with other scientists through their research.  The questions and conversations that will come from this effort are invaluable for tweaking your ‘go to market’ strategy (See ‘Taking Your Show on the Road: Using Your Science to Boost Sales’)
  • Create demos that highlight impact rather than features.  Nothing is more powerful than a compelling demo to confront skepticism. (See ‘The Technical Demonstration: 3 Tips to Insure Success’)
  • Use a Key Opinion Leader (KOL) plan to help smooth your launch.  Key Opinion Leaders can be a strong force for reinforcing the value of your innovation to the field.  (See ‘The Key to Key Opinion Leaders’)
  • Invest time and resources to creating scientific content that will be compelling to your future customers.  Consider starting an application focused blog, write white papers and present at industry conferences in the scientific forums. (See ‘Where Does the Science Belong in the Life Science Startup?’)

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Startups: Strategy or Innovation? Three Views

By:  Michael Kaiser

eyeglasses on an eyechart

Having a clear vision and mission for your startup is not enough. Entrepreneurs with an actionable strategy have the best chance of leading their company to success!

Rather than “reinventing the wheel” I chose the
following three options to the question.

VIEW # 1

In a recent article by Ken Favaro, a Senior Partner at Booz and Company, (How Leaders Mistake Execution for Strategy (and Why That Damages Both)) explains that:

“When discussing strategy, executives often invoke some version of a vision, a mission, a purpose, a plan, or a set of goals. I call these “the corporate five” (see exhibit, below). Each is important in driving execution, no doubt, but none should be mistaken for a strategy. The corporate five may help bring your strategy to life, but they do not give you a strategy to begin with.

Before they get to the corporate five, companies need to address five much more fundamental, and difficult, questions. Let’s call them the “the strategic five:

1. What business or businesses should you be in?
2. How do you add value to your businesses?
3. Who are the target customers for your businesses?
4. What are your value propositions to those target customers?
5. What capabilities are essential to adding value to your businesses and differentiating their value propositions?”

Corporate5

Favaro reaches the following conclusion to the above:

“They can’t answer those questions because often they haven’t asked them in a very long time, if at all. Instead, the corporate five have become a mask for strategy. When that happens, the real substance of strategy—making deliberate and decisive choices about where to play and the way to play—is lost. There is no foundation for decision making and resource allocation. Everything becomes important. Indiscriminate cost-cutting and growth become the order of the day and, sooner or later, with no strategy as a guide, a business drifts”

VIEW # 2

By contrast,here is a recent article by Tania Prive in the Forbes Magazine issue of March 29, 2013 with the title “Top 11 reasons startups succeed”. Here are her titles for those 11 reasons

“1) Vision- 2) Speed -3) Budget Masters – 4) Social Skills – 5) Discipline – 6) Determination -7) Ability to adapt to Change – 8) Fundraising Skills – 9) Unwavering belief – 10) Master of time management -11) Execution”

At the end of the article we read that “…successful startups are always looking for opportunities to do something better by thinking outside the box and constantly questioning the status quo”

Both authors make a good case: Favaro, with a more analytical emphasis on established companies and Prive from fundraising and personal abilities needed in order to lead to a successful outcome. This is not a contest between two authors, but rather a choice that is left to the reader to determine if a startup is purely based on innovation, and thus, why and when should it dovetail with strategic concepts that fit more established companies.

VIEW #3

The answer and/or solution to such a conundrum may be found in an article authored by Uzi Shmilovici in Techcrunch (‘Strategy For Startups: The Innovator’s Dilemma’). Here are some excerpts:

“Strategy. Unfortunately, it suffers from a bad reputation among startups. It is associated with consultants who are paid millions of dollars only to come back with a two-by-two matrix of animals. Not that there is anything wrong with it. Some of my best friends are consultants.

However, strategy is crucial for startup success. Startups usually operate in an environment of constrained resources while competing with strong incumbents. Hence, the right strategy can be a matter of life and death…

The first concept we’ll look at is the “Innovator’s dilemma”, a term coined by Clayton Christensen from the HarvardBusinessSchool. The innovator’s dilemma discusses a situation in which there are established incumbents in a specific market who are investing in sustainable innovations — these are incremental improvements to an existing product. Usually, they are doing that to support the incremental needs of their customers

They are then faced with a new entrant to the market that introduces a disruptive innovation. The new entrant attacks only a small part of the incumbents’ business, usually the one in which the margins are very low. At this point, the incumbent decides not to compete in this business anymore because they don’t want to invest in defending their least profitable business and/or are afraid of cannibalizing their main business. As a result, the new entrant is then able to capture a significant market share in that specific segment… it is important to understand the types of disruptive innovation that exist. There are four: a new product, a new technology to produce a product, a new way to distribute a product and a new way to provide services. The entrant can introduce a disruptive innovation along one or more of these dimensions.”

And last but not least:
What do you, the reader/analyst of the above views, believe to be the one that more closely reflects your opinion?

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Taking Your Show on the Road: Using Your Science to Boost Sales

Green Comet

Dazzle them with your science and you will get more than just sales leads!

By:  Andrew Johnson, Ph.D.

The technical roadshow can be a great way to build excitement for your product(s) with potential customers, build your brand and engage with the researchers and other professionals whose feedback is most valuable to you.  Use these tips to make the most out of the time and effort this requires to make this work for you.

Maximize the Impact of Your Technical Roadshow with These Tips:

      • Frequency – Schedule one or two roadshows per month.  Most academic departments and even some biotech firms have regularly scheduled ‘Journal Clubs’ or ‘Brown Bag’ lunches where speakers are invited to share their work.  These are ideal venues for your technical presentation.  Give each of your sales team members the opportunity to schedule these.

 

      • Content – The goal of these presentations should be to excite your audience about the science.   Interested attendees will seek to learn more about your company, your technology and your products afterwards (sometimes even during the Q&A session).  Keep the sales stuff out of the presentation other than perhaps a slide that briefly describes your products  and focus on how your product has impacted the field.

 

    • The Presenter – The presentation should be given by a scientist traveling with the sales person who scheduled the event.  Make sure that the science and business side are kept separated by having the sales person introduce your speaker and take all questions regarding business (pricing, scheduling demos, etc.)  Nothing turns a scientific crowd off faster than a sales pitch masquerading as a technical talk.  The other benefit of having two people at these events is that the sales person can provide valuable feedback on how well the presentation is being received and where improvements might be made to increase impact.  On the other hand, the speaker can assess how well the audience is interacting with the sales person and provide them with equally valuable feedback for how to better connect with potential customers.

 

  • Duration – Keep the presentation concise and focused.  The presentation should be about 20 slides long and take about 25 – 30 minutes max when you are rehearsing it without interruption.  This will allow for enough time for questions during and after the presentation.  Your goal here is to engage with your audience and the more questions the better.  The comments and questions from your audience are a goldmine of information on how well your technology is perceived, what might be trends in the field that you should be following and even what your next product iteration might be.  (Another reason why it is good to have two people at these events is that they can take notes of all of these insights)

Preparing and delivering a compelling and effective technical roadshow program is not trivial.  There is a lot of work required to not only get your slide-deck right but also making the event itself work well (measured by lots of questions from your audiences and ultimately lots of strong sales leads).  Stick with it, it gets easier over time and you might even find yourself enjoying this!

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Beta Testing Checklist Your Competition Doesn’t Want You to Have

Laboratory glassware, symbolic graphic for beta testing

Beta testing insights will smooth product launches

By Andrew Johnson, Ph.D.

Beta testing done right can significantly improve the chances that your product launch will be a success.  When done wrong, this can be a terrible waste of time.  With this in mind the following checklist should keep your team on track for a successful launch.

        1. Select a technically savvy Product Manager or BD guy to lead the Beta Testing, not someone from the R&D team.
           The purpose of the beta is to confirm that you have created the best product to meet the needs of the customers you plan to target.  The intent here is not to modify the product, but to adjust the type of customer that you will target at the product launch. Technical feedback will be shared with the R&D team but this should be viewed as a commercialization effort.
        2. Identify a number of prospective Beta Evaluators that closely match the demographics of the customers you hope to win.
          You want to select those evaluators you believe will typify the customers that will purchase your product.  Keep the number as small as possible but large enough so that you get at least one or two evaluators who do not like your product (it is just a vital to know who your customer isn’t as who they are).
        3. Prepare Launch focused survey instrument.
          It is important to find out what each tester likes about your product as well as what they don’t.  This should not be a complicated or long survey but it should probe deep enough to give you insight on how to modify your positioning, marketing, technical support and their view of the competition.  This can be completed informally in a discussion or by asking to have the evaluator fill this out directly.
        4. Contact prospective beta evaluators and get commitments from them on what you expect them to do for you including timelines.
          Select the fewest number of beta testers that will give you the information that you need to insure a strong launch.  Managing this effort can be very labor intensive and can include travel and other expenses.  Keeping the number smaller will allow for a more manageable effort.
        5. Collect feedback testimonials to support your launch.
          Online surveys are OK.  However, the best way to do this is by meeting with the beta tester face to face.  You will get much more information and it is easier to get a testimonial or two from happy testers when you are meeting with them.
        6. Convert as many beta testers to paying customers as possible.
          One of the best measures of a successful beta evaluation is when the tester wants to continue using your product and is willing to pay for it.  It is easy to tell someone that they have a great product but there is no better validation than someone that is willing to back that up by purchasing your product.  Offer to sell them a unit at cost (if an instrument or piece of software) or at a deep discount on their first order if this is a consumable.

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Alpha Evaluations: Going from Great Science to Great Products

OK sign made by hand

Give your customers what they want with great alpha testing.

By:  Andrew Johnson, Ph.D.

Why do alpha testing?
Alpha evaluations, also known as alpha testing, can be a crucial way to reduce the risk of launching a product that will not be accepted by your customers.  When alpha testing is done well, this can provide crucial insights on how well your final product is going to be valued by customers and what is not.  A good early understanding of these product attributes will save you considerable effort and expense during your product development.   Essentially, this effort will tell you how to best transform your innovative science into products your customers will want (and purchase).

Alpha evaluations are:

        • Run by R&D not Product Management
          • These efforts should provide R&D with the insights they need to make changes to the product performance and/or feature set.  Further R&D may be necessary if the current prototype does not meet the performance expectations of your target customers.  Remember to keep product management in the loop during this effort though.
        • Tests of very early prototypes to gauge customer acceptance of proposed product
          • For software products, consider creating a mockup of what the software will be like using PowerPoint slides.   You walk the evaluator through what each tab and feature might be like very quickly with a minimum of up-front effort.
          •  For reagent products or kits, don’t worry about any fancy labels or packaging.  Prepare some samples and use them with your tester.  It is important not to just send them to the tester and ask for feedback but really to work side by side with them in your lab or theirs to maximize getting the most relevant feedback on your current concept.
          • For instrumentation or equipment, bring ‘bread-board’ version or other mock up prototype to tester’s lab or invite them into yours, for the evaluation.  This does not need to be ‘pretty’ and not all of the functionality needs to be in place.  You want to get feedback on the core function of your instrument or equipment to see how well they accept it.
        • A source of customer insights that will change your final product
          • Unlike beta testing, changes to the product will be made based on alpha evaluator feedback.  Be sure to get feedback on the desired (or expected) performance characteristics of your proposed product (e.g. acceptable linear dynamic range, sensitivity limits, through-put, ease of use etc.)

Important safety tip
Beware the danger of this effort becoming a research project (leading to time and cost overruns not to mention confounding your commercialization plans).  Alpha testing is not feasibility testing or discovery research.  The goal of this effort is to see if the current concept for your product will be valued by potential customers.  At this point, it is assumed that the underlying science works.  Set specific goals for what you hope to learn and stick to that.

When not to do alpha testing
Alpha evaluations may not always be appropriate.  If you are making a better version of an existing product (yours or a competitors) alpha testing is most likely not needed since you already have plenty of information on what customers like and don’t like about the current offering(s).  Use alpha testing when you can’t easily answer “yes” to this this statement.

“The design of my current product offering will meet or exceed the expectations of my customers.”

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The Business of Life Sciences: Using Great Science to Build Great Businesses

Big sand dune with dark shadow on one side

There is no ‘dark side’ to commercializing Life Sciences – just a ‘different dise’.

By Andrew Johnson, Ph.D.

Having a clear understanding of the differences between how science is done from an academic standpoint with how it is done in the typical Life Science company can significantly ease the path from discovery to market success.  To the uninitiated scientist, the commercial team (Sales people, Marketing people, Business Development folks and the Financial Team) has been viewed as ‘the dark side’ and only interested in driving the business and either not understanding or valuing the role of the underlying science.  From the business perspective, there is a concern that company scientists are only concerned with making more discoveries and not pushing towards doing the kind of work required to launch a compelling product.  Neither view is accurate.  Getting a good understanding of the differences can help to align the critical goals of each of these important parts of the life science company and increase the chances for success.

Why the Confusion?
Some of this confusion is caused by the way that scientists are trained in academia.  The increasing pressures that academic scientists are facing to fund their research programs as NIH funding continues to become harder to secure only acerbates this.  New relationships between commercial life science and biotechnology companies with academia, often facilitated by university technology transfer offices, are providing new sources of research capital.  Strategic partnerships, patenting and out-licensing of intellectual property from research conducted in academia are increasingly filling the government sponsored funding gap.  Like it or not, the lines between academic and commercial science have already been blurred.

Confusion is created because academic – commercial partnerships do not really combine the science being done in university labs with the commercialization efforts being done at the outside company.  This separation allows traditional roles and attitudes to remain prevalent.  In a Life Science company, the priorities of the science, the way that it is conducted, how it is validated and decisions on what projects will be worked on and which ones will be discontinued must be driven by commercial priorities.  However, it is equally crucial that the commercial team allows enough freedom to R&D to insure the quality of the experimental and feasibility work and that there is some room for discovery (you never know what killer application you will find or valuable intellectual property your R&D team will develop).

Getting the R&D and Commercial Teams on the Same Side
The following table lists some of the key differences between academic and commercial science.

Academic

Commercial

Research Scope The scope is wide.  New   research findings drive the efforts in often unpredictable ways.  This process is inherently unpredictable   and random. The scope of the experimental program is very focused.  Only work that progresses the science from   feasibility to finished product is encouraged.
Goals Improve understanding of scientific or technical discipline Improve robustness of product and provide initial data to support   applications that will support commercialization
Scientific Validation Publications, Presentations, Patents Product Sales, Patents (as part of a strategic intellectual property   estate)
Funding Sources Grants, Foundation Sponsorships, consulting fees, licensing fees and   royalties Investments, Sales Revenue, licensing fees and royalties

 

There is no ‘dark side’ in a successful life science company, just a healthy relationship between the scientific and commercial teams.  In both academic and commercial cases, the goal is to produce new technology and science.  The only difference is in the path that each of these endeavors use to achieve this.

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