Category Archives: Product Development

Six Steps to the Epiphany: Get This Right and Go Big

By:  Steve Haralampu, Sc.D. & Bill Skea, Ph.D.

Toaster

Every technology company strives to offer the best thing since sliced bread. Achieve commercial excellence with these key insights.

Successful commercialization of a new technology has more to do with marketplace needs and product execution than with the technology itself.  The main factor driving success is the customers’ perception of value:  “What does it do for me?” and “Is it better, faster, or cheaper?”  Technology rarely sells for technology’s sake.  We will discuss some factors to consider during the commercialization process.  Although the concepts are generally applicable to all product development efforts, we concentrate on how these relate to the introduction of new tools for life science R&D and diagnostics laboratories, especially within startup companies or other small organizations.

Changing Priorities: Transitioning from Bench to Product Development
Product development and commercialization is a truly multidisciplinary activity, especially at the beginning of the process:  the product specification.  The focus should be on filling customer needs.  Traditionally, sales and marketing is the conduit to the marketplace, and they should be involved in defining what the customer wants, but too frequently they are the sole drivers. Scientists that develop novel technologies have unique insights into their potential for being revolutionary, and to see outside of the conventional box.  How a product is specified and developed also depends upon design and manufacturing constraints.  The main design constraints are product complexity, such as automation, which drives product cost and time to market; and design for manufacture and assembly (DFM/DFA), which also drives cost, and whether a product can be made or repaired.  Finally, the whole process is driven with money.  Finance must be at the table to assure that the product development and commercialization effort is affordable.  A product funded for 95% of its commercialization is still not a product.  Resources must be available to cross the finish line.  Therefore, an agile team of scientists, engineers, marketers and financers, each with the ability to wear many hats, and each with roughly equal input, drives a successful product commercialization effort, since each has a stake in the outcome.  Since the product development effort is usually a period of intense activity, and is an activity with which a small organization is not constantly involved, it makes sense to share some of the workload with external resources. Otherwise, at the end of the process, an organization can be stuck with excess headcount.

A major consideration in the specification and design of a product is developing a strategy for how it will be manufactured and distributed.  Manufacturing entails investment in manufacturing space, equipment, and personnel.  This investment can be significant, and can be the burden that breaks an organization if product rollout is late, or sales do not meet projections.  There are many vendors that provide contract-manufacturing services.  Whether it is the whole product, product subsystems, or final assembly and packaging, the use of contract-manufacturers can significantly reduce financial risk in the early stages of a product’s life cycle.  Determining how vendors play into the overall manufacturing scheme can impact product design.  It can be extremely valuable to give your contract-manufacturing vendor a seat at the table during product development, to assure a design for manufacture, and to avoid surprises late in the game.

Associated with early-stage manufacture is a realistic sales projection, or a willingness to manufacture to orders.  Excess inventory of an expensive laboratory instrument ties up huge amounts of capital needed for an organization’s growth.  Maintaining financial flexibility during product rollout is important should it be necessary to redirect efforts into sales or applications development.

Six insights to keep you on the path to success
All of this is common sense, and most managers feel like they would never fall into any traps posed by the product development and commercialization process.  This does not seem to be the case, however, since there are so many examples of organizations that stumble, sometimes fatally.  Heeding the admonition, “Those who cannot remember the past are condemned to repeat it.” we give some real examples from which we can learn.

  • Technology Evaluation/Due Diligence Alone Is Not Enough

Even before a technology is approved for product development, before a startup is approved for funding, or during due diligence of an acquisition target, the projected product development process needs to be evaluated.  Sometimes inventors are so close to the technology that they do not recognize the marketplace landscape they are trying to enter.   This can be particularly true, for example, when a technology is developed by physicists and/or engineers and is to be applied to diagnostics.  It is typically not within their realm of experience to understand the technology alternatives or regulatory landscape.

      A clear sign of being too focused on the core technology is making the statement, “We have no competition.”  A core technology may be so revolutionary that there is indeed no competition that performs its specific task.  What can be unrecognized is that there are perfectly adequate alternative technologies for performing the task.  One team of inventors developed a methodology for detecting metabolic stresses within living cells.  Another established company had a similar physical product already on the market.  When the team was asked how they were better than this competition, their response was, “They’re not competition because they measure amplitude modulation, our invention measures frequency modulation.”  One needs to have very solid intellectual property protection if one plans to enter a marketplace and not expect competition when the method of data analysis is the only point of differentiation.  The technology is good, but the inventors did not adequately evaluate its potential versus competitive stresses.

 

  • Listen to the Customer (sometimes)

It is important for a product to be successful that it fulfills some unmet need of the customer.  Although this is true, end users do not always recognize their unmet needs, especially with regard to technologies that require a paradigm shift.  Therefore, asking sales and marketing to poll customers for their needs, tends to generate feedback that is incremental improvement of known product forms.  Apple, Inc. has been a leader in creating marketplace needs for its new products.

With respect to laboratory products, it is important to understand the customers’ workflow.  A product might do amazing things, but if it does it in a way that is not helpful, it will not be a success.  One company had an interesting platform for growing cells.  Their development team designed a product that compared a control to a test under a wide variety of environmental conditions.  This seemed logical to the design team.  However, research is normally done using plates with 24 or 96 wells, not just 2.  The company had a good idea, but its execution did not meet the most common workflow.

Small organizations tend to focus on the new technology.  A lot of this is driven by the fact that completion of the technology development is going on concurrently with the early stages of product development, and, after all, new technology perfection is what the small organization is all about.  One company developed a technology to separate proteins in a way that enhanced the research information obtainable once the proteins were further analyzed.  Unfortunately, that company did not provide the customer with an adequate way to retrieve the separated proteins from its product and into the downstream analyses.  Although the technology met customer needs, the overall product system execution was not useful in the laboratory workflow.

  • Customers Don’t Like to Read Instructions

Once a technology is demonstrated and shown to be useful, the technology development must focus on making that technology execution robust.  An inadequate technology execution is when:  failure rates are high, and it takes a skilled practitioner in the technology to recognize the failures, but when it works, it’s great!  Technology developers need to realize that they probably have an extraordinary skill at getting things to work, while the customer may not be willing to invest this kind of time to come up on the learning curve.  Technology developers deal with the technology 100% of the time, customers deal with most technologies only a fraction of the time as part of a larger workflow.  Therefore, they cannot focus on the nuances of running a finicky product.  A technology needs to be simple (sometimes requiring significant automation to conduct the difficult tasks) and needs to work reproducibly and flawlessly.  One company’s product was based on an array of test sites.  Each test site had >99% reliability, but since there were 41 test sites on the product, and each needed to work for the product to have worked, there was only a 65-70% chance that the product worked.  This was unacceptable in most laboratory situations.

  • Beware: The Misguided Cost Estimate

Especially with regard to the micro- and nanotechnologies being developed today, product cost estimates that drive the business plan can be based on faulty/excessively optimistic assumptions.  One company developed a rather extraordinary biochemical sensor that was based on a silicon chip only 0.2 x 0.2 mm.  The materials cost for the sensor was only cents.  Micro- and nano-scale products use very little material because of their size. The fault in the analysis was that the nanosensor still needed to interface with a macro world.  The product cannot be a box of grain-of-sand-sized sensors.  A housing to allow a customer to handle the sensor, along with the appropriate plumbing to get the sample prepared and to the sensor cost as much as an alternative sensor technology for the base application they chose.  The core technology probably still has great potential, but an application needs to be found where its small size is the advantage, and enables sensing in places unattainable by the alternative technology.

  • Product Design is a Predictable Task, or is it?

Many aspects of product design are predictable.  It is merely the engineering task of finding OEM components or designing custom parts and fitting these together in an operable system.  What could go wrong?  Missing cost targets, inappropriately setting priorities, or inadequately integrating systems are frequent issues.

Engineering design is fun for those involved, but sometimes it is hard to know when to stop. Over design with too many features can make a product too expensive, and/or unreliable.  Some features are just annoying.  One company decided to have its product send a stream of text messages to the operator’s cell phone updating the instrument’s status.  This sounded novel and useful, but in practice was just annoying.  That same company decided to custom design most of its mechanical components.  This approach was in some cases expensive, but more importantly did not leverage the knowledge base of OEM suppliers.  Consequently, some components did not perform as expected, which ate up valuable development resources to debug components that could have been purchased with proven performance.  Too much time was spent resolving issues that could have been purchased, and defocused the team from its core technology and applications development.  This company failed.

We are accustomed to seeing sculpted cases used in consumer products around us.  It is an attractive concept to create products with an eye-popping “look”.  This is possible for products manufactured by the thousands, but sculpted skins for products manufactured by the hundreds can be surprisingly expensive.  This is an example of an inappropriate priority in a resource-limited environment, and where paint might be a better alternative.

The product design effort is not complete with a final set of product blueprints.  There is still substantial work to be done producing support materials.  The user manual is not just a set of step-by-step instructions for the customer, but is also a legal document that is used to support safety testing and certification.  It has a particular format and set of regulatory requirements.  Another neglected aspect of product design completion is product packaging.  One company had great success beta testing its product at the university located across the street from their headquarters.  The same could not be said for beta tests at major research centers halfway across the country.  Placing the instrument in a shipping crate was not sufficient protection.  Beta testers received product, with screws missing (loose in the shipping container) and critical components out of alignment.  Needless to say, these beta testers were never converted to customers.

  • Transitioning from Prototype to Manufactured Product

The main pressure of an organization is to get income as early as possible, and to manage cash flow.  This drives some compressed schedules, and encourages cutting some corners.  Sending a product design to manufacturing too early can have profound consequences.  When a design flaw is detected in the design phase, it may be expensive to fix, but it is preferable to fix it before the flaw is replicated by the manufacturing process.  Just think about the costs associated with retrofitting multiple products in inventory, or in the field in comparison with taking the time to assure the design to manufacturing is correct.

Inevitably, some flaws in product design go undetected until the product is stressed in the marketplace.  One company did not make it that far.  They experienced too many bumps in the road during product development, so they were running out of money.  The product still had severe flaws.  They decided to launch the flawed product because investors promised that they would provide more capital if the company demonstrated they could sell product by the end of the quarter.  The company’s management thought that selling flawed products would buy them enough time to fix the product later. Unfortunately, customers were not willing to pay full price for a product that virtually did not work.  No products were ever sold.

Two clichés come to mind:

  • You only have one chance to make a first impression. 
  • If we don’t have enough time to do it right, why do we have enough time to do it twice.

 

In Conclusion
Nearly every function within a company has a vested interest in the success of product commercialization.  The commercial product is the physical manifestation of years of work, and is what will bring reward to the development team.  The product development task requires teamwork between corporate functions that typically do not have much interaction.  Lack of appreciation of the constraints of a given function by team members leads to disaster, e.g., specifications/expectations that cannot be met by the technology or by the design team; specifications that cannot be supported by finance; designs that are difficult to manufacture; executions customers do not want; etc.  The commercialization process is capital intensive, and has very little leeway for errors.  Product commercialization uses unique skills and experience not needed 100% of the time within an organization.  Outsourcing is a great option to minimize risks during this critical growth function.

Picture Credit:  fensterbme via photopin cc

What You Can Learn from an Orchard about Growing your Business

Apples

Approach building your company like planting an orchard. Be sure that you know what your customers want today but also a few years down the road as well.

By:  Andrew Johnson, Ph.D.

What does growing apples have to do with building a life science company?  It turns out that there are a lot of similarities if you look closely.  A successful orchard requires a huge investment in planning (what variety of trees, how much of each, etc.), effort (a lot of work before the first harvest), finances (cost of land, labor, farm equipment etc.) and time (trees need a number of years to mature before your first harvest) to become successful.  The successful orchard keeper needs to have a good assessment of what types of fruit his customers will want in a few years and also how he can differentiate his own business from other orchards in the area to compete successfully.  The leadership of a strong life science business needs to think in the same terms.  What need will your offering(s) fulfill in the future and why will customers come to you rather than to your competitors?  With an orchard, once you plant the trees, you are now committed to your view of the future market for your products and now everything is about nurturing your trees until you have your first harvest.  With a startup, once you have selected a product and/or service, all of your efforts will be to get it successfully to market.  The orchard keeper cannot rip up trees next year if he thinks that the market for his fruit has changed.  Likewise, most startups do not have the funds (or time) to scrap a product offering once they are working to get it to market.  The lesson here is, make sure to spend enough time to understand your market, your customers and how you will successfully sell and then commit to a laser-like focus for getting that offering to market as soon as possible.

Tips for Building a Strong Startup:

  • Plant Trees:  Build your company for strong and steady future business.  Whether you are offering a platform, service or a one-time sale of a large instrument, referrals are the key to efficiently growing profitably.  Winning new customers is costly so getting referrals from happy customers is like harvesting apples in the fall.  The time, effort and investment you put into winning strong early customers will pay off as they share their experience with your future customers.  Building a scalable infrastructure that consistently and efficiently delivers the goods that delight your customers will insure success in the long run.
  • Build a Barrier to Entry:  It takes a while to plant and nurture an orchard.  However, once your trees have matured, you will have happy customers coming on a regular basis.  Building strong relationships with key opinion leaders, establishing preferred vendor status with organizations and establishing your company as a market leader in the technology is a lot like planting new trees.  There is a lot of prep work up front and the rewards are not immediate but once you have done this, this makes it very difficult for competitors to come into the market later.
  • Plant some Pumpkins Too:  As a startup, you need to start generating revenues as soon as possible to prove out your business.  Your team will need to put a lot of focus on getting your first sales and creating happy customers.  Many startups make the mistake of neglecting to build in some time for creating a scalable and profitable business.  You will be planting and harvesting an annual crop like pumpkins to do this. Developing a product road map that contains both near term (pumpkins) and long term (apples) offerings will allow you to get to market faster and get the insights you need to insure a better outcome with your later prospects. However, the key here is using what you have learned about your customers, their wants and needs and enthusiasm for your offering to build an infrastructure that will allow you to maintain the high level of customer satisfaction that will lead to referrals from your customers (See first point – Plant Trees).

Take Home Points:

  • Start building relationships with key opinion leaders and strategic partners early (even before the launch of your first product or service).
  • Use the insights you gain of your customers’ wants and needs from early sales to guide your efforts as you scale the business.  (e.g. if you will start selling using distributors, make sure that you build in an infrastructure (tech support, technical inside sales, social media outreach, etc.) to maintain the level of support and service that your customers valued in the early days).
  • Everything you do and every interaction you have with the public will shape your brand.  A strong positive brand can be a powerful barrier to block your competitors.  Clearly identify the brand identity you would like to have and make sure that you and everyone in the company reinforce this in everything they do and with every interaction with the public.

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

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.

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

The Power of Story: 3 Key Steps to Connecting Your Vision with Commercial Success

By:  Andrew Johnson, Ph.D.

open book with watch on it

Take the time to craft the ‘story’ of how your offering will impact your customers to provide a focus and direction to your commercialization efforts

There are a million things to do to get your new ideas and discoveries into a finished product that will delight your customers.  This can be a very overwhelming experience as you are not only trying to determine what your product will be like when you launch but also how to talk about it to your investors, your prospects, partners and your team.  One unifying principal that can help here is to use the power of story to guide you through this process.  Think of the story you would like people to tell about your company and its product(s) years after its success.  When you take the time to do this, the path to success will seem a bit less treacherous.

Easier said than done
The key here is to focus on the interests of your target audience and realize that the narrative will be different for each of your stakeholders.  This is kind of like trying to come up with a story that will appeal to both children and adults (perhaps using a comic book version for kids and a novel for adults).  However, as challenging as this might seem to be, the process that you will follow to create the story of your company will ultimately provide you with the insights and focus you will need to move your company forward.

Step 1:  Start with Your Future Customers
Your new product will provide some new outcomes for your future customers.  This could be a new diagnostic test to guide medical treatment, a new tool or kit that will allow researches access to new information or perhaps even a significantly improved version of an existing product or service.  In each case, you need to find out how badly your customers would wish to overcome a particular issue and ultimately if they can envision your solution to it to be compelling.  From this effort you will know what your product or service needs to do for your customers (not just what it can do but what it must do).  This is the most critical story to get right.  You will be basically retelling this story of how your product or service impacts customers to your other stakeholders in the following steps.

Step 2:  Delight your Board and Investors
Use the insights that you gained from the previous step to build enthusiasm on your Board of Directors.  Being able to share testimonials from future customers, and statistics like, “90 percent of the people we targeted in our initial outreach said that they would pay $$$ today for our offering to fulfill this critical unmet need.”  Testimonials like this go a lot further than statistics from market reports that have been shoehorned to fit your business case with these stakeholders.  Remember your ‘audience’ prefers non-fiction over fiction here.

Step 3: Putting It All Together with Your Team
The feedback from your future customers in Step 1 will become the minimal set of performance and pricing characteristics for your first product(s).    Your development team can use this to produce the first prototype for alpha evaluations.  Your commercial team will have key insight into what will be a compelling value proposition to use to reach and win new customers.  If your board and investors liked your ‘story’ so far, they will have validated it with their approval and perhaps even some additional funding.

In Summary:

  • As early as possible, find out who will buy your products and for how much and why (what impact will your offering have on your customers).  – The Customer Needs and Solution Story.
  • Use real prospective customer feedback to further convince your stakeholders (Board of Directors and investors) to support your team.  – The Rags to Riches Story –non-fiction version
  • Provide your team with real outside feedback to guide your development efforts towards making the right product for the right customer at the right price at the right time.  – The Life Science Idea to Successful Biotechnology Company Story

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