Tag Archives: risk mitigation

Eliminate This Risk to Your Sales Momentum

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traffic cone

Avoid the ‘out of stock’ pothole on your road to success.

By:  Andrew Johnson, Ph.D.

Your team has pushed hard to get a successful product launch.  There is intense focus on Sales & Marketing to take the ball now to close on ever greater numbers of sales.  There is nothing like being ‘out-of-stock’ to put a crimp in your sales momentum.  With a little bit of post-launch effort, the risk of this happening can be minimized.

STEP 1

  • Assemble a team made up of some of the technical people from your product development team, someone from Operations and a product manager.
  • This team will initially be tasked with the following:
    • For Consumables – Identify all critical raw materials.  These are key components like antibodies or other biologicals or chemicals that are critical for the proper functioning of your kit or reagent.
    • For Instrumentation – Identify components with particularly long lead times.

For consumables, pay especially careful attention to sole suppliers of a critical raw material.  What would happen if this company went out of business or decided to discontinue the product?  Alternatively, what would happen to your business if they doubled the price of this component?

Use Failure Mode Effect Analysis (FMEA) to  help you and your team assess not only impact of what delays in instrument components  or loss of a source for a key reagent would have but also how likely it would be for that to happen.  This will allow you to compile a prioritized list with the biggest risks to your business at the top.

STEP 2

  • For Consumables – Have the technical team find an alternate source for the critical raw material.  This alternate source might be more expensive but it is much better to have a validated alternative source than to run out of it when your demand is growing.
  • For Instrumentation – Make sure that your agreement with component suppliers include options for rush shipments.  Find out what the lead times and additional costs are for this.  With good Sales forecasting you should not need to exercise this option but it is good to have this in place (just in case).  Consider keeping some additional inventory of critical components to buffer risk.

You cannot eliminate all of these risks to your business but it is far better to know what they are and have contingency plans in place in the (hopefully) unlikely event that some of them come to pass.   Remember that some of these risks can be mitigated by solutions provided by your technical team and others using business tactics.

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Are we there yet? The Secret to Keeping your Company on Track

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Road in the rural woods

It’s not how far you have gone, it’s how much further you need to go to get there.

By: Andrew Johnson, Ph.D.

Every summer as a kid, my family would pile in the car and drive to beautiful Lake Champlain, Vermont for a week of fun and relaxation.  The car ride itself felt like a quick detour to the 9th circle of a place a little less nice than Lake Champlain.  This was due to my brother and I repeatedly asking my Dad, “Are we there yet?” (Ten minutes into a 6 hour drive).  Sound familiar?  This scenario plays itself out every week at companies all over the world at the dreaded update meeting.

The Problem
You and the team went through the effort to prepare a good plan for charting how you will get to your next milestone.  One day after publishing the plan, it is out of date.  The key here is then updating your plan with new information and then moving on.  When a lot of effort is spent fiddling with the plan and keeping it updated, a lot of time is wasted on  ‘managing the plan’ rather than focusing on getting the things done that are going to move you closer to reaching your goal.  At the end of the day, you really need to know what is left to do more than what you have already done (eg you really want to know how many more miles left to go before getting to the lake than how many you have already travelled).

The Secret
It’s how you ask for progress updates.  The use of Gantt charts, lists and other planning and project management tools can make this seem like an exact science.  You plug in a number and out comes the new finish date.  The problem is that most of us are terrible estimators of how close we are to finishing unless there is a hard metric to provide guidance.  So here is how you ask for feedback that will be the most accurate and will require the least amount of time and effort on everyone including yourself.

Cut and paste these lines into the Request for Updates e-mail that you are sending your team.

  1. What tasks on the list assigned to you are now completed (100% done)?
  2. Which tasks have you started?
  3. Of those tasks that you have started, how many days will you need before it is done?

Sounds simple and it is.  The key here is in the last question.  When asked in this way, a person will have a much better idea of how much time they need rather than the percent complete of the task.  (Professional project management tools will automatically calculate the percent complete when you enter this information – you will find that the percent complete will go up and down over time until this is finished) Each person will automatically factor anything else that they are working on or delays or problems that would affect getting the task completed.  This whole process should take no longer than five to ten minutes of effort from the team including yours to update and send out the updated plan.

Quick Tips:

  1. Cancel all update meetings.
  2. Send out requests for progress updates via e-mail using the 3 lines I suggested above. (Once every 2 weeks or more often as you approach a critical milestone)
  3. Update the plan with progress and send out to the team.

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

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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:

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The Successful Life Science Company: Three Tips to Insure You Survive Your Success

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By: Andrew Johnson, Ph.D.

Keeping your expanded team well informed, supported and rewarded will insure the continued growth of your company.

Keeping your expanded team well informed, supported and rewarded will insure the continued growth of your company.

What do you do when things start to go well?  Sounds like an odd question but it is something that every Life Science entrepreneur should consider even in the early days.  It is very easy to lose sight of the intangible contributions of your early team as you start to have some compelling profits and the company is growing.

The early days
When you are just getting started, you will have a small but very passionate, focused and solid team.  (If you don’t have this, you soon will not have a business at all).  You can easily sit around the same table at lunch and share what is going on, your ideas for what should happen next and anything else that concerns the company.  Furthermore, everybody is more than willing to put in the insane hours and total commitment it takes to build your company’s success.

What happens when you start to see success?
You and the team have launched your first product or service and you are beginning to see revenues and maybe even some profits.  At this point you and the early founding team may have added a few more people but it is still possible to squeeze together in the same room.  Whether you realize it or not, the culture of your company is by necessity changing.  With the growth of your company, the way that you communicate and get things done needs to scale as well.  This is where some processes and procedures come into play.  Ad Hoc worked well when it was just three of you.  This cannot work as the team grows.  There needs to be communication between the R&D and Sales & Marketing teams but it would be a waste of time and resources to call all of you sales people in for every R&D meeting and vice versa.

Nurturing the goose that laid the golden egg
At the start, everything was about getting your first product or service to market.  Now that you have successfully launched, you need to grow and expand profitability by boosting sales with your commercial team, reducing costs with your operations team and begin and expand your market reach with ‘follow-on’ products (or services) by launching your next product development effort and/or business development efforts.  You need many more hands to get this all done and so the team will now grow significantly (sometimes doubling and tripling in size).  Many will bemoan the loss of the ‘small company feel’ but if you hope to be successful transforming the company from its startup roots, this  is essential.

The easier part here is to start to adopt some of the tried and true processes and procedures that are often associated with large established companies (you just need to scale these down to fit your company so that you don’t import a bunch of bureaucracy).  The hard part is maintaining a positive culture.

Keeping it ‘real’ with the new team
Your company works best when everyone’s individual goals and aspirations are well aligned with the company.  In the early days, only those people that shared your passion and vision would have joined as founders.  By definition you are all aligned and that is partly because you will each individually be successful if the company is successful (financially, better reputation, etc.).  Later employees will often not be well aligned as they do not have the same interests and passions as the founders (the link between their personal success and that of the company will usually be weaker).  However, the company will do best when it can utilize all of the talents, intelligence and ideas of everyone on the payroll.  Get this right and you will see a continued positive impact on the bottom line.

Tips for Boosting Innovation as Your Company Grows:

  • Adopt empowering HR policies.  Consider why someone at the bottom of the compensation scale would want to share their good ideas with the company.  Perhaps there is a monetary reward, opportunity for promotion or other benefit that would encourage this and other employees to ‘go the extra mile’.
  • Nurture a culture of respect and fairness.  A company where employees can share their concerns without being afraid of repercussions is critical.  So is taking care to recognize excellence in the company and to reward it frequently.
  • Maintain excellent communication with the troops.  There is confidential stuff for sure (but share as much as is appropriate).  As the company grows, you may wish to have quarterly ‘State of the Company’ meetings (both in-person and remotely with those in the field), a company newsletter and other tactics for sharing how the company is doing on a regular basis.  This will allow everyone to better connect what they are doing as individuals with the ultimate fate of the company (kind of like in the ‘old days’ when the three of you founders plotting over a pizza at lunch).

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Is Planning a Waste of Time? Debunking the Myths, Planning for Success

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Plans in wooden house beams

Whether you are building a house or growing your business, having a good plan will keep you on track!

By: Andrew Johnson, Ph.D.

Planning done badly is a horrible waste of time.  However, not having a plan at all is even worse. Many of the following myths have contributed to the bad reputation that planning and effective project management has sometimes unfairly received.

            • “There is no value in planning. I know what needs to be done.”
              -A good plan will help you to identify and mitigate any risks that could cost you serious schedule delays, wasted money and unhappy stakeholders (eg investors, customers, team members).  By setting some time aside to create a plan, you will be forced to critically think about each step of the effort that needs to be completed to successfully achieve your goal.  In the process, you may discover additional needs or risks that may have an impact on your success.  This process allows you to essentially simulate how you would wish things to go before you have committed yourself, the team and your money.
      • “We have already started so it’s too late to start planning now.”
        -In an ideal world, you would first develop the perfect plan and then implement it.  This almost never happens.  Don’t just stop everything to develop your plan.  Take some time and work on this while you continue with your day-to-day activities.  The fact that you have already started will provide you with better insights about what needs to be done, and the true effort and costs that will be incurred
  • “There is no point in planning since there are too many unknowns.”
    -The purpose of a good plan is not to predict the future but to highlight the connections and inter-dependencies between all of the things you need to get done.   If your R&D team encounters some technical issues that you had not foreseen, how will this affect your product launch (ie how long will the delay be?)  Knowing the impact of both lucky breaks and frustrating delays will allow you to make reasonable changes to the plan to mitigate the effects of the unknown.  Letting your customers or investors know about a delay before it happens is much better than missing your deadlines.

Never be late or over budget again!
With a good plan, you will be able to see any missed deadlines or additional costs well before they happen.  As changes to the original plan occur (you should keep updating on a regular basis) you will be able to see any conflicts well before they happen.  This gives you the chance to find other solutions to keep things on track or if this is not possible, to let your stakeholders know about what is coming.  In this way, you can come to a new agreement on the budget and time required to get things done right.  You are not late or over budget, you are in control!

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