Have an idea? What’s next?
During residency, Dr. Jones, realized there were many surgical problems that needed innovative solutions. During his chief year of residency, he started his first company and created and acquired patents around a more convenient surgical instrument. While working on this project, he identified several other clinical problems that needed to be solved and began to add to his portfolio of products.
A short time after completing his residency, Dr. Jones combined all of his devices into a new company, hired an experienced management team and raised his first round of funding. Because of the demands of the business world, he left full-time clinical practice to become the Chief Medical Officer for the company.
You probably think the next step is to find investors, and you would be wrong.
Instead, if you are like Dr. Jones and have the urge to commercialize a new idea, invention or discovery, then you will need to follow a defined pathway to insure your success.
You will need to follow a process to assess your new idea, identify potential pitfalls, and follow the pathway to commercialization. The roadmap to success has several phases.
First, you need to answer The Three W’s: Why are you doing this? Is the opportunity worth it? How can you win at it?
The first is problem identification, understanding and analysis. Most doctors, engineers and scientists create solutions looking for problems. At the early stages, the idea is to be a problem seeker, not a problem solver. You need to have a thorough understanding of the market, customer segments, their market pain and the competitive landscape. Identifying customers involves interviewing and observing potential users, including vendors, distributors and ,particularly in healthcare, those involved the multi-sided market like payers and patients.
There are several ways to understand the problem, the competitive industrial landscape and potential market segments you intend to dominate. A common one, doing a SWOT analysis(Strenghts, Weaknesses, Opportunities, Threats)
SWOT analysis is a methodological tool designed to help workers and companies optimize performance, maximize potential, manage competition, and minimize risk. SWOT is about making better decisions, both large and small. It can help you determine the efficacy of something as small as introducing a new product or service or something as large as a merger or acquisition. Again, SWOT is a method that, once mastered, can only enhance performance.
John Mullins, Professor at the London Business School, suggests The New Business Road Test, specifically analyzing the macro and micro elements of your intended industry and market and team and identifying your potential new opportunities.
The next step is Idea Generation. New ideas generally come from two sources. The first source is from discoveries, inventions or designs that result from basic or clinical research. Those who create these new technology-based ideas, called technopreneurs, are usually solution focused and have little or no understanding of the market demand or need for their products. A typical example is a university- based researcher who creates a prototype of a device incorporating a new paradigm, such as a nanoprobe to image head and neck cancer in vitro, or an optical probing device to be used in surgery to detect molecular margins. The inventor’s main focus is proof-of principle, not market acceptance. Likewise, a clinician who designs a new instrument for endoscopic sinus surgery is more interested in solving a particular surgical problem, not how many customers will buy the product.
On the other hand, market perceivers identify a market opportunity or problem and try to develop solutions. While the former, like doctors and scientists, are more problem solvers, market perceivers, typically with a background in marketing, finance, or business development, are problem seekers. They usual are more interested in market size, growth and customers and whether there is sufficient “pain” in the marketplace to warrant identifying a solution.
Dr. Jones is a little bit of both. He recognized a clinical problem that might have a broader application and had the training and technical background to invent a potential solution. Biomedical innovation is like identifying a big enough and important market lock and creating and inserting the right technical solution key. Only by inserting the right key into the market lock can you open the door of opportunity.
The third step on the roadmap is Idea Assessment. The developer takes a high-level look at the commercial potential of the idea with a focus on the market size, potential customers and market growth. At this point, the bioentrepreneur or clinical champion does an initial analysis of the primary market, technical and intellectual property risks involved in moving forward with commercial development.
At this early stage, the principle questions are:
- Will the product or service work?
- How will I protect my idea?
- Is there enough of a market for my idea?
- What kind of people will I need to move this idea forward?
- How much money will I need and how do I plan to use it?
- What are the regulatory and reimbursement issues?
A useful tool at this stage is creating a business model canvas, where you define core underlying business model hypotheses and then test and validate them.
The keystone of your business model canvas is your value proposition, the promise you make to your customers. Use one of the templates explained here to craft your initial value proposition. As you learn more over time, expect it to change substantially.
The fourth phase, writing a Feasibility Plan,and developing a business model canvas, comes next. Lean startup methodology has three basic components-creating a minimally viable product, executing your customer development process (compared to a product development process) and devising and validating the business model canvas.
Now that you have done a risk analysis during the idea assessment phase and have decided to proceed, your task now is to do more research and a more detailed analysis of the business opportunity. During this part of the process, you should describe:
Management Team Analysis
Current management team
Purpose of product/service
Stage of development
Product/Service legal liability
Related products/services and spin-offs
Total market size
Features and benefits
Cost of product/service
Feasibility Plan Evaluation
Value of opportunity
At each step, you should decide whether to proceed, modify your idea, or abandon your idea. Your task with each of these stages is to identify those issues that are “deal-killers” early in the planning process so you can move on to something else and not waste precious resources and time on an idea that will predictably fail. Most importantly, you should validate your business model assumptions, not just technically and commerically, but clinically as well.
The final phase, writing the Business or Commercialization Plan, is intended to tell your business development “story” to potential stakeholders and investors. If you have done your homework, most of details of the business plan will already have been addressed in the feasibility analysis. Now is the time to identify how much money you will need, what you will do with it, how you will structure the company and how you will execute your sales and marketing plan.
So, if you have an idea, what should be your next step? You should identify your next critical success factor and find the people and resources who can help you achieve it. It could be finding an IP attorney to help protect your idea. It could be finding seed money to create a prototype. It could be finding a regulatory affairs consultant to help plot your strategy. Or, it could be finding advisors or co-founders to help you create the right product-market mix and business model. Here are some tips on how to find them.
Here is a process for deciding and then actually taking your inspiration from an invention idea to a sustainable business:
- It all starts in your head (think it). Start with what you know, but think outside the box. As you think and explore and imagine the possibilities for new products, remember that it should have a broad opportunity, appeal to people who have money to buy, and needs to have pizzazz to get people’s attention in this age of information overload. Innovation starts with the right mindset.
- Now get real (cook it). Before you get too excited, it’s time to do some homework. Find out if something very similar is already selling, and who your competition would be if you proceed. Ask some potential customers to see if there is real interest, and start thinking about price versus cost. Look hard at the technology for feasibility and risk.
- Keep thieves away (protect it). Limit your disclosures to people you trust, and learn the use of non-disclosure agreements (NDA). File at least a provisional patent and one or more trademarks. Be wary of crafty shysters who will flood your mailbox with official-looking mail offering to help for a fee, or demanding fees you forgot to pay.
- Make ‘em want it bad (pitch it). “Pitching” is the insider term for presenting your product idea to people who could conceivably buy it or fund your efforts. Start by developing an “elevator pitch” that you can deliver in 30 seconds to hook a potential investor. Attend trade shows and network to find the right players and pitch your product.
- Factory in the garage (make it). This is the point where you work on the specifics of being able to deliver your product or service. Relevant questions include the type of business entity (LLC or C-Corp), licensing or manufacturing, sales and marketing, and staffing. It’s also time to build prototypes to make the product come alive.
- Continuous improvement (replace it). Once you have a real product, and it’s actually selling itself online, or on store shelves, you may think you can just sit back, relax, and collect your riches. But remember that complacency kills, and you always need to be thinking of the next product iteration, new territories, and new competitors.
Remember that a technology is not a product and a product is not a business. Plus, an idea is not an invention nor is it an innovation. The keys to biomedical business success include a compelling value proposition, a business model that makes sense, a management team that can execute and customers willing and able to buy your product. By following a clear business development pathway, you will identify and address potential landmines and limit your risk of failure.
The life science innovation roadmap filled with hazards. But, if you take the journey a step at a time, you will either discover early the errors of your thinking and kill or change your approach or move forward with some level of confidence.
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