This blog post is the second in a three part series in which Ian Siragher the Business Development Director of Agenda1 Analytical Services compares the structure of two types of organisation, CAT groups & Boss Companies.
As I outlined in my previous blog post (Business Isn’t Rocket Science) companies that focus on the Business of Science, (below I refer to them as Boss Businesses), work very differently to those Commercializing a technology (CaT groups). One key difference is the different emphasis placed on preparing the entire business to meet the harsh realities of the commercial world. This distinction is important because, in my opinion, Boss Businesses have a much greater chance of survival and commercial success.
The leadership differs.
CaT groups are often lead by the inventor. There are examples where such leaders turns out to be great businessmen. But there is usually a reason why a University Professor is a University Professor, it is the life they wanted trained for, and enjoy. That is the reason they didn’t become accountants, serial entrepreneurs, venture capitalists, marketing and PR specialists etc, they didn’t want to. A Boss company will be lead from very early on by people who have specialized in business, not people whose claim to company leadership is they “Understand the Technology”. Those who understand the technology have critical roles to play in understanding how the technology could be applied, but they should not make the final business decision as to how they will be applied.
The focus of the technology application differs.
A CaT organization has 10 new ideas before breakfast, the teams are creative, excited by change and ever alive to the possibilities. With Boss Companies the unique benefit of the product are the core focus. The role of the business is to find a way to make those benefits available to the market as quickly and as profitably as possible. Other bright possibilities are not allowed to distract.
CaT specialists lead, Boss specialists support
CaT Groups thrive on having high quality specialists as part of the team, each niche area of the technology often benefiting from its own leader. This has a snowball effect, typically that specialism is not required 100% of the time, the specialists by their very nature seek additional tasks to fill their time – these are not lazy people. Interesting areas for exploration will be identified by them, proposed, championed and followed. This is wonderful and creative, and highly chaotic.. and has no place in a Boss Business. A Boss company uses more sub contractors, consultants and temporary staff than a CaT group, this helps them maintain focus, specialists are employed to advise on key issues, but are less likely to initiate brand new projects.
The Business of Science does not to chase grant revenue
I do believe that start up grants make some sense, and R&D grants which extend the reach of investor funds also have a part to play. However, there is nothing like revenue from real customers (or lack of it) to tell you if your business idea is a winner. Focus on generating revenue from customers who have options and who are pre-disposed not to buy from you is fundamentally more business oriented than submitting applications to grant bodies who reason for being is to pay the cash out. A CaT group then is one where the primary revenue stream for more than 3-4 years is grant revenue. Such a business is in reality playing a shell game and even they don’t know where the real value is. Typically there is a lack of a direct correlation between the grant money and unequivocal value generated, and this is a fatal flaw. Boss Companies will find ways to generate revenue, be it from conferences, license fees, feasibility studies, consultancy, or numerous other devices which validate their idea and show that real value is being generated. I would also argue that it must be customers) (plural), CaT groups with a single client are not true businesses, merely differently funded subsidiaries whose existence depends on the decisions of Boards they cannot control.
There is one type of CaT group which falls between these stools, that is the company which successfully completes numerous funding rounds, without ever generating profits during that period. I would agree that these are companies who understand the Business of Science very well, but maybe not entirely which business they are in!
Boss Companies measure their return on capital, CaT groups measure their capital.
Boss Companies see ownership of assets as a last resort, every £ tied up in hard capital is a nail in the coffin of return on capital. Boss Companies demands that assets are only purchased when doing so makes fundamentally better business sense than out sourcing, sub contracting, or doing without. CaT groups retain the operating DNA of their usual forebears, University Departments. Until recently University Departments measured success primarily in the acquisition of equipment, facilities, and resources. That is changing, but CaT groups can be identified by this same trait.
Boss companies have multiple marketing routes, CaT groups favour published papers and posters.
Posters and papers have a part to play in the marketing mix, they can help some customers make buying decisions. But where an organization’s primary publicity focus is the use of academic publications/conferences to a broadly academic audience then that group cannot claim to be focussing on the Business of Science. Those publications/conferences, bound by convention and rooted in a academic process can be wonderfully written, providing genuine insight, and excite awe. But at their heart they are about publicising the writers/authors/the science but not the business. So, unless their place with the sales process is completely understood and planned they are almost always a distraction from the true Business of Science.
Boss companies compete with competitors, CaT groups compete internally
Boss companies usually have clear hierarchies and decision making processes. Decision making might still be messy and inefficient and won’t always come up with the right decision – often there is no “right decision” – just an opinion of what seems best. Such businesses are though usually focussed on deciding the way to solve a business problem and achieve a clearly defined goal.
In CaT groups the pursuit of scientific truth, of the “right” answer, gets in the way. The academic world is one where knowledge is indeed power, where the ultimate goal is to find the truth and where it is perfectly correct to cling stubbornly to ideas until they are demonstrably shown to be incorrect. This is the very strength of science and crucially important. Business, like politics though is the art of the possible, of compromise. It is often necessary to make judgements on incomplete facts, to accept that your great idea, your better mousetrap, your beautifully designed solution, is just not going to be adopted. In which case the team have to disagree and get on with the new route. That requirement is very hard for overtly science focussed teams (CaT groups) to accept, the measure of those following the Business of Science is how well they handle this dilemma.
Boss teams think more strategically than CaT groups.
CaT groups often take decisions that appear tactical but become strategic bottlenecks. A CaT group focussed on a technology will make decisions that suit primarily the needs of the group in a semi personal relationship with the technology. A typical example is establishing critical infrastructure in high cost areas close to the development team, rather than in low cost areas the development team might have to move to temporarily. A fixed high cost infrastructure that was easier to manage for a few years by being convenient becomes a long term liability once the technology is working and cost reduction is the goal.