If you trace the journey of a log from its stump to a piece of fine furniture, you will see a similar process to developing products from concept to profits. You start with some raw materials and a good idea, add lots of effort and capital, a little luck, and out the other end comes something that customers pay handsomely to acquire.

• On the stump – A log on the stump (aka a tree) is worth about $50 to $100 per MBF.* This is like you and your colleague having an idea over a cold drink. It is a good starting point, but is not really worth much yet. It is a long way between this tree (concept) and a nice coffee table (products). If you look at biotherapeutics, over 80% of the cost to develop them is dealing with formulations, clinical trials, regulatory issues, and production engineering.

• Saw logs at the mill – Here the tree has been cut, skidded, sawn to length, and delivered to the mill on the truck. The value is about $500 per MBF, and this increase in value pays the labor, overhead, costs of trees and profit for the logger. At this point you have your innovations patented and the value of your enterprise has increased, albeit not much. If you look at typical royalty rates for patent licenses they are often in the 3-5% range.

• Rough cut boards – Now the wood is starting to be in a useful form, with a commensurate increase in value to around $2 per BF. Your product has progressed to the proof of concept stage, and your concept now works quite well. It is indeed able to do what you had dreamed about months or years earlier.

• Dry, planed and cut lumber – This wood is ready to be turned into useful things. At Home Depot this will set you back about $6 per BF for a red oak board. Your business is now gaining in value as you have a prototype to demonstrate to customers, and they like what they see.

• Finished furniture – This is where the greatest transformation in value happens. From less than $100 in lumber you can create an $800 table. Your product has passed all its tests and is now in the market. Don’t forget, though, that you will still need to get people excited about your new offering so they open their wallets.

So whether you are crafting a fine coffee table or developing the next MRSA diagnostic, you will build value as you progress down the development path. There are few shortcuts, and it takes time and lots of work. But eventually you will transform your raw logs into valuable products and an invaluable business.

* board foot or BF is a standard measure of wood volume equal to a square foot of wood, 1 inch thick [a foot of board], or 144 cubic inches. MBF is 1000 board feet

We’re not supposed to get a foot of snow in October, but that’s what greeted me the other morning – along with no electricity… The transition from summer to winter (aka fall) is supposed to happen a little smoother – some cool crisp days, maybe a frost or two, then a few flurries in November, and frozen ground mid December. Fall foliage covered in snow is not in the plan.

This disorderly move from one season to the next is similar to the growing pains many companies experience. Instead of seamlessly adding new channels or upgrading processes, they often stumble their way to the next level. Since growth is pretty much at the top of everyone’s list, successful companies will eventuality run into these bumpy transitions. This happens whether they are adding outside capital or building sales organically.

So what can you do to try to avoid getting snow on your foliage? Here are a couple ideas.

• First is to realize that it will happen. Companies growing from a few $M to $10M as well as those going past the $50M watermark will run in to this. It’s human nature to put your head down and grind away, assuming these little challenges are just another small hill to surmount.

• The most obvious sign is that you and your people are getting lost in your pile of information, and becoming less organized in your execution. Spreadsheets are no longer giving you the forecasts you need – its time to put in some infrastructure and processes that are designed for this purpose.

• Management styles need to evolve from the collegial, flat, all-for-one approach to a more formal organization. I’m not saying you need an HR department, but the organization needs more structure to function efficiently.

• Last, but certainly not least, your strategy needs to move from a product or product-line focus to a broader corporate viewpoint. A product view will get you to a couple $M, but more pieces are usually needed to build the company to the next niveau.

Growing your company is a somewhat chaotic, but supremely satisfying achievement. But be aware that snow can fall before you expect it. When the warning signs appear, be sure to change the way you are doing things, before the lights go out.

As we were taxiing down the runway at Denver airport recently, the pilot gently glided the plane over to the side and stopped. A collective sigh was heard as we all anticipated the usual explanations for the delay. The pilot came on to tell us that a series of storms in the Midwest was preventing us from flying directly to Boston, and we have been re-routed to a northern route over Minnesota. Our agenda had been altered from taking the fastest trip to Boston (happy customers, less fuel) to avoiding the nasty storms that would rattle the passengers and shake the plane.

Similarly many companies at the recent conference I attended came in with agendas set on growth and prosperity, only to find storm clouds upsetting their plans. New products from the competition, unexpected customer reactions to their offerings, or ground-breaking developments have all caused companies to reset their agendas.

If we look at agendas, which hopefully you all have, they usually have 2 or 3 main items and fall into a few simple buckets.

• Growth – innovation, M&A
• Costs – do more with less
• Capital – finding $$ to fuel growth
• Risks – gotcha’s and surprises
• People – the right people to move the agenda

That’s about it. Pick your most critical couple areas of focus and get the company lined up behind them. Sounds simple enough, and if asked you can usually say – we are focused on “getting our costs of goods in line,” or “developing our market for IVD’s”

Agendas really have 2 parts to them – first is picking the right one, and the second is knowing when it needs to change. Picking the right one flows from your overarching strategy, and assuming you have a good plan, your agenda should be clear. However, when some storms appear in your path, you need to asses whether your agenda needs to change. Here are few indicators that your direction needs adjustment

• Timelines are being bent beyond reason
• Many of your assumptions are proving inaccurate
• Your people are losing confidence in their ability to meet the goals
• Your sales or costs are trending in the wrong directions

None of these are fatal flaws unless they are ignored. People and companies are extremely malleable, and with good leadership can be steered onto the right route. So when you detect storm clouds on the horizon, be sure to take stock of your agenda. If you can weather the storm, then proceed ahead; but if you expect some unhealthy buffeting, then reset your agenda. Though this should not be a knee-jerk to the challenges you face, it is important to realize when you need to take the longer, yet smoother route to your destination.

Stepping into the flight chamber, I was astonished at the unexpectedly strange sensations. As I attempted my first indoor skydive, my mind was trying to reconcile the noise, the wind, the pressure on my limbs, and the hand signals from my instructor. A similar cacophony of signals often occurs when you are bringing new products into the marketplace – noise, forces, opinions, and speed are all at play trying to upset your planned trajectory.

Processing all of this at once is critical to entering the market and actually getting the results you want (usually $$$.) Granted you aren’t trying to float in a 100 mph wind, but things do move quicker than you would like.

• Noise – Nothing is more disruptive to a good product launch than too much noise. This can be due to a poorly-focused effort or because lots of other things are occurring around you in the market. Having a good process, a well-vetted strategy, and committed people will help you rise above the fray.

• Odd forces – Like the wind trying to deflect my arms behind my head, there will be responses from the customers and competitors. Being prepared for the possible reactions will definitely help you weather these forces. Run a few scenarios to help you plan for the buffeting.

• Heeding the signals – Trying to comprehend signals and act on them in this environment is tricky. When you first enter the market, signals will come flying back at you. Some people like your product, some hate it, some don’t care. Sales people sell version X but not version Y. Paying attention to this early feedback is critical. Though your plan was perfect, you often need to heed the market signals and make adjustments to be really successful

• Speed – Moving quickly can give you a big advantage over your competitors. Once you see that you need to make some adjustments, doing this quickly and effectively across your organization and market is important. Slowly adapting to the feedback has killed many good products; so keep your foot on the gas. As the Valeant CEO, Michael Pearson, recently said, “Time is the enemy, in my mind. Speed has proven to be a real competitive advantage if you look at our history.”

So when you are getting ready to parachute your products into the marketplace, take a few lessons from the skydivers. There will be new, unexpected forces at work. Paying attention to them will lead to a successful and controlled dive into your new flow of revenue. Not paying attention can lead to a very unpleasant landing.

ps. in case you’re wondering, that is indeed yours truly in his first flight.

It amazes me that the windmills over in Princeton have never stopped turning. Every time I gaze across the Wachusett Reservoir to the ridge in Princeton, the big white blades are lazily spinning. Maybe they do stop once in a while, but I’ve never seen it. Many companies would love this type of business – at all hours of the day the cash keeps rolling in.

This is a conundrum for companies, large and small, that are developing new products. How do you maximize the revenue that can be obtained from the innovative products coming out from behind the curtain? Many look to the windmill model where they first sell a piece of equipment then watch as the revenue rolls in from the consumption of the bits and pieces needed to keep it operating. This works great if the measurements or tests are all the same, the thousands of samples are the same type, and the operator does not need 3 PhD’s.

However, many companies making equipment are relying on the customers to be the experts and develop their own custom methods. This case is more like the windmill manufacturers that sell 3 million dollar windmills to towns like Princeton. A long sales cycle, a big sale, then start a new sales cycle again – kinda lumpy.

To smooth this out, others look to leveraging their technologies to offer a service to their customers. Many companies consider this as an easy add-on to their current businesses. Just look at how many instrument vendors now have service arms (Bruker, Caliper, Beckman, Millipore to name a few)

Another approach to harvesting your innovations is to collaborate to create valuable biological discoveries. This is a riskier approach with longer payback, but has worked for some folks with unique platforms such as BG Medicine and Rules Based Medicine.

A final pathway is to take your research technology and move it downstream to a production environment or a diagnostic facility. Both have much more stringent requirements than the RUO (research use only) world. But once inserted into a process or accepted as a routine test, the revenue flows quite nicely.

So when you are looking to get the most from your innovations, be sure to look beyond just selling a cool new box. Like the windmills in Princeton, consider the various ways to bring your value to the market, and you too may be able to generate energy ($$) day and night.

I went timber cruising last weekend. No, this is not aimlessly driving the back roads of New England, but rather, walking around the woods selecting trees for next year’s firewood. I take little pink ribbons and tie them around the trees that will eventually keep us warm during the blizzards of January 2012.

Though the forest has over 100 trees per acre, I don’t just pick the first 30 trees I see. I have another objective beyond just cutting firewood – I also want a healthy and robust forest that supports a diverse range of wildlife. I actually see many companies in a similar situation – an overstocked portfolio of products and applications, and struggling to support and grow them all. For those folks, it is time to apply some well-directed timber cruising.

The starting point for the selection process is actually in the future. Ask the question, “where do we want to be in 5 years” (or pick your favorite horizon.) For the East Woods, I am looking 10 years down the road at big trees able to fend off beetles and ice (see Dec 2008.) Similarly, your business first needs to define its long term goals, be they top line growth, strategic partnerships, near-term profits, market position, or exit.

Once you have the bar set, it is somewhat straight-forward to go through your opportunities and find the ones to pursue. There are a few big slices you can take that will get you well on your way.

• First which applications have a sizeable market that the product can address? When I size up a tree I prefer to take a fatter one that will yield much more wood with only incrementally more effort that a skinny one. Also, a red oak will produce heat much better than a white pine.

• Second, can you actually get your products to the customers who will benefit from them? Though I may find some nice oaks way out in the woods, if I can’t get them to my house without a Herculean effort, then it is a lost cause.

• Third does your offering solve a problem that is really important to the customer? Many nice-to-have products have sounded great only to languish on the shelves. When I plan to take down a tree I always consider how much more light and nutrition will fall on its neighbors if this one is removed. Energy and food, along with water, are the primary currencies of growth in the forest.

• Lastly, will your selection make the company better off in the long run? Can you leverage this product for follow-on applications and build the company around this. When I look at the trees, I always select the weaker, crooked trees and leave the strongest and straightest. They will grow faster, produce more nuts (offspring, food), and look nicer.

So while you ponder all the wonderful products and opportunities you have, remember that if you cull out the weakest, the strongest will flourish from the additional sunlight (resources) and nutrition ($$). With this accomplished, your woodlot of products will be strong, robust, and fast growing, just like the East Woods.

How does a plant grow from a rock?  I was wondering this as I looked at the black birch seedling sticking out of the hunk of granite.  Looking a little closer I could see that it had a toehold in a small crack, where it was able to summon the ingredients for growth.  This is similar to what happens with many businesses in the life sciences.  If there is a crack or gap in the business or in the customer’s situation, all kind of effort will result.  These cracks are the opportunities for growth.

Granted many of the gaps are self-imposed, but they are still responsible for guiding people’s efforts.  So let’s take a quick look at a few.

• Revenue gaps – If the corporate goals are on the other side of the void, then an acquisition, development of a new product, or improved sales channels will get you across.  If there is a gap at that business unit level, then more near-term, tactical activities will result – increased marketing, sharpening the product strategy, or more hands in the field.

• Customer gaps – When companies determine that their customers are facing a hole in their process, they have a great starting point for new product development.  Often the customer has gaps in their workflow in terms of efficiency, costs, time or performance that can be addressed.  Just look at your favorite new product, and it becomes obvious what gap it is trying to fill.

• Organizational gap – Sometimes the gaps are internal and relate to the company’s’ ability to get its products completed and in the market.  Or maybe they are having trouble getting to the right customers.  Here they can add personnel, partner with a complementary organization, or sometimes they just stumble along, knowing they have this gap.

Though understanding the gaps in and around your organization or marketplace is not the whole picture, it is responsible for putting the fine point on many of your efforts.  Here are a few recent examples

• ThermoFisher acquired Proxeon to fill a gap in their offering for LC/MS, which in turn addresses the customer’s gap in efficiency

• BioMarker Strategies will receive $1 million from the National Cancer Institute to fill its funding gap.  This will enable them to develop their live tumor cell testing system.

• Ireland’s National Institute for Bioprocessing Research and Training partnered with Waters to fill a gap in people’s ability to characterize glycans.  They will create a database of glycan information to help enable the production of effective and safe biotherapeutics.

So to focus your efforts, take a look at your organization and your customers to see where the cracks and gaps appear.  That is where the opportunities lie, just waiting for you to take hold of them.