I had nothing to show for my 3 recent mornings of fishing on the local ponds and lakes. I had started with great hopes of catching a keeper, especially after reading that a third of the state record fish came out of the big lake at the end of the road. However, I was skunked, much like the new product launched with great fanfare and hope, but languishing unloved upon the shelf.

So what causes us to so grandly and totally misjudge the outlook for our efforts? I think the root lies in our culture of working in a technical field with inherent risks. Because of this we have all become tremendous optimists to buffer ourselves against the failures. This is not necessarily a bad thing since it helps us envision new opportunities where none had existed. But it also blinds us to the reality that the future is not always rosy, and sometimes our ideas just not that good.

To help steer our way out of this tendency to forecast hockey sticks and exponential growth, here are a few suggestions.

• First acknowledge that not all ideas and product concepts should be commercialized. Some are best left as notes on a napkin. The poster child for this is Pfizer’s excursion into inhaled insulin with Exubera. After $12M in sales of the supposed blockbuster, they pulled the plug and wrote down $2.8B.

• Develop a framework for rapidly assessing whether a concept has legs in the marketplace. There are a lot of good approaches for doing this so pick one and stick to it.

• Casting your bait into the lake at mid-day is unlikely to rouse the wily lake trout that is resting on the bottom. Ultimately your market (aka customers) has to be sitting there with an open mouth, awaiting something to satisfy its hunger. They need to have a big problem, gap, need, or whatever you want to call it.

• Looking around the shore I saw a few other fishermen, and it appeared that they also had empty creels. Having other competitive products in the market is not adequate validation that you should too. They aren’t necessarily smarter or cleverer than you.

• Lastly if you go home unlucky or with only 30% of your forecast, be sure to learn as much as you can – why did some buy (or bite) and others not. How satisfied are the customers, and how did the competitors react? As the Pfizer CEO said, “We will, of course, evaluate closely what happened here.” On my way home from the lake, I thought about all the factors that lead to my lack of success – bait, time of day, weather, lunar cycle, etc.

So when you are looking to the future of your next great product, be sure to use a disciplined view and don’t become blinded by the optimism of a great day of hunting keepers. That said, I’m still thinking that my next day on the lake may bring in that four-pounder…

The wind was howling last night in the East Woods – it sounded like a 747 coming in for a landing as the wind whipped the trees back and forth. After a minute or two the gust would subside, until another came roaring through a moment later. If there was anything else making noise last night, it was drowned out by the big blow.

This situation is similar to some of the life science markets which are dominated by a few large companies, making it difficult for anyone else to be heard above the din they create. Additionally the strength of several large companies holding sway on the marketplace does make it challenging for new market entrants.

If we look in more detail at the research products marketplace, there are ten companies that control over 60% of the action. Being analytically inclined, I decided to calculate the Herfindahl Index to see the actual concentration of the market. This gives a quantifiable sense of the concentration and is actually what the anti-trust guys use to determine if an acquisition or merger is bad for customers (decreases competition too much.) So I calculated a value of about 16% which is “moderate” concentration.

So what does it mean for you? If you are looking to bring new products in to the market there are a few things to consider.

• The place to start is the segmentation. Though the overall market may look like a tough nut to crack, there are some segments that are not well served or are undergoing big growth. These are places to attack.

• Second is to leverage the noisemakers. You can build products and services that take advantage of the installed bases of the large companies. These can be add-on products, sample prep, software or services using the popular products.

• Another is to piggy-back on top of the big vendors. These strategic relationships take time to develop, but can pay big dividends. When your products are brought to the customers by a Thermo or Agilent salesperson, you are in great shape.

• The final suggestion it to create something totally new. You will have few rivals and will be under the radar of competitors for a while. Easy to say and hard to do, this can be a lucrative approach, assuming you can fund the enterprise (but that’s another story).

Though the roar of the wind does drown everything out, you still can break through the noise. Take a close look at the marketplace and come up with your own unique approaches. After all, the wind eventually will die down, leaving you a chance to be heard.

Walking through the East Woods the other day, I noticed dozens of little rivulets running downhill to join up into larger flows. They carried what is left of our winter snow pack (that has yet to really arrive in earnest…). Moving downstream is also a popular activity for many companies that sell research products – they view diagnostics as a neighbor to their current markets, and a profitable one at that.

They are flowing downstream with a few different approaches, and all with the same objectives of growth, leveraging current products, and, of course, profits. Here are some of the ways research product companies are moving.

• Reposition current products. Putting on a new wrapper, working with collaborators to validate assays, and getting regulatory approval enables them to leverage their current products into this new arena. This is often the lowest cost approach, and here a couple examples.

Agilent has gotten their LC and Mass Spec Systems listed as Class I Medical Devices with the FDA. This will enable them to move toward the clinical laboratories and eventually seek approval for specific assays.

Affymetrix supplies FDA-approved gene profiling reagents together with its instruments for use in development of molecular diagnostic tests in cancer diagnostics, blood and tissue-based screening, and disease segmentation.

Some companies such as Vermillion have taken this approach to the limit by transforming their whole organization into a diagnostics company, from its humble beginnings as a research tool provider.

• Bolt on a new business. Buying a complete operating unit is the fastest way to enter the diagnostics market. As long as you get approved products and complete channels, you are on your way. This is a pretty expensive approach, but may save years of development costs.

Danaher’s acquisition of Beckman ($6.8B) and Thermo’s purchase of Phadia ($3.5B) are two of the more notable examples of this approach.

• Get pulled in to the fray. Some companies are eying the opportunities in diagnostics, but are still on the sidelines. However, their hand is forced when someone moves to acquire them and their technology. With the growth in companion diagnostics, this is expected to become a more common event in the not too distant future.

The unwelcomed bid by Roche to acquire Illumina ($5.7B) is still in high drama, and the upshot is still to be determined. However, the value of new technology for the development and positioning of new therapeutics is pretty clear.

So whether your company is happily selling your products just to researchers, or is already immersed in the market, the pull of diagnostics opportunities are on everyone’s mind. Like the melting snows, your technology will eventually flow downhill and seek new applications in this arena. After all, even the glaciers succumb to the pull of gravity.

I tried to make snow the other day, but much to my surprise, I failed.  I couldn’t believe that my exquisitely designed system of a leaf blower, hose sprayer and duct tape did not produce the wintry landscape that is absent this year.  Instead I got an icy coating on the brown grass and frozen fingers.  This similar situation befalls companies that have a “great” idea, spend a year or more turning it into a product, only to get a tepid reaction from the marketplace.

I had spent several months thinking about my snowmaking system so where did I go wrong, and how can you be more successful with your new products?  Here are a few suggestions.

• Talk to the snowmaking guys.  I had skied by dozens of experts on the hills, but never stopped to ask them some basic questions about turning water into white stuff.  Be well engaged with your target customers – understand how they work, what’s in their way, and whether your product will improve their world.

• Test the snowmaker before you are in need of covering your lawn.  Getting your product in the hands of customers before it is launched is very important.  Like me, you have great ideas…but are they really going to benefit the customers as much as you think?  Better be sure on this.

• Know the environment.  I had assumed that below-freezing air temperature was enough, but what about humidity, wind, etc?  No idea.  Look closely at your market so you are not surprised by unexpected barriers in the way of your success.  Are there regulatory issues, are your prospects funded, is the market large enough, what are the alternatives to your offering?

• Build a better snow maker next time.  I did learn quite a bit from my failure.  Next time I will use a finer spray, colder temps, and drier air.  If your product stumbles out of the gate, all is not lost.  Be on the lookout for this early feedback and be ready to re-tool, re-position, or re-price before your product becomes maligned in the market.  View the launch as the midpoint, not the end-point of product development.

So long before you send your product out into the marketplace, be certain you really understand how well it will fit with your customers.  The alternative is thin icy cover, frozen hands, and wasted duct tape.

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.

Markets are not static – they evolve, grow, shrink, disappear, and are built. The challenge is to know when this may happen so you can be ready to take advantage of the new sustenance. Here are a few things that you can do to be sure you don’t end up like the squirrels.

• Having a deep understanding of your customers’ situations is the best starting point. After all, they have the problem and the money (usually). For instance, if you are selling 96-well screening thingamajigs and your customers have big backlogs, then there is an opportunity for you (or your competitors…)

• What is everybody else doing? I’m sure the squirrels quickly surmised that all their brethren were fighting them for the 3 acorns that fell on their acre. If your competitors are fiercely throwing all kinds of effort (and VP’s) at even small business opportunities, then something is afoul in your market.

• The good news is that markets do not tend to vaporize; the problems that were being addressed often just shift to new solutions. Similarly the squirrels are now all rushing to get sugar maple seeds stashed away. Capillary sequencing, HPLC, and shrink-wrapped software are in the process of being supplanted by NGS, UHPLC, and SAS. (next-generation sequencing, ultra-high pressure liquid chromatography, and software as a service, in case you were curious). People still need to buy stuff, just not the old stuff.

• The easiest way to get a sense of market reorganization is to look at some external factors. If the squirrels had realized that last year’s super-abundance would be followed by a lean year, they could have been better prepared (though this, of course, is beyond their walnut-sized brains). Trade show attendance, funding agencies’ programs, M&A activity, and capital raising are all good indicators of where the action is… and isn’t.

So when your dependable sources of nutrition are disappearing, be sure you know where to find your next pile of revenue. Like the trusty annual crop of acorns, things will change and you will need to adjust your diet.