Flying an Ultralight Company

I was enjoying a little peace and quite in the East Woods last weekend when the stillness was dashed by the sound of a chainsaw above my head.  I looked up and saw what looked like an outsized kite with a motor and a person.  This so-called ultralight aircraft was a funny looking, albeit functional vehicle, and it reminded me of how some companies are running their businesses these days.

They operate with only the bare essentials to keep the company functional, eliminating “non-essential” activities.  They have few long-term investments in new products, no employee development activities, and just enough gas to keep it out of the trees.  While a great survival tactic, it has big-time downsides that need to be considered.

• Running light can lead to improved mobility and agility since the organization is smaller.  However, it may be very hard to capitalize on new opportunities with the reduced resources available.

• Like in a smaller aircraft, the ride is pretty bumpy as small changes in the environment (marketplace) can buffet the company around.  A new competitor here or there, loss of a couple key customers, and instability can set in.

• The risks of ultralights are obvious since you don’t need a pilot’s license to fly, and the accident rate is higher than conventional aircraft.  Similarly running the company on the edge of stability will cause some to fall into a tailspin.

• Contrary to what you are led to believe, not everyone is flying by the seat of their pants.  If you consider pharma and biotech, they are spending around $65B this year on R&D.  If you add in the government funding, well over $100B this year will be spent on discovering new biology, developing new therapeutics and diagnostics, and furthering our understanding of disease.  Also in Q1 of this year, $1.4B was invested in over 80 early stage life science companies.

So while the view is quite exciting as you skim over the treetops with your ultralight company, take heed of the risks and missed opportunities.  There are still a number of your comrades that are flying at a safe altitude and will surely capitalize on the opportunities just over the horizon.