Tag : Project Management

Success in Product Development

Implementing and obeying go / kill criteria will ensure that your life science company has a better allocation of resources.For companies, success in life science product development does not mean completed development of a single product, or even successful commercialization of a product. Likewise, triage of one product development project does not equal failure. Successful product development lies in product development operations which best contribute to the success of the company. For any life science product development project, or for product development operations as a whole, projects must be evaluated for four key factors: value, strategy, balance, and resource availability.

Value is the most obvious factor by which to evaluate a product development project. There are many metrics by which to measure project value, such as net present value (NPV), expected commercial value (ECV), Productivity Index (PI) and a host of others. Our favorite metric is slightly different – We take the NPV of expected future profits, divide that by the NPV of project costs, then multiply by the probability of success. Note that for projects that are in progress, only future costs are considered. Money already spent can’t be recovered, so it is effectively irrelevant. Value, while very important, should not be the only thing considered. If your company is evaluating projects by value alone, you are likely making some poor decisions and not realizing it.

Strategy is crucially important in selecting life science product development projects. Companies must determine how the product will fit in with their greater strategic direction. A project that does not fit with the company’s strategy can shift focus away from more important areas, both within and outside of the context of product development.

Bioscience companies should also have a balanced portfolio of product development projects. Balance comes into play in many forms: long-term projects vs. short-term projects, projects with higher probabilities of success vs. those with higher potential returns, projects that are a close fit with corporate strategy vs. projects that are more loosely aligned, products that will protect markets vs. products that aim to expand the company’s market, etc. Too little product portfolio balance, either by too little diversity or too much, can increase risk.

Last but not least, life science product development must take into consideration resource allocation and availability. If an otherwise attractive project will hit a bottleneck because of insufficient resources, it may be more effective to begin another project first which better addresses current and projected resource availability.

In order to be successful, companies need to look at life science product development at a high level, ensuring that not only is each product right for the company, but all product development projects taken as a whole represent the best mix of projects for the company in terms of value, strategy, balance, and resource allocation. While many companies will rush to declare success based on individual projects, lasting success will come from a product development selection process that takes into account multiple factors and is geared to improve the company’s performance over a long term.

"Would you like more confidence that your company is undertaking the correct projects? Would you like to implement a system that will help you improve your bioscience product development pipeline? If the answer to either of those questions is yes, then look no further. BioBM’s experienced consultants have the product development and project management experience you need to bring more certainty and better decision making to your product development project selection processes. Contact us and we’ll get started."

The Lost Art of Go / Kill

Implementing and obeying go / kill criteria will ensure that your life science company has a better allocation of resources.Great ideas are precious things. They are the fuel driving innovation, the sustenance of progress, the energy that powers success. Not all great ideas are so great in practice, however. In the life sciences, as in all industries, ideas that are put into action need to be periodically re-evaluated to make sure they are working out to be as good as we thought they were. If they are not, then we would be best off scrapping them and focusing our energy and resources on something else … but life science companies seem to have a very hard time doing so, and this inability is to their detriment.

For your information...

Want to learn more about go / kill decision making? You can read about the stage-gate project management technique, from which go / kill is based, on Wikipedia.

The area where this lack of go / kill is most prominent and has the largest effects is product development. Life science product development projects have well-defined milestones and easily tracked metrics, yet go / kill criteria are usually nonexistent and when they are they are most often poorly defined and almost never strictly obeyed. Put simply, not having such criteria is a poor business practice and not obeying them is a poor business decision. Go / kill criteria are defined based on the risk at any point in time in comparison to the revenue potential. This information, which may be subjective but is still based on the best knowledge and information at the time the criteria is created, tells us whether we are likely to achieve our desired returns at any stage-gate (the point at the project when the go / kill decision is made) if we move forward with the project. If you are unlikely to achieve the desired returns, and resources would be better allocated elsewhere then the kill decision should be made, yet it very rarely is.

It is, to some extent, easy to understand why companies so infrequently utilize stage-gates successfully. Kill decisions are hard to make. In our business culture, killing a project is often interpreted as the project failing and this can cloud the business judgment of those on the team who do not want to appear to have been on a failed project. In practice, recognizing the need for a project kill and implementing it should be commendable, a gesture that the project team are willing to put the greater good of the company as a whole. Unfortunately, this rarely happens. No one ever handed out a “best project kill decision of the year” award. Kills are not seen as an achievement but project completion is, so most often projects push on even in the kind of adversity that makes desired returns extremely unlikely.

Other types of endeavors can benefit from stage-gate type go / kill decision making. For example, marketing campaigns can be periodically re-evaluated for ROI determination. If the ROI is not up to par, the campaign can be killed in favor of another which has a greater likelihood of success. Distributor / supplier relationships can be subjected to go / kill, and because of easily quantifiable metrics these decisions can be very easily gauged. Go / kill gates can even be easily and beneficially applied to the continuation of existing products. There are a multitude of other areas where life science companies can benefit from such gates as well.

Ensuring that resources are allocated to areas providing the greatest benefits is a cornerstone of a successful company. Ongoing projects and processes have a need to be periodically reevaluated to determine if they should be continued or “killed” in favor of other more promising endeavors. Despite this, life science companies rarely use go / kill decisions. Implementation of stage-gates and proper adherence to go / kill criteria will help life science companies ensure that that their resources are more optimally allocated and utilized.

"Does your life science company use stage-gates? Would you like to better implement go / kill criteria to improve your company’s resource allocation? Do you use go / kill criteria or stage-gating but find that it is poorly adhered to? BioBM’s team of business consultants can help you properly design and utilize go / kill criteria and implement staging to improve business results across a multitude of areas. If you would like to start improving your decision making, call or e-mail BioBM today."