Product Development R&D Strategies

Outsourcing R&D: Opportunities and Challenges

April 26, 2012 – 11:37 pm

Recently the Tech SIG of the OC IMC had an on-site look of the opportunities and challenges of R&D outsourcing, as our hosts from DeviceLab shared their successes and problems in providing R&D services for the development of medical devices and other products. DeviceLab, Inc. is a contract design and product development firm which takes products from concept to market. It was established in 1998 as a full-service R&D Company for technology assessment, proof of concept, mechanical engineering, electronics, software, industrial design, prototyping, manufacturing, integration, FDA regulatory consulting, and consumer product design. Their expertise includes user interfaces, medical devices, hospital equipment, lab instrument development, and related industrial design for start-up entrepreneurs all the up to Fortune 500 Companies. The following are the main points brought out during the presentation and discussion:

Why Outsource Product Design R&D?
• The business is new to the Industry and does not understand the regulatory environment, materials and processes, and professional networks in the industry
• The business may have a shortage of staff, equipment, and other resources
• The outsourcing firm may have a specific need for expertise or technologies
• The project has a limited market window and needs a fast time to market
• There is a need to reduce development costs and risks

How do you outsource a project?
• Define specific R&D project development needs and perform “Make or Buy” decisions
• Research for potential outsourcing partner(s)
• Write detailed product requirements document
• Define deliverables in terms of hardware, software, quality standards, etc.
• Plan the project, establish an R&D schedule, and agree on costs

Advantages of outsourcing R&D:
• Allows a company to concentrate on development of their core competencies
• No need to add R&D staff with long-term cost commitments
• Available resources, network , technologies, experience, at one location
• Reduce risks, costs, and time to market by contracting with a firm that has done similar projects before

Disadvantages of outsourcing R&D:
• Concerns with project control, interfacing, definitions, agreements
• Less opportunity to develop new internal know-how and core competencies
• Higher probability of leaking intellectual properties

In summary outsourcing R&D offers distinct advantages for many types of technology based businesses requiring significant R&D. A successful outsourced R&D project requires selection of the right outsourcing partner, experienced product development project managers to carry out the project plans, and an adequate technical staff for quality output. Naturally this assumes the development of an agreement with a clear scope of requirements, list of deliverables, schedule, and effective project reviews. Confidence is built up as milestones are monitored and met. This will lead to a longer term relationship for multiple projects and potential production opportunities.

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Innovation Methodologies Product Development R&D Strategies

Outsourcing Medical Device R&D

April 21, 2012 – 12:46 am

Outsourcing Medical Device R&D was discussed at a recent Device Alliance meeting. A panel included Contract R&D, large medical company, and small medical companies. The large medical company was self sufficient with respect to R&D and would not consider going outside unless there was good definition of a product and it was outside of the core competencies within the company. They would hire expertise for new product areas —-rather than go outside. This could involve strategic partnerships or acquisitions for new areas of technologies. A smaller business could take a different approach. After obtaining a key technology person an emerging business could go outside to flesh out a temporary R&D organization to get a prototype for initial studies and feasibility confirmation using very experienced people.

As a starting point for going outside for R&D there needs to be market research leading to a product requirements document with a clear vision for the future of the product. Spending time with potential users is important. Starting R&D with only an idea is may not be the most efficient use of R&D outsourcing. Ideas need to be fleshed out with the potential customer in mind as to payment, use, potential, etc.. It is also good to consider competition and intellectual property issues early in the R&D process. A products requirements document needs to include specific ideas for a product, but leave some room open for innovation including trade-offs for early discovery and potential competitive constraints.

Outsourcing can include incremental innovation or new product development, but should not include unnecessary constraints on creativity. Make sure the users have bought into early concepts and that reimbursement is possible. Watch what doctors and other users do and how they use devices. The true test is going through clinical trials. Consider value of outsourcing relative to potential sales, meeting market windows, available resources, and risk. In some cases it would be valuable for the R&D vendor to have some equity incentive—especially if they are to have any role in sustaining engineering. Working with small companies may require creative financing.

Some technologies developed in universities are difficult to outsource because of the lack of expensive equipment. Here it may be possible to form strategic partnerships for joint development.

Sometime this involves virtual Companies. In any case– leadership of the total team is key to success.

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Competitive Strategic Information IP Including Patents R&D Strategies

Competitive Patenting

March 22, 2012 – 7:00 pm

IP and business strategies should be well coordinated. One should not invest in patents that won’t further ultimate business goals. If you hold patents on existing products look at strengthening your present patents by adding new applications based on new technologies for related markets. Sometimes it is possible to purchase or trade related IP rights related to primary business strategy. In any case make sure you know where your business is headed and get important patents in your emerging markets. Do not wait for competition to act—be there first!

Google’s recent $12.5 billion acquisition of Motorola is example of the value of a large related group of patents. This was smart for Google even though Motorola has been losing in the handheld market. Google isn’t after Motorola for its cell phone markets—but its portfolio of 17,000 patents. That patent portfolio was incentive enough for the internet giant to invest. This helps Google grow its communication, advertising, and data markets. This is a great example of working toward comprehensive patent coverage of related technologies.

Last week I attended a presentation where David Kappos, Director of USPTO, spoke. He says they are accelerating work on the patent backlog and that the fast track path for patents is reducing the overall time for those paying an extra $4,800. One case he cited took 41 days rather than an average of 17 months for first office action. A considerable backlog is expected to remain for several years. There are also new possibilities of remote interviewing of examiners at some length to explain patents as they are being filed—with extra charges for accelerated services. In the future new satellite offices are also a possibility. Acceleration of patenting could help establish early leadership in a new product area.

To consider serious patenting strategies one must have scientific literacy. This is often missing in some new startups that may have a great idea, but are unable to develop it into a patentable product. In this case— get outside technical help to prove the technologies and economic feasibilities and legal help to file the patent. It is important to be first to file. This is especially critical with respect to international competition since Japan is actually filing more patents than the US and by 2015 China is expected to lead the world in patent filings.

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Competitive R&D Competitive Strategic Information Innovation Innovation Methodologies

Questions to Accelerate Disruptive Innovation

March 8, 2012 – 11:11 pm

A number of questions can be asked, but what are the ones that may provide disruptive innovations?

An article in Chief Executive (Jan/Feb/2012) presented an array of tactical questions as follows:

Tactic #1 “What is?”—try to understand others’ experiences with diverse questions about physical, intellectual, and emotional issues surrounding basic needs to develop empathy for what caused a need and related what if questions.

Tactic #2 “what caused?”—try to find out why things are the way they are and what caused the need for them to be the way they are. Here you can also look into the who, what, when, where, and how to determine basic needs.

Tactic #3 “why” and “why not?”—try to find why there is a need to uncover what might be a disruptive innovation. Here looking at alternates could be worthwhile if followed up with patent research or strategic analysis that might tell why someone had done something different. In any case—try to get to the basics—- and then be innovative.

Tactic #4 “what if?”—try to find a new marketing methodology if a suitable one does not exist. The same can be said about new manufacturing processes, materials, or radical functional designs that require some new teaching.

Leaders should ask questions of a wide and diverse group of people that may or may not use the product or service—but might influence a potential buyer. One needs to get to the basic need and creatively deal with it. Then leaders need to identify the concepts that may be novel for patent and other research—– and potential development. Good incremental innovation could still be important if disruptive innovation does not occur.

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Innovation Methodologies Product Development R&D Strategies

More on Scrum Program Management

February 21, 2012 – 11:37 pm

As I wrote in a recent blog, SCRUM is a management methodology that is an innovative approach to getting complex projects work done. It has been used for aerospace, medical, software, and other developmental projects. SCRUM was recently reviewed at an OC PDMA meeting relative to improving project definition and development. PDMA is a well known group for Project managers and Product developers. The meeting was quite successful in communication of the SCRUM methodology.

I continued to find that an advantage of SCRUM is that it is designed to make change be an integral part of the development process because during every sprint they stop to reflect and learn for the remainder of the sprint. Changes may also be done daily at team meetings that the SCUM Master calls—-this is to remove obstacles, make the team more effective by focusing on the immediate objectives, maintain a burn down chart, and facilitate progress. These short meetings, focused work, constant review, and focus can pay off by getting to key problems sooner rather than after expensive delays at a high burn rate.

During this activity the Product Owner is accountable for product sources, defining product features, prioritizing development tasks, and making sure the team is working on the highest value features. Since development projects are divided up into specific tasks and features that can be demonstrated—- new features can be added or removed according to changing market needs or excessive cost of development of a specific feature that may not be cost effective. By getting early feedback on problem areas, identifiable cost of difficult non-essential features, risk, and potential quality problems one can have working products sooner and at a lower cost. Again, the power, efficiency, and other possibilities of the SCRUM Team seem to be significant for many product developments. By posting problem areas on a working display that all team members can see communication is improved for the whole team. Some significant SCRUM Values include:
• Focus on the current part of a project
• Team visibility
• Courage to act and change when necessary
• Respect for team members

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Crowdfunding

More Crowd Funding Ideas and Sources

January 19, 2012 – 12:21 am

There are more crowdfunding sites that hopefully will fuel innovation of new startups or projects to become viable candidates for angel or VC funding. This will result in creation of new jobs. The new bill in congress that would allow an SEC exemption for crowd funding sites will allow equity investments from larger numbers of small-time investors. This bill will reduce the barriers for small business, allow new projects, protect investors, and allow a larger following of an idea to invest. This will change the landscape of Angel and VC funding by proving out ideas for later investment. This can also help prove out ideas by providing preliminary market research which could be valuable for additional rounds of funding. The following related site reference may also be helpful for non-profits to fund and idea or cause:

http://p2pfoundation.net/Crowdfunding

Also try to leverage your local media sources by using news releases about your Crowdfunding. This may be a good way to be featured in local newspapers, radio, and TV. These news sources may even place other articles about crowd funding activities to provide encouragement for new business and more jobs. This can be an additional form of marketing for a product when you are ready for serious production and sales. Crowd funding can also help to grow a customer base. Read more about 8 Crowdfunding Websites that can help you raise funds.

http://www.businessinsider.com/8-crowdfunding-websites-that-will-help-you-raise-funds-2011-2#ixzz1ftJOLF3O: http://www.businessinsider.com/8-crowdfunding-websites-that-will-help-you-raise-funds-2011-2#ixzz1fKRdQsYt

The following site can help create a funding network:

http://www.growvc.com/main/networks/networks-Partners/?gclid=CJb7qIL_4awCFQg1hwod5052oQ

These networks can create value for many applications such as incubators, accelerator programs, Universities, student networks, associations, institutions, startup networks, boot camps, startup events, and niche specific networks. You don’t have to start building your network from scratch as you can tap into their global startup ecosystem of thousands of members and run your own network on top of the tools that they have created. There are many crowd funding sites—so beware of the costs and current legal issues before getting involved.

Here are a few more potential Crowd funding and related fund raising sites:
buzzbnk http://www.buzzbank.org/
biracy http://www.biracy.com/
chipin http://www.chipin.com/
capangel http://www.capangel.com/
cofundit http://www.cofundit.com/
crowdcube http://www.crowdcube.com/
crowdfund http://www.crowdfunding.co.za/
citizen effect http://www.citizeneffect.org/index
cofundos http://www.cofundos.org/
fundable http://www.fundable.com/
revenue trades http://www.revolutiontrades.com/
sonicangel http://www.sonicangel.com/
investedin http://invested.in/
40billion http://www.40billion.com/
digital garage http://digitalgarage.co.za/
globeforum http://www.globeforum.com/
growvc http://www.growvc.com/main/
innovatrs http://innovatrs.com/
podium ventures http://podiumfunds.com/
raisecapital http://www.raisecapital.com/home…
seedups http://www.seedups.com/
seedmatch http://www.seedmatch.de/
trampoline http://crowdfunding.trampolinesy…
vencorps http://www.vencorps.com/
venture bonsai http://www.venturebonsai.com/
wealthforge http://www.wealthforgeonline.com/
wiseed http://www.wiseed.fr/wicket/web/…

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Innovation Teams Product Development R&D Strategies

Scrum Program Management for Product Development

December 13, 2011 – 10:41 pm

SCRUM is a management methodology that is an innovative approach to getting complex projects work done. Originally developed for software development, it works well for many complex projects. The Scrum management methodology has been used for aerospace, medical, software, and other developmental projects. Scrum was recently started in 2010 at Source Scientific to improve their project development process and is now being used to complete seven projects. I helped set up an OC Tech SIG IMC Meeting that was hosted by Source Scientific to help learn how they use Scrum to manage multiple medical device developmental projects. This was a chance to see it in action on seven projects in a working environment with top management reporting on and discussing its applications. The meeting turned out to be quite successful in communication of potential Scrum applications.

Source Scientific, incorporated in 1981, is now a BIT Group Company. They provide contract engineering and outsource manu¬facturing services for clients from initial discovery and design through manufacturing and after-sale service of medical devices and instruments. Source Scientific is registered with the FDA as a medical device design and manufacturing facility that develops complex medical instruments for multiple clients and has produced many thousands of medical and diagnostic instru¬ments—some for large names in the medical industry.
Bruce Sargeant, President and CTO from Source Scientific, is currently using the SCRUM process successfully across seven projects on a daily basis. He has applied it across their cross-functional teams; thereby taking into account the requirements of the total business.

Source Scientific does not fit the classical Scrum model exactly. Their process is still evolving as they gain experience and learn what works and what does not. They started with two projects, but added others as teams formed spontaneously around motivated individuals. They found the short stand up meetings as an efficient method of conveying information. The beauty of Scrum is that it is designed for change. At the end of every sprint they stop and reflect –if something isn’t working they change it…that’s the whole idea. Short meetings, focused work, constant review— then improve next time. Their applications of Scrum include the following problems and characteristics:

• Projects with electronics, software, and manufacturing team members.
• Client driven projects where each client has his own needs and priorities.
• Clients always want their project first.
• Clients may not always want to interact with us the way we want them to.
• Projects that vary in size and function.
• Customers may be close or on the other side of the world.
• SS team members need to be highly skilled and often are shared.
• Deadlines for one project may occur at the same time as others.

The power and possibilities of Scrum seem to be endless, and its framework and terminology are relatively simple by pasting project requirements, progress, and problem areas on a working display that everyone can see. All projects are divided up into increments and features that can be demonstrated. Features can be added or removed according to market needs or excessive cost of development that may not be cost effective. This results in early knowledge of problem areas, identifiable cost of difficult non-essential features, risk reduction, quality, improved client communication, and working products.

The Tech SIG of the OC Institute of Management Consultants chapter would welcome similar opportunities to discuss successful program management of technology projects with OC companies.

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Crowdfunding

More Crowd Funding Sources for New Startups

December 12, 2011 – 9:37 pm

Creation of new jobs from new small business is one objective of the potential new bill in congress that would allow an SEC exemption for crowd funding sites, so new startups could raise up to $1 million in exchange for equity from small-time investors. There are already many crowd funding sites that accept donations with no promise of monetary remuneration—instead are paid back in chip clips, early access, memorabilia, and other favors. The Administration is pursuing efforts to cut down regulatory burdens on small business fund raising while maintaining investor protection. They also support the establishment of a “crowdfunding” exemption from SEC registration requirements for firms raising less than $1 million (with individual investments limited to $10,000 or 10% of investors’ annual income) and raising the cap on larger “mini-offerings” to make it easier for entrepreneurs to raise capital and create jobs. This bill is currently being drafted to reduce the barriers for new crowdfunding, protecting investors and preventing fraud, being able to advertise your offering, and allowing an unlimited number of unaccredited investors. This could change the landscape of Angel and VC funding. On one hand it could provide enough preliminary money to prove out an idea to reduce risk for later investment. On the other hand it could provide vast new sources of funding that could surpass present available funding without the present regulatory controls. The following are some more of the present crowd funding sites:

ProFounder https://www.profounder.com/ is a professional platform website for entrepreneurs to raise investment capital. They are presently working with the government regarding new solutions to expand and improve capital access for entrepreneurs. With ProFounder tools, you plan fundraising, create your pitch, and offer terms. Profounder charges up to a 5 percent fee of the total funding. Entrepreneurs (and start-ups) must be registered as a C-corp, making it legit to receive crowdfunding investments. Here you choose how much revenue to share and how long (the number of years) you’ll share it. Because this is not a loan or equity, your payments to your investors are not fixed, and depend only upon your success so you do not give up company ownership.

MicroVentures http://www.readwriteweb.com/start/2011/04/crowdfunding-your-startup-with.php a prime example of peer-to-peer lending or donating targets companies that are creating technologies, products and services in core areas, such as business products, consumer products, electronics, online technology, and more. They have over 500 investors that amounts to potential or over $25 million in liquid net worth. It is not clear what the constraints are on this investing, but they have raised $150,000 for distribution to several startups. Their process is automated online so to minimize all of the paperwork and handle most of the investor calls. Here you submit your business plan and $100. And if you are approved, your business will be listed on their website. They charge 10 percent of the offering amount—if the offering is completed. Since they work in the following areas they are worth considering: Biotechnology, Business Products and Services, Computers and Peripherals, Environment, Electronics, IT Services, Medical Devices and Equipment, and other related areas.

Appbackr http://www.appbackr.com/is a wholesale marketplace for mobile phone apps. Developers post an app or app-in-development to the appbackr marketplace. Backers can then purchase a bulk of apps wholesale, and the developer receives immediate payment. Backers can view monthly sales reports and the daily run rate of purchased apps on the appbackr dashboard. Here the developer must be a registered Apple or Android developer.

Quirky http://www.quirky.com/ offers product designers, engineer types, and inventors the chance to bring products to market. Submit your idea for $10. If your concept is selected and brought to market, you’ll earn a share of the revenues. Influence the communal product development process and you’ll also earn a share of the revenue.
They seem to have some significant strategic partners.

Peerbackers http://peerbackers.com/ leverages social media to help you raise small increments of capital from your peers— in exchange for tangible rewards. Here you create personal and venture profiles to share your stories through social media. After launching your campaign they send progress updates. As you reach at least 80 percent of your total funding goal (by deadline) your funding is released to you. They charge a 5 percent fee, in addition to third party processing fees.

Another post will be coming out with more sources.

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Crowdfunding

Crowd Funding or Sourcing for New Startups

December 3, 2011 – 10:37 pm

With the economy down and the need to stimulate more jobs, the U.S. House of Representatives passed a bill (Entrepreneur Access to Capital Act, H.R. 2930), that would allow an SEC exemption for crowd funding sites, so new startups could raise up to $2 million in exchange for equity from small-time investors. It is going to be interesting to see if this becomes a reality because existing law prohibits startups from taking equity investment unaccredited investors (individuals with $1 million net worth). Now, after almost 90 years, new crowd funding technology and related activity has brought the issue up again.

A recent article in the OC Register told about raising money from Crowdfunding sites. The article mentions www.Peerbackers.com mentions a case of raising $10,000.in 45 days with average contributions of $15 to $50 . It also mentions web services like IndieGoGo.com , Kickstarter.com and RocketHub.com that provide platforms for new startups to get funding from a wide variety of potential contributors including friends, relatives, and social media communities. Policies and costs of raising capital differ so one should select the platform for raising funds very carefully. IndieGoGo, a San Francisco-based crowd funding source, releases funds regardless of how close the original funding goal is obtained. Their service is not without expense—it takes 9% of the total from funding that come up short of the goal, compared with 4% for those that meet their goal. The group called Kickstarter claims to be one of the largest crowdfunding sources for creative projects in the world (13,000 campaigns since 2009). One of their success stories was the open source Facebook alternative Diaspora raising more than $200,000. Their projects must be fully funded within a time limit or no money changes hands. Project creators offer rewards such as products, benefits, and experiences to contributors. They integrate with Facebook and Twitter, offer a widget for your website, and charge a 5 percent fee in addition to third party processing fees.

A group called #SciFund Challenge http://scifund.wordpress.com/ allows people to contribute to the excitement of making science. Long ago Plato was funded through wealthy families, but now regular people can participate. This is one of the largest science crowdfunding initiatives in US history. They are partnered with researchers and scientists from around the globe. Currently there are 49 research projects asking for your support. Here scientists have to convince the general public to open their wallets for donations. This group includes scientists from ecology, computer science, math, and other disciplines. It is being run through RocketHub, a major crowdfunding platform on the Internet.

Caltech recently (June, 2011) had an Enterprise Forum program on crowd sourcing. This allows pooling of knowledge, rapid distribution of data, outsourcing, raising capital, collection of intelligence. IP still needs to be defined well and protected and one should seek out expertise in this area as to rights and ownership of technology.

Also, the INC magazine carried an article on Crowdfunding with some very helpful information and a number of possible sources raising from $5,000 to $150,000. They also tell about KICKSTARTER, INDIEGOGO, PROFOUNDER and MICORVENTURES in their November 2011 issue.

Funding new small businesses is one important way to create new jobs. There are already many crowd funding sites that accept donations with no promise of monetary remuneration—–instead are paid back in chip clips, early access, memorabilia, and other favors. These funds don’t need to be paid back because they’re not loans. This type of funding is not magic—it will still require one to have a good pitch, work hard, and find an audience with a needed product or service. As we all know, all good ideas are not guaranteed success. There have been some problems with this source of funding and it is not suitable for all funding requirements. Using this methodology for equity investment (if it is approved) could also bring prohibitive due diligence requirements to crowd funding—so this will be interesting to watch. There are already many helpful sites about crowd sourcing. The following is a very small sampling of what is out there:

Startup Addict
The Startup Addict crowdfunding website is fairly new to help Entrepreneurs get a business launched. This could be good if you are not in some of the more creative entertainment or inventor orientated sites.

Venessa Miemis
Here is some research that deals with interfacing with social networking separated into categories for creative/artistic projects, business development, and investment.

http://www.businessinsider.com/8-crowdfunding-websites-that-will-help-you-raise-funds-2011-2#ixzz1fKRdQsYt

I will be writing another post that will deal with many more helpful sites, sources, and issues.

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Innovation Methodologies IP Including Patents

Brainstorming for Improved Intellectual Property

October 10, 2011 – 6:46 pm

With the new patent laws the time of time filing is more important than in the past. It is now more necessary to capture new ideas and concepts as soon as possible. Brainstorming with the idea of capturing new ideas has been done for years, but focused discussions with a group of 5 to 10 people with various disciplines can be helpful in looking at all possible applications for new product patents. Here it would help to have marketing, engineering, manufacturing, and finance represented.
Such a meeting should have a specific purpose so the right people can be prepared to contribute new ideas to new product Intellectual Property (IP).Results of brainstorming and subsequent prioritizing of concepts and their application helps management select areas for more work, helps in R&D strategic planning, and can provide initial information to file a provisional patent. By capturing ideas early patent attorneys can develop broad claims for more valuable patents. Then by “filling the white space” it will limit future competition.
Brainstorming may be thought to be an art and a science. It involves the gathering of ideas which could be an art and the prioritizing and applying ideas or concepts is more of a science. Gathering ideas needs to have few constraints or break though technology ideas or concepts may not emerge. Just because there are many patents in an area is no reason that a new break though technology cannot be added. Here one has to be aware of the “obviousness issue” so one does not file for something that is already covered. Some specific ideas on brainstorming to gather ideas to increase higher quality IP generation include the following :
• Set goals for directed brainstorming for a specific market, topic, product, or wish list
• Build on present technology and products and be open to potential breakthrough ideas
• Invite 5 to 10 people of different levels, disciplines, and functions
• Include marketing, engineering, and someone with patent and technology knowledge
• Have a means of recording and displaying ideas in categories
• Create an open focused environment with key people where there are no bad ideas
• Have more than one idea generation session with breaks for informal discussion
• Rate and prioritize ideas as a team—select the best ideas to meet goals
• Expand and write simple disclosures on the best ideas with future strategic potential
• Do research and have discussion with patent counsel to determine potential coverage
• Have discussion with inventor, management, and patent counsel to decide next step

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