Platt Perspective on Business and Technology

Pure research, applied research and development, and business models 7

Posted in strategy and planning by Timothy Platt on September 29, 2017

This is my 7th installment to a series in which I discuss contexts and circumstances – and business models and their execution, where it would be cost-effective and prudent for a business to actively participate in applied and even pure research, as a means of creating its own next-step future (see Business Strategy and Operations – 4, postings 664 and loosely following for Parts 1-6.)

I began to more formally and explicitly discuss what would go into developing and launching a business that offers research and its output as a source of marketable products, in Part 5 and Part 6. And by the end of Part 6 I had developed and offered a list of qualifying features and goals that such an enterprise would have to meet, and both within its own organization and for the marketplace and the potential client base that it would need to develop:

• A particular type of proposed client business and industry specialization,
• Meshing that business’ niche client focus, with demonstrated expertise and experience in the founders and leaders of such a research firm, with their having established track records for doing productive, successful research and development in their clients’ particular areas of business activity.
• Focus in this, as a founder and owner of such a research enterprise, on the industry and the businesses operating in it that you would turn to and market your business to, as your most likely customers:
• Customer businesses that explicitly need the fruits of research and development that you can offer, that they would see as necessary to themselves in order for them to be and remain as competitive as possible
• But that they would chose not to carry out in-house and on their own.

I raised the issues of direct costs, and of timing and timeframes in the context of that last point, and simply note here that a variety of possible factors can enter into a decision by a business, to outsource at least some of its product-oriented research and testing. But ultimately they all can be expressed at least to a significant degree in terms of cost-effectiveness and fit: a determination of whether or not capability to do what might even be effectively essential research fits into the core ongoing needs of the business, for its meeting its core business model objectives and as a cost-effective endeavor.

As a research provider business begins to prove itself, and as it develops a track record and reputation for success, and at least something of an established customer base, it faces at least a measure of opportunity to expand and to extend its service offering reach. Let’s consider here, at least one possible direction that this can reasonably and cost-effectively take:

• Exploring new types of applications of basic technologies that are held in place in the research business and that have contributed to its earlier success up to now: that have at least something of a track record of success in their hands and that they can successfully market themselves for having.

Let me take that out of the abstract with a specific real-world example: expert capability for developing, mixing, and producing, and testing small batches of specialty exotic materials-based alloys using advanced sintering and related technologies. These technologies make it possible to produce alloy mixes of metals with vastly different melting points and densities, among other relevant properties, that would never be possible outside of perhaps a zero gravity environment from simple melting and mixing, and at anything like a reasonable cost. But it turns out that many of the same set of technologies and skills that are called for there are also called for when making exotic metal enriched ceramics that can be used, when properly formed, as higher temperature superconducting magnets. (Exotic for more routinely considered ceramics, that is.) And many of those here-ceramics-oriented skills and technologies and essentially the same basic equipment are needed for making other specialty ceramics too.

Developing and expanding the materials handling and production capabilities from small batch exotic alloys manufactured through advanced sintering processes, to include test sample production of specialty ceramics such as potential high temperature superconductor samples would call for additional materials science expertise and at least some new equipment and physical space. But this type of business expansion might be quite cost-effective for a business that already has most of the necessary infrastructure and manufacturing resources in place for that already, from their already-current business practices, and where this next step business growth would follow a more linear expansion pattern.

Leveraging similar, relevant experience from their already ongoing work, combined with professional publication of articles on their participation in these new areas of endeavor, in peer reviewed scientific and materials engineering journals and in the news where possible would establish them for this new work too, and help establish them as research resources that a wider range of potential client businesses could turn to. And this brings me to two fundamental questions that the leadership of such a research enterprise would ask and keep asking, on an ongoing basis:

• What are we doing now and what can we be doing now, and as we move forward that would both strengthen our capabilities for the types of work that we do now and also open doors to expanding on that?
• And how can we best market ourselves as being able to offer excellence in doing this work: already ongoing and new to us, and in ways that would more effectively drive business success and growth?

I have been discussing and analyzing the issues of defining and building into an effective marketplace niche, that a new research business can come to dominate, and from the beginning of this series. And more recently and particularly in this installment to it, I have addressed the issues of growing and expanding that niche as an approach to growing and expanding the business and its competitive effectiveness as a whole. I am going to continue that discussion in a next series installment, where I will at least begin to consider the issues of business models and exit strategies, and short-term and long-term and in-between planning. And in anticipation of that, I note here that “exit strategy” does not necessarily mean the founding owners of a business selling it off and walking away from it. This term more generally encompasses transitions from startup and early stage into reliable ongoing profitability, and exiting from what might be considered a business’ infancy into a first real growth phase.

Meanwhile, you can find this and related postings and series at Business Strategy and Operations – 4, and also at Page 1, Page 2 and Page 3 of that directory.

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