Product vs. Process #4: Low and High

God, for me, has been a constant tugging, like gravity--never going away, but never overpowering in such a way that it can't be resisted.  Just like I can climb trees, I can resist God.  But like water seeks it's own level, so He always brings me back. 

In college, if I were at a party and there were two conversations--one about football and one about God--once I knew the score I would turn toward the one about God.  If I went on two dates, one with a beautiful lady and one with a Godly lady, the first might have momentary alure, but the second would have more pull, leave me more curious, wondering more, more desirous.  This has been true for as long as I can remember.  I've never had a moment where God was overpowering and transformed me.  For me it was more like having many smaller moments, each one chiseling this rough-hewn stone that is my soul. 

Sin, on the other hand, is not constant.  There are times in my life when I am devoid of it, when there is love and there is companionship and there is serenity.  For me, sin is related strongly to proximity.  If I go where sin is then it can grip me and grab me and gravity can be overwhelmed for a while.  If I am where it is not, then the appeal is much less, maybe nonexistent.  So, as an adult, I don't hang out with attractive single women, I avoid belligerent people, I don't participate in much drinking, I watch movies without nudie scenes, I read books primarily about history, business and God, and I don't shop in stores where I can't afford the stuff.

These are some simple choices that I can make.  Later, I'll talk about the more difficult areas, but first, some...

...Other Choices:  Low Process, High Product Innovations

Don't even think about starting a materials business in which you are required to build something to get the initial sale.  It's a choice, and if you get halfway through writing the business plan and there is no way to avoid building--chuck the business plan and think of something else.  Here is why high product, low process innovations are much better:

R&D:  The R&D is fast.  If your innovation can be implemented on standard equipment, that means  someone owns standard equipment that you can do R&D on.  Rent it from them, rent their technicians if you can, and do the R&D by bringing in your own starting materials and making your samples and taking the results away with you.  Likely, you'll have to work with two or three labs and no one will have the full picture except you.  Having to build a lab with lab scale prototypes and hire a staff to figure out all the problems can take five times as long and cost five times as much.

Patent Protection:  Patents are what you will sell.  File reams of them and document your trade secrets.  Sign secrecy agreements with everyone who touches the material until you are ready to launch a product. 

Outsource Manufacturing:  As soon as you have a prototype in the lab, find somewhere to make a bunch of it.  Again, someone who owns this equipment will rent it to you, especially if its a good, growth market and they have a chance to be a long term partner.  Often, there will be pilot scale equipment available for rent with no long term expectations, and this may be better for the first tests.  Make enough material to test in full scale applications and for customers to test on their production lines.  Iterate a few times, and document everything.  You didn't have to build a production machine or even a pilot line, and you don't have to hire any full time staff for this, though an extra scientist to help understand things is helpful.  Without exaggeration, outsourcing can save you three years and $3-5 million dollars.

Business/Application Development:  You want to get here, where the heart of your business is, as fast as possible.  Get your product into customers hands and get their feedback.  Expect your first prototype to have flaws.  Your goal initially is to find out what the flaws are and fix them and get new, significantly improved products into their hands quickly.  It is not a numbers game, so hire a couple good technical sales people who can listen, ask the right questions, get feedback and find the right applications for your product. Don't hang on one or two big customers--look for 6-10 who will test your product and give honest feedback fast.

You have a huge benefit here when working with other people's R&D facilities and other people's manufacturing facilities, in that you can iterate a product very quickly.  Absorb your customers feedback, fix the problems and get it back into their hands.  Expect to iterate a few times and don't believe any of the crap people will say about not being able to go back to the well a second time, etc. etc.  Customers love a new supplier who brings them something innovative, listens to their feedback and quickly brings an improved product.  Even if they have to iterate a couple times, they will continue if they have a problem you can solve.  In this sense, you are free R&D for them, and most customers expect to use their supplier base for this.

If, on the other hand, you have a product that has a high process innovation component, you may have to rebuild the machine.  This can take 6-12 months and cost a lot of money--at least $X00,000s and maybe $X,000,000s.  Without the machine, it is limited by your time and could iterate as quickly as a month or two and for a few $X0,000s.

The Challenge:  The challenge with innovations like this is that it may be easy to steal or to invent around.  There are ways to mitigate this, and they include:

• Patent Protection:  File early and often.  This will protect you in honest countries and from honest competitors, and that is a big help.
• Trade Secrets:  Find a critical component--often the details required to scale up production--and keep it secret.  Document what the trade secrets are, and who knows them.  Most states have pretty strong trade secret law, with stiff penalties for employees or ex-employees or partners who violate them.
• Choose Partners Sparingly and Wisely:  Choose your R&D, pilot and production partners carefully and develop lasting, long-term relationships.  Ensure they make money while you do.  In the end, non-proliferation will depend on only a few people really understanding the innovation.
• Sell Quickly:   If your invention has real value, eventualy someone will cheat, invent around, or knock off your material.  If this is done honestly, it's okay and a little competiton is good.  Even honestly, if your company is still small and it has been knocked off by Dow, then sell quickly to DuPont and move on to the next invention.  Take the bird in the hand, roast it and enjoy it's succulent flavor, even if you are certain that a bigger, juicier bird is nesting in the next tree.

The Benefit:  There are many companies who rightly see themselves as being very, very good at business development, but aweful at real innovation. These companies look for products they can buy that will leverage the long reach of their business development relationships and otherwise require little up-front investment, other than the purchase price for the technology. 

This Doesn't Make it Easy

Even choosing the right type of innovation, which gives access to a more nimble business plan, doesn't make it easy.  There are technical problems with fitting your work into other people's agendas, with working on equipment you don't own and can't easily change, with building relationships and finding partners whose priorities fit your goals.  In the end, the product has to work, and it has to create much more value than it costs to produce.  If this is the case, a lot of other problems go away.

In the same way, though I can make choices that help me avoid sin, there are other sins so deeply ingrained in my person that I can't get away.  My particular weakness is what I call self-love, and it is steeped in pride, arrogance, a need to be right, sometimes being unnecessarily quarrelsome, and having a deep rooted insecurity that can leave me putting others down and not appreciating and loving others because of this weakness in myself.  Getting away from this is more complicated than closing the book or walking out of the room or movie theater.   Like the high product, low process innovation company, it has to do with building lasting relationships--with God, with my spouse, my children, with accountability partners and others who care enough to help me overcome these weaknesses.  And in the end, if my relationship with God is strong enough, a lot of other problems go away.