Having just watched the 2010 World Cup soccer final end in a 1-0 victory, I was struck by a number of things. First, how a country’s fortunes, political capital, and all-around national pride are impacted by a World Cup victory… or loss. Second, how few points are scored in a 90-minute soccer game. Third, how shotmaking did not determine the outcome of the game.
Since I’m not a soccer expert, I don’t claim to know the intricate details of the World Cup final but a quick look at the statistics tells me that both teams were fairly even in shotmaking. The big differences were in penalties and time of possession. Being an armchair sportsman, I entered the viewing public at about 60-minutes into the game, and from what I could see, the winning team was in control of the game most of the time, made well-planned attacks on the defense, and ultimately managed the game to take advantage of the opponent’s 1-man weakness due to the Red-Card ouster of the Netherlands’ Heitinga in the 109th minute.
So, in Soccer, it’s a well-managed game that wins matches. In Business Development and Licensing, it is both a well-managed game and a well-informed team that wins value for the company. In our recent newsletter, we looked into some statistics provided by Campbell Alliance that show how the dealmaking landscape is becoming more complicated while at the same time becoming more valuable and more critical to a company’s success.
Business Development teams are being asked to do more with the same number of dealmakers, yet must process more potential deal candidates in the hottest areas of interest. All of this must be done in a landscape of increasing competition. So, is it better to have more shots on goal? Or take the right shots. While sports teams invest millions to produce the right mix of talent on their teams, the cost is much the same whether one takes many shots on goal in a game versus few. However in the field of innovation, where every shot on goal expends costly and valuable resources, there is a considerable difference between quantity and quality.One of the most amplified examples of this difference is the Pharmaceutical industry.
In the drug development lifecycle, billions of dollars are spent bringing forward potential molecular candidates through the process to become an approved drug. All along the way, failing candidates are winnowed away until a winning candidate is successful. This failure based model is only successful if a company “fails fast, fails inexpensively”. The costs of this model, among other things is one reason many companies turn to licensing deals to de-risk their portfolio. By in-licensing potential candidates, we can leverage the investments of others and select the candidates with the best chance of winning.
Since one trend identified in the Campbell Alliance study is toward Phase II deals, the burden of scrutiny falls on the dealmakers’ due diligence process. Further, it is important to have a very clear picture of what a successful candidate looks like, with respect to your corporate strategy, cultural fit, and other holistic factors in addition to the raw scientific criteria, and to impose this picture on the earliest stages of the dealmaking process. By having this clear picture, we can narrow the funnel of potential candidates and make fewer, but better, shots on goal, yielding more value from the goals we achieve. If we don’t do this, we run the risk of failing later, and failing more expensively on many deals, robbing us of valuable resources to expend on the winners in our portfolio.
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