Don't concentrate on the set; focus on the scene in intelligence presentations.
The Aurora WDC RECONVERGE:G2 conference began events Thursday with an invigorating and inspiring session, Intelligence Shark Tank. In this exercise, teams representing a variety of companies defend an intelligence function proposal at their organizations to three judges who will either accept or reject their ideas. Each team had 15 minutes to make a case, and the judges had 15 minutes to ask questions.
Participants in this popular session included Spencer Broughten and [REDACTED], Coach: Dr. Craig Fleisher; Shawn Oreschnick and Connor Hamel, Coach: Nat Brooks; and Brooke Stevens and Jay Goodman, Coach: Alysse Nockels.
The judges are representatives from a fictitious company, "Medicorp Scientific," a medium-size medical device company looking to get into 3D printing.
All three teams have the same scenario.
Broughten and [REDACTED]: When dealing with disruption, you can be an ostrich, you can be a fighter (create obstacles for the competition), or pioneers.
We see two phases: Pphase one: year one plan, phase 2, where are we over a 5-year period. Budget for 2 plans is around 300K.
Positive market conditions, high probability this will be a growing market. Similar to aerospace, the market has plateaued—25% 3D may slow, and, shutdown by FDA/DOJ may hamper progress—a small chance.
Potential for ODD—FDA receptivity and market receptivity are determining factors. Should the market not be receptive, they may acquire another company involved in this, as Medicorp is a $50 billion company, acquisition is a possibility.
Thiele: If negative market receptivity is a possibility by FDA, why does this not stop all progress?
Response: Ways FDA might be on the negative side—obstacles they pose. IP capital/cost sharing are other considerations.
Market landscape overview; medical is a growing industry in 3D, we are currently in an enlightenment slope, ability to produce product w longer lifetime is possible. The business model evolution is the path, hone in on mass customization, manufacturing, and supply chain.
Mullin: Clarify that other scenarios exist, you focus on one.
Reply: Overview is that it is possible to have now and immediate future in prosthetics, for instance, risk is in skeletal structures and bone implants 3D printed, which is already in progress.
One-year reliability plan is to have two teams for external intel and internal operations. How does the product fit within existing business units? Is there excess revenue to distribute to another team to tee things up?
Asking for a 10-week program, 1000 man hours, MI team plus 2 reallocations, 3D print labs and staff, BU financials, and select BU executives.
Reply: This is the research planning phase. Five-year plan: We need data to combat inertia. Check out areas for locations for operations, form partnerships, create budget analysis on how it works, where is the competition operating?
The ask: 12-14 weeks, 2500 hours, MI team and eight staff, $275K, R&D stand-up, processes control facilities group, legal team, friendly hospital customers.
Thiele: Where are you looking for larger market?
Reply: This is outside the scope of their research project.
Thiele: In 8-10 weeks are you reevaluating the entire business model? This is to augment or supplement existing business; will this cause existing business to grow or shrink?
Reply: The assumption is this will be built into the budget; asking for extra resources in upfront in one-year plan. We want to see a fit within legacy operations. We need to figure out how groups mesh.
Thiele: Economics is a function of growing or shrinking larger market. If it is shrinking, why substitute a project with what we already do?
Reply: That better fits in the five-year plan. Bioprinting is still not near perfect.
Thiele: We need to know the larger environment.
Reply: This is worked into the larger plan.
Response: Yes. You can get this done without a ton of resources. If you can evaluate the market in a timely fashion, "you're golden".
Thiele: A concern is there are three segments to our business, and we are reluctant to abandon other business lines. They've not fleshed out how to do analysis without any money in a short amount of time. Where are these products going? You need to put your 3D printing in context.
Response: You're not wrong, but this is our plan, this is how we evaluate. This will fit within legacy business units.
Mullin: We just did a purchase 15 months ago, first acquisition ever. You are talking about another big change in 15-16 months? How is this in our culture?
Zena: How does this all fit in the bigger mission?
Reply: Vision is to improve care. If 3D can be top of line in the market, this should be merged into current operations. If we aren't already there, 3D printing will speed up, if we don't adjust to change, we'll be left behind.
Applebaum requests data for proof.
Reply: Need more collection for definitive answer. Growth rates 18-20% for next three to five years, 1.5M-3B in total for 3D printed devices by 2020.
Reply: It is a rosy picture, and we are passionate. We probably went at this with hope this is where market is heading, and this is not going away. It's material, its devices made in fields where we already are.
Reply: 3D printing companies are purchasing medical printing companies. If you want to maintain leverage, we would be buying these companies from competition not in the medical field. We need to react to this kind of M&A action going on.
Applebaum wants context in how this fits in acquisition, and where is this in relation to competition?
Oreschnick and Hamel coached by Nat Brooks.
3D printing field is crowded but still profitable. Bio printing capability is high, tech function not yet refined for wide scale use. Bio-tech 3D printing market is less saturated, we can lead market and gain ROI.
Patent activity may be lagging indicator, it allows a look at market. Innovation driven, patents will be filed. Tech implementation costs will go down.
Factors measured: Low patent apps and low entry costs.
Industry patentscape shows subsets within ODD industry. Machine tooling 3D objects, laser beams, we know where they are filing patents.
Competitor high in 3D systems: All patent filings are 2461 patents, they are mostly filing in US. Patent strength is in the portfolio–they have a majority of weak patents, but they have 200+ patents above 50% in strength. Likelihood of innovation here could be impactful to industry.
Thiele: Where are you going with this?
Reply: Because this corporation is widescale 3D, no industry focus, we recommend this stay with ODD capacity. Technology not quite there yet for us, but we have other strength in another company. We are trying to compare and contrast the competition.
Organovo, another company in the bio print field, is a bigger opportunity going forward. One-hundred forty-two patents filed, 33 text clusters compared to about 250 in another company. This is immature; possibility for us to grow here. Our company is not yet in this field.
Existing patents for Organovo has smaller patents and lower strength portfolio for patents.
Thiele: If the time comes, we can always buy a company that owns patents. What is the larger market for these products? Is our pie getting bigger or smaller? I don't want to cannibalize the business.
Reply: Market is projected to grow in 3D printing.
Thiele: Tell me something about our market. We have three core segments. Will they be robust or weak in the next five to ten years? Why tamper with it?
Reply: Bio 3D printing was focus.
Thiele: Why is this not the Titanic?
Reply: We know this is a growing market. We want to identify which aspect is most profitable for us. We are one of many players; we need to get into biodevices.
Reply: Monitor strength of patent applictions, monitor acquisition of partnership activity. Can we get in via acquisition? Partner with an adjacent industry? Successful medical trials use 3D printing innovation—need to montior it. Also monitor adoption into mainstream healthcare.
Thiele: Put this in context.
Bio print tech not tech advanced enough for widescale use. Industry lacks clear leader and this needs attention.
Near term–maintain focus on ODD. Remain vigilant for indicators. Start strategic planning for potential pivot, very little spend, this can be done in-house.
Looking ahead: reevaluate market conditions, explore acquisition of partnerships, identify markets within bio printing.
Thiele: Cost? When are we spending?
Appleabaum: How much money do you need to maintain this for seven to ten years? What are associated costs?
Reply: Somewhere around a few thousand per month to get a subscription to (research) product.
Thiele: When will you want more money?
Reply: Depends on pace of maturation of the printing market.
Mullin: Cost is then a few thousand per month for the next 10 years.
Thiele: Over 10 years, where is larger market going for our three core product groups? Larger, smaller? Efficacy of 3D comes into focus, this is not part of plan.
Reply: Looking at patents, the market is saturated. We can't grow there as one of many players.
Thiele: You keep talking about patents. I don't care. I care about core business. Where is this going? Disappointed this is not part of your intel strategy to see if this is worth getting a slice of the pie.
Mullin: In our history we've made only one acquisition, but three to seven years, potentially seven to ten, are we then simply followers?
Reply: Better for us to be a fast follower due to associated risk. We are monitoring maturity of market and think our three businesses as they mature will see similar projection in bio printing industry. Potential for market is to grow. Adding this to portfolio when time is right and market is mature enough is a good idea.
Thiele: Get this on the calendar. Give me an update later, this is mushy. Needs timeline for investment; lead up to that takes time. Building this story and fixing understanding of markets is necessary by third quarter.
Applebaum: We remain vigilant to key indicators, what are the blindspots?
Reply: Other factors besides patent filing and entry into technology are partnerships, medical trails adoption into mainstream healthcare establishment, insurance and reimbursement.
Fast follower acquisition requires more research on the company not yet available, we don't know which company is the best to look at in three-seven years.
Global 3D medical printed devices market is expected to grow, at rate susceptible to variances: competition, regulation, it is capital intensive.
Mullin: You know we've only had one acquisition 16 months ago.
Reply: Looking forward we want to grow with M&A.
Four aspects to 3D printing tool: machine, software, output, material. Of these four, we don't see three as strong monetary value. Machines expensive, quickly obsolete. Output; dream to have repeatable cheap parts, not much value in future. Software dominated by open source community leads to innovation in the space and will control that mechanism. We are left with material—a strategy looking forward. We should be a material company. We recommend the board pivots from printing of parts to securing IP around material.
Thiele: How much value in design software implements?
Reply: output of 3D printing has no value; goal is to reduce cost of parts.
Thiele: Who is designing parts?
Reply: Another company to license our material. We want to stand in a position to support these companies by providing material that is medically approved. Material takes long time to get approval, if we monopolize the market, we can allow a multitude of companies to succeed.
Applebaum: How does this fit within existing business?
Reply: Three lines will continue as is today.
We are looking at one and five-year plan. One-year; focus on acquisition or securing the IP of medically approved material for 3D. Five-year: Expand upon one year plan. We will become experts on obtaining material.
Thiele: You were to come up with a research proposal. You have a strategy unencumbered by data. I am not interested.
Thiele: Layout a plan to research how, when, where this tech could be implemented. You've jumped to a conclusion we must do this. Is market for core business to survive in five to ten years?
Thiele: Answer the question asked.
Reply: We want to control and license material to make money off it.
Mullin: You conclude quickly one area to research further—what's your plan to research?
Reply: We are in our second slide. We want to develop resins and support open source community for hardware software, we want to focus on materials, find the best for printing by other companies. Too much depreciation.
Thiele: I want to know for three core product lines whether they will survive in next ten years. Nothing in recommendation about how to validate size of market pie 3D will play in. What is it you will do for us?
Reply: We researched these areas, recommend materials, we will need more research done.
Applebaum: Demonstrate this with empirical data?
Reply: Based on our experience in 3D printing and things available in open sources.
Thiele: My vote wins, your vote loses. You did not come up with a research plan to investigate how 3D enables us or not to perform in existing environment. You have a strategy based on assumed research activity.
Mullin: Your strategy is maybe not wrong, but we need more information.
Thiele: You were asked to have a research plan.
Applebaum: Why do you research, what does it cost, what is the headcount? Do you need more people to do this in addition to existing business?
Reply: Depending on whether or not company will pivot will determine headcount. Are we investing in the past or moving forward?
Mullin: Let's assume we adopt this. What will this cost to do research and focus on acquisition of material?
Reply: We will need 2-3 headcount over 2-3 weeks to provide initial recommendation.
An inquiry was posed to the audience: What did you see, like? What are observations?
Applebaum: Team one had great acumen but they needed more context and less reliance on third party data that doesn't get to how this impacts our organization.
Mullin: Complimented all three groups on their participation. Team one was polished. Remember leadership has different learning styles. Data was great but relied a lot on "trust us." Be careful not to be perceived as arrogant.
Thiele: Thanks to all three teams. Team one—had a plan with time and numbers but it was incomplete. When you are asked to give a research plan, think of three tiers of intel: Larger business environment, what happens in industry, and what happens with the stakeholders. They couldn't address them, but it should have been part of the plan. Other critique is to have embedded assumption was 3D printing was the way to go. Intel function has to give data, provide roadmap to the future.
focused a lot on patents, and it was the set not the scene. It led analysis but did not support it. You need to understand the business and the industry.
Mullin: Very well done. Good sense of humor, but he did detect a few moments when participants seemed almost sick…be aware of your emotion and don't betray it.
Applebaum: In agreement with fellow sharks, but wanted to hear a story around the data. Rather than going through each competitor, overlay them and show we our company sits within them. "Wow me" with the budget. Bring numbers to the exec team to get buy in.
Applebaum: Team three—it wasn't a bad pivot, but tell me why—context necessary. Give me reasons to agree, not reasons to be put off by your method of presentation. If you want to take a company in another direction there needs to be a reason why.
Mullin: Loved creativity and that they rolled the dice. Takeaway is that conversation presented other opportunities and willingness to say "this is what we need to do," but there needs to be context.
Thiele: When in an intel function, make sure you understand the question you are asked to answer. It may not be the right question, they did not address the question asked. On actual strategy itself, it is flawed because the printer, software, material was covered, but you did not have the design. You leapt to strategy without having research to support it. Don't be an advocate, be an analyst.
The winner is: Team two.