THE BUSINESS
PARADOX ©
Présentation à l’École Polytechnique de Montréal
Journée de la Recherche
26 mai 2011
1
THE ULTIMATE GOAL: VALUE CREATION
Value ≥ ƒ (Risk)
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2
BUSINESS THESIS: A SIMPLE PRINCIPLE
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3
THE UNFORTUNATE REALITY
1
1:5
1:25
1:20
1 commercial success ~ $50M
Total cost: $ 331.25M
(minus ~ $3M license revenue)
5 VC projects @ $10M
Cost: $50M
125 Spin-off @ $250k
Cost: $31.25M
2,500 R&D projects @ $100k
Cost: $250M
Abandon - Transition Rate - Licenses
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4
THE TRADITIONAL THESIS
$B
market
Money
Skills
Pain
Solution
In other words, is it good enough?
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5
THE BUSINESS PARADOX
Opportunity A
vs. Opportunity B
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6
SO WHAT ARE WE DOING WRONG?

Cause #1: Push strategy;

Cause #2: Little interaction with the market;

Cause #3: Opportunistic approach for project selection;

Cause #4: Lack of experienced entrepreneur;

Cause #5: Dysfunctional value creation chain;

Cause #6: Dysfunctional financial community;

Cause #7: Reactive governance;

Cause #8: Short-term vision.
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7
WHY CAN’T WE GET IT RIGHT?
trust
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8
WHY CAN’T WE GET IT RIGHT?
“Ultimately, most business will fail to create value as the
leaders reject the importance of setting a trusting
environment. Trust is the ultimate ingredient that
enables people working together defining the critical
path, identifying risk factors and assessing the main
challenges. Considering those challenges will bring rapid
alignment the deliverables, the priorities and create the
momentum essential to value creation.”
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9
A SYSTEMATIC APPROACH TO RISK REVIEW
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10
THE VIABLE OPPORTUNITY
valuable
Sustainable
11
THE MARKET
Vision
Familiarity
Drivers
Market
Readiness
Growth
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12
THE LANDSCAPE
The Clients
(the prize)
Partners
(Friends or
Foes)
Gaps and
strongholds
Landscape
Market
dynamics
competition
(the
enemies)
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13
THE BUSINESS STRATEGY
Time to
Market
Exit
Planning
The Food
Chain
Business
Strategy
Partnering
Branding
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14
PRODUCT DEVELOPMENT
Need vs
opportunity
Next Gen
Core Value
Product
Scalability
Value Prop
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15
THE COMPETENCIES
Relevancy
Timing
Advisory
Competencies
Performance
Commitment
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16
THE CRITICAL PATH & RISK MANAGEMENT
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17
VALUE CREATION: LIFE CYCLE
Momentum
Depletion
Expensive
Break-even
Acceleration
Profitable
Break-even
losses
Declining
Creation
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18
ULTIMATE VALUE CREATION: A CONTINUUM
Total value creation
VCO 1
VCO 2
VCO 3
VCO 4
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19
INGREDIENTS TO VALUE CREATION



Are the Basics checked?
Do we understand HOW to do the job?
Is the critical path defined?




Can we assemble the Right team?




The deliverables?
The risks?
The priorities?
The competencies?
The Attitude?
Can we go the distance (Cash & Time)?
Is the team aligned?
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20
THE BUSINESS PARADOX
Only then you are ready!
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21
PÉRIODE DE QUESTIONS
Merci
Jacques Denommee
Directeur – Investments
BDC Capital
jacques.denommee@bdc.ca
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22