Food for thought as you plan your businesses

Since the industrial revolution, scientific discoveries have driven the formation of businesses, how successful have these businesses been? I mentioned in an earlier post that the chemical industry sprung from the energy of a small number of entrepreneurial individuals, with a background, or at least an enthusiasm for Science. How well did these individual pioneers fare over 150 years on. Well actually they have done pretty well, but the journey has been complex. Early successful business plans, were adapted through shifts in science and technology and have been buffeted by market forces and globalisation. From its origins as a producer of laxatives and pain killers, "Beecham's Powders", through merger with Smith and Kline, a second merger with Burroughs Wellcome, another with Glaxo led to the company we know today as GSK. There is a nice time-line found here. In turn GSK has spun out companies like Cellzome and operates by balancing drug discovery, manufacturing and sales and marketing with strategic acquisitions and collaborations, some of which may be absorbed into the parent company and others maintained at arms length. This is just one example, but similar stories are to be found for Biogen, formed in the late1970s and now part of the Idec organisation, or Genentech, which is now Roche, formerly itself Hoffman La Roche. [I like the fact that their domain name is Gene.com]

What is the pattern here? The first is that the founders will eventually move on or

die! The second is that initial business plans must adapt in order to be sustainable. Collaboration rather than head to head competition is often a success, but not always! The processes, whether it be manufacturing, R & D, investment, marketing, sales outlets, advertising, etc. must also be adaptable. How many companies started out with one or two similar products and today's success is built on a totally different form of technology. The BBC broadcast on the radio, then TV, then the Internet, an example of technology shifting, but core business staying constant. When thinking about your business idea, you might want to think in 3/5 year milestones. Let's look at an example of a company formed in 1970, where a different model than that of the BBC is evident.

1970 Richard Branson launches mail order record sales
1971 Record stores open  
1972 Recording studio
1973 Virgin record label
1983 Virgin invest in communication technology
1984 Virgin Atlantic launched
1985 Virgin Holidays
1987 Virgin Cable TV
1987 Mates condoms (Virgin branding might have been inappropriate!)
1991 Virgin Books
1991 Virgin Records Sold
1992 Virgin Radio
1994 Virgin Cola
1997 Virgin Trains
1999 Virgin Mobile
2000 Virgin Money

By now, I think you get the picture! What do you take from this. Branson is a business man who started out as a music fan, but who rapidly realised that the Virgin Brand was more important than the product (or maybe as important) and the phenomenon of Brand-credibility or  Brand-trust, led him to diversify to seek money making opportunities. He now divides his time between charity work and innovative travel through the Virgin Galactic branch of his company! You might like to take a look at the link relating to the 100 largest companies, that I discussed in the session to give you a wider perspective on business and enterprise. A more useful guideline the Technology sector is the Nasdaq (National Association of Securities Dealers Automated Quotations), founded in 1971 and now the second largest stock exchange after the New York SE. The movement of stock in the Nasdaq top 100 can be seen at their live web site (here) 
and will give you an idea of where the

current investor interest lies. Have a play with the links. Think about stock value (red or green), volume of transactions (investor interest), the stock value (this is often quite surprising) and then click and look at a few companies that take your interest. These are the companies that have been floated via an IPO. You should search these terms and find out more for yourself, especially if you are building a company founded on its IP.

One final point, you will be holding "board meetings" and also working on team related tasks. Delegate one of the board members to keep the minutes of all meetings, roles and responsibilities. It will keep you organised and focused and will give one of you (or you can take turns) invaluable experience.