Business_Case__Eng_

May, 2005(c) 2005, US Civilian R&D Foundation1The U.S. Civilian Research and Development Foundation (CRDF)Industry Partner Development Program (PDP)Your Partner for Ventures in Science and TechnologyBusiness CaseInnovation Business SeriesMay, 2005(c) 2005, US Civilian R&D Foundation2Business Communication Mistakes•Talking first (in meeting)•Too much information•Addressing the wrong issues•Political statements•Irrelevant commentaryPersonal passionate issuesMay, 2005(c) 2005, US Civilian R&D Foundation3Primary Purpose?•Inform?•Explain?•Reference?•Demonstrate?•Convince?•Encourage ActionMay, 2005(c) 2005, US Civilian R&D Foundation4What Action & Who?What action?Schedule a meetingConvince superiorReview a demoExplore a business relationship Who should take action?Decision-makerTrusted advisorFinancial officerWhy?They need (not want)May, 2005(c) 2005, US Civilian R&D Foundation5Determine what they NEED?•Listen, don‟t talk•Ask questions:Primary business goal?Current situation?Next steps?Top Challenges?Where technology might help?May, 2005(c) 2005, US Civilian R&D Foundation6Business Goals versus Desires•Test business goals:Ask them to define their success? What measures?Test their answers:•Successful? if „a‟, but not „b‟?•Determine most important and realistic goals•Customize your pitchMay, 2005(c) 2005, US Civilian R&D Foundation7Determine Decision Makers•Who makes business decisions?•Who takes actions?•Who makes financial decisions?•Who makes technical recommendations?•What is the relationship between the individuals?•What is the last decision and how was that made?May, 2005(c) 2005, US Civilian R&D Foundation8Ready to Start? (Checklist)1.What they need2.How you can help3.Who is the decision-maker (action taker/target)4.What action you desire5.What you must convince6.Your argumentMay, 2005(c) 2005, US Civilian R&D Foundation9Business Argument•CredibilityWho are youWhat are you there to doWhy they should care•The issue (confirm?)•Solution (summary)•Key benefits•Competitive position•Achievable results•What youneedMay, 2005(c) 2005, US Civilian R&D Foundation10Forms of Argument Needed•Statement (Pitch)5 to 30 seconds•Presentation5 to 10 slides•Proposal1 to 2 pagesAppendix in RARE casesMay, 2005(c) 2005, US Civilian R&D Foundation11Target‟s Language and Mindset•TermsBusiness advantagesBusiness costs•GoalsLower costsHigher profit marginMore salesBetter market positionLower product returnsLower customer service costsEtc.May, 2005(c) 2005, US Civilian R&D Foundation12Presentation vs. ProposalPresentation(1 slide each)•Title slide•Business issue•Technical issue•Technical solutionSummary: key aspects•Business benefits•Market & competitors•ROI (time and money)•Next stepProposalFact boxContact info, project name, proposition, funding, schedule, return•Proposition statement•Diagrams, charts, tables•Sections:PropositionIssue and solutionMarket & competitionSales & distributionManagement planProjectionsROI (time and money)May, 2005(c) 2005, US Civilian R&D Foundation13Length & Style•Short and direct as possible•Focus on 1 key aspect•One good argumentis stronger than several good arguments•Each section should NOT be equal length•Fewer words make a bigger impact•Stay away from details and supporting information•Use quotes and convincing statistics•Use common languageMay, 2005(c) 2005, US Civilian R&D Foundation14Examples -PropositionWith all competitors meeting standards, the producthas become a commodity. Using a new standards-conforming algorithm, already implemented on a common microprocessor, twice as much can be processed on the same hardware. As a result, manufacturers can produce the same product at a net 37% increase in margin or double the performance at the same price. 1.Business issue2.Technical issue3.Technical solution4.Business benefits5.Market & competitors6.ROI7.Next stepMay, 2005(c) 2005, US Civilian R&D Foundation15Examples -MarketStructure, players, market drivers, dynamic, opportunities, threats:The market for the hardware is dominated by manufacturers and integrators . Manufacturers produce their own cards and Integrators purchase cards from any of the top 9 card suppliers. The market driver is price...1.Business issue2.Technical issue3.Technical solution4.Business benefits5.Market & competitors6.ROI7.Next stepMay, 2005(c) 2005, US Civilian R&D Foundation16Examples -CompetitionDX Group, SignalCorp, and Motorola are also developing new algorithms. DX Group‟s solution requires a more expensive microprocessor. The SignalCorp algorithm has not yet been implemented in real-time. The Motorola solution saves only 39%, short of the 50% required to reduce hardware costs. 1.Business issue2.Technical issue3.Technical solution4.Business benefits5.Market &competitors6.ROI7.Next step0102030405060"YOU"DSP GroupMotorolaSignalCorpCommon Mistake:•No competitors•“Only solution”May, 2005(c) 2005, US Civilian R&D Foundation17Examples –Return on InvestmentThe total cost of labor and material is $1,500. At the current levels of production, the profit margin increases by $100 per unit for a net increase of $7,500 per year. That‟s a 500% return on investment in the first year only.1.Business issue2.Technical issue3.Technical solution4.Business benefits5.Market & Competitors6.ROI7.Next stepItemNo.AmtSubtotalLabor & materials150$100$1500Increased profits750$100$7500Return on Investment500%May, 2005(c) 2005, US Civilian R&D Foundation18Examples –Next StepMeetings: (Presentation)1.Engineering Manager –Demonstration2.Finance Manager –Economic case3.Business Manager –Project definitionActions: (Proposal)1.Business issue2.Technical issue3.Technical solution4.Business benefits5.Market & Competitors6.ROI7.Next stepMay, 2005(c) 2005, US Civilian R&D Foundation19Examples –Sales & Distribution(Business Plan Only)Direct Sales, PartnersWe plan to sell directly to manufacturers. There are only 15 sizeable manufacturers and our technology is needed enough to gain the attention of their R&D managers. Integrators do not purchase technology and card vendors are not structured to work with scientists. Our chip partners will help us get meetings with the R&D managers at each Manufacturer.1.Business issue2.Technical issue3.Technical solution4.Business benefits5.Market &competitors6.Sales & distribution7.Projections8.Management Plan9.ROI10.Next step* Business Plan onlyMay, 2005(c) 2005, US Civilian R&D Foundation20Examples –Projections(Business Plan Only)Bottom-up Estimates:We plan to close Aldec, Marzed, and Pixel, or similar manufacturers in the first 9 months. Each quarter thereafter, we expect to close deals with one more manufacturer using two sales people…1.Business issue2.Technical issue3.Technical solution4.Business benefits5.Market &competitors6.Sales & distribution7.Projections8.Management Plan9.ROI10.Next step* Business Plan onlyMay, 2005(c) 2005, US Civilian R&D Foundation21Examples –Projections (Mistakes)(Business Plan Only)Top Down: (Mistake)The market for the software is $10M and we will sell 5% of the market or $500,000.1.Business issue2.Technical issue3.Technical solution4.Business benefits5.Market &competitors6.Sales & distribution7.Projections8.Management Plan9.ROI10.Next step* Business Plan onlyMay, 2005(c) 2005, US Civilian R&D Foundation22Business Statement (Pitch)1.My organization has developed a better solution for manufacturers. 2.Partnered with BrandCorporation, my team has produced components that reduce the cost by 50%.3.We plan to direct sell the solution to manufacturers.4.I am a scientist with the Institute of Semiconductor Physics in Baku, Azerbaijan.5.We have interested customers and are looking for funding to produce the first 10 units.6.We can provide a 5 times return in 18 months.May, 2005(c) 2005, US Civilian R&D Foundation23Q&A: Business CaseMay, 2005(c) 2005, US Civilian R&D Foundation24CRDF Contact InformationU.S. Civilian Research & Development Foundation (CRDF)1530 Wilson Boulevard, Suite 300Arlington, VA 22209 USAEmailsinfo@crdf.orgGeneral CRDF enquiriespdp@crdf.orgPartner Development Program (business questions)tgp@crdf.orgTravel Grant Programfstm@crdf.orgFirst Steps to Market Grants (new partnerships)nstm@crdf.orgNext Steps to Market Grants (commercial partnerships)Website: www.crdf.orgTel: +1 (703) 526-9720