Situation Analysis

A technology-based contract research organization sought a new growth strategy after its existing business had begun to stagnate. The company’s main business was designing early-stage clinical trial programs for pharma companies, supported by simulation and modeling. It wanted to move its business further downstream in the R&D value chain, with the objective of generating new revenue with point of care diagnostics. To successfully develop this business, the company had to transform its current business model consisting of consultancy and digital technology into a productized and scalable business with new clients in new territories.

The CEO wanted to resolve the continual debate of “where to go first” versus “how to grow later.” He sought to achieve this through a guided discussion and by objectively evaluating ideas that his management team had raised over a period of several months.

Discovery & Solutions

Strategic Decisions Group was brought in to determine the best path forward by providing a structured approach to characterize the rich set of existing ideas, to expand on them, and to analyze them in terms of value creation potential and risk.

The company needed to demonstrate viability and, ideally, generate profit from any new idea within the short time horizon required by its largest shareholder, a private equity firm. Longer-term growth had to be enabled by geographic expansion and scaling of the business. The company also considered establishing a joint venture or new entity and had set aside substantial funds for such a move.

Together we evaluated the different paths the company might pursue. As the options being considered represented new business territory for the company, it was necessary to carefully define each of them in detail and create a shared understanding of the potential market. SDG structured the opportunities by defining each of the business cases in terms of the position in the value chain, the value-add, the economic buyer, and the type of decision support the new solution would offer users at the point of care.

Moving into new business territory naturally comes with an information deficit, leaving a great deal of uncertainty about the future potential. While the company would serve its existing client base for some opportunities under consideration, many others were new and presented major questions in terms of customer access and acceptance. The full scope of the addressable market was unknown as latent needs were to be addressed in a currently unserved market. Additionally, internal R&D plans, timelines, and budgets were highly uncertain. Each of these uncertainties needed to be described and quantified as ranges of possible outcomes.

By systematically describing what could reasonably achieved and how to incorporate uncertainty, the team developed a commonly agreed perspective on the opportunities, risks and key decisions that the company had to make in the short term. This was then the basis for the company’s eventual selection of a market entry and growth strategy.

Results & Impact

SDG’s structured approach and probabilistic evaluation of the alternatives provided full clarity on the different opportunities, their individual value propositions, and the associated risk. Within a short period, a high-value strategy was designed in detail. In a matter of 10 weeks, the joint team had produced an implementation-ready recommendation, making up for several months of delay caused by the management team’s continual revisiting of the issues and inability to move forward.

Further, because all ideas and strategy alternatives could be compared using the same set of value measures, a clear rationale and narrative for the selected strategy could be articulated to the board. The SVP of strategic ventures expressed how smoothly the board presentation went. “The board content was first rate, and I think that it was very evident how much work went into making it clear, concise, and rational,” she said. “It took just two hours to present and hold the discussion. We had allotted three hours. They were fully on board with the recommendation.”