Hindsight 20/20: Ian Gilham

Ian Gilham: The key thing is to get a network of people who have done it properly to give you feedback. One of the keys to a company's success is knowing when a different skill-set is needed. People are good at different phases of the business and somebody who runs a $1bn-market cap company may not be someone who would ever sit in a garage with a computer and £5,000 and start a business. It's not very often where you have people who can transition to that later commercial stage – it's very, very rare and often that problem is recognized too late and businesses get into trouble without the correct leadership.

I think that's where the board comes in; having an independent board and a chairman who have done it before and can take the steps to renew the management team and get the right skills set in.

Gilham: I started doing my PhD in immunoassays and I started at Celltech, did a few years there in the labs then went to Amersham, who, scientifically, was the world leader in diagnostics at that stage. I was a bench scientist but I really wanted to do something different, get some commercial experience and I found that quite difficult, frankly, at Amersham, because people moved in very definite career paths and it was very hard to move between them.

So I got a position in Abbott Labs, then the world leader in commercial diagnostics, in technology licensing and acquisition, which bridged the gap between science and business. In tech licensing and acquisitions, you really get into patent acquisitions, understanding the IP, the strengths and weaknesses, prior art, etc. I really got a good grounding in IP [in that role], and it is important to understand this in a high-tech sector, as a lot of the value of the company is in the IP estate.

I really enjoyed the commercial side of technology acquisition and licensing and then moved on to a pure commercial role and ran Abbott's eastern European business. Abbott was a great business school generally; I learnt very quickly about country organization, finances, business planning, all that.

Gilham: As I said, IP is very important so you would want to invest in protecting it. But it's not just about owning the IP but understanding what IP you might be treading on with your product. Frankly, when you come to raising money, if you haven't done the due diligence on the IP yourself, the investors will do it and you'll find out the hard way that you have an IP problem or your competitors are ahead of that.

Invest in a strong team and a strong board. Having people who understand special areas, who you can go to and get advice is absolutely critical. You need to recognize you can't do it all yourself and that you need to get the best IP people, the best finance people, the best commercial people you can afford to bring them in or have them consulting to help you build a strong business. And it's not just advice: with those kinds of people on board, you are much more likely to get funding. Because you have a very strong business case and tested it against people who have done it before.

Gilham: The biggest thing people do not take into account when considering an acquisition proposal is the objectives of their investors. Sometimes, founders of companies fail to understand that when they bring investors in, they don't own the company anymore. And it's the investors who will decide what a good offer is. So the first thing is to be aware of who you bring in as an investor and what their objectives are.

There might be those who are thinking that if they can sell the company and get X times more money in two years, they'll be thrilled. While there are others who might think this is a 10-year project for them, that they want to invest money in the company, make acquisitions, grow the business, set up offices in the US or in China, etc. So they want to invest in a longer period of time to get an outcome.

If you get an offer from somebody who says they want to offer so much, you as the founder might have views on that but ultimately the market/investors will decide what a good price is. You are not the decision-maker.

Gilham: One of the key things is to build that support network by hiring people who have been very successful in their area, whether its commercial or regulatory or clinical. Not just those who have had a positive experience but also who have made mistakes and learnt from it and can advise the team not to make those same mistakes. It's critical to build as strong a team as possible and use that network.

There is a feeling that to be a CEO of a business, you need to be fiercely independent and successful and visionary; most people aren't like that and the good news is, you don't have to be. There are plenty of good people out there with a lot of experience and you can learn from it.

In terms of which functions to focus on more than others, all the functions are important. You'd need R&D expertise to manage the product development process, a regulatory person to oversee the requirements for registering the product in different markets, a commercial person to assess how you would want to sell the product whether to go direct or through a distributor, and then there is also the reimbursement aspects, how to get your product reimbursed, whether that is a one-year project or ten-year project. You would need all of those functions filled all the time, but the balance shifts as the company goes through the different phases of growth. It's important to understand which phase you're at and thinking ahead, and getting the resources to be prepared for that phase.

We learnt this lesson when Axis-Shield was plan to launch a point-of-care blood testing instrument in the US. In the early days, we would hire people from Europe to head a US operation and then have them spend one week in the US and one week back. This didn’t work out for this product launch and we got it wrong twice. The third time, we got a VP of sales who was actually based in the US; it was a very expensive hire, but what I learnt was sometimes you need to bite the bullet and spend the money, because you're learning about the market and you need their knowledge. It's the same in China. We had an office in China and at first, we were running it from Europe but when we finally got a local to oversee the business there, suddenly we got product registration, suddenly we got sales, suddenly we understood the market.

So, at the appropriate phase of the business, you need to be prepared to invest properly in the right person.

Gilham: There was a point when Axis-Shield had some field performance problems with a product which required fixing. We had some serious trouble shooting to do and so it comes back to having a really good management team with the experience and who have seen this before and knew what to do. The team we had was very proactive. We promptly informed the FDA, we spoke to the customers and that, frankly saved the business, because we were able to fix the problem without losing customers and too much negative publicity.

All companies run into problems – whether it's a product problem, a manufacturing problem, or competitor problem – but it's what you do about it that matters. It's about putting your heads together during a crisis and having an experienced team that knows what to do so there is minimal impact on the business. You learn from that and you put new quality controls in place so it doesn't happen again.

Ultimately, it's about people. The success of a company is not so much about the technology itself but the quality of people who deliver that technology. It's all about the team you put in place, the support and the advice you get, recognizing when business is transforming from one phase to another and realizing the different skillsets you might need then and when you might need to refresh the team again.

From the editors of Clinica