A couple weeks ago, a friend sent me a fun and insightful blog post by Zappos CEO Tony Hsieh. Among the great business lessons one can glean from poker, one really stuck in my head: "Hope is not a good plan."
I was reminded of this wisdom on a conference call the other day. The discussion concerned an early-stage diagnostic manufacturer and the partnership they intended to seek with a large instrument maker. I'm not going to use real names here, so let's call them Early Stage Diagnostics (ESD) and Blue Chip Technologies (BCT).
ESD had developed a test that runs on instruments made by BCT. ESD intended to seek 510(k) clearance for the test, but the BCT instrument was not IVD cleared. BCT manufactures their instrument under quality procedures, but these have not been designed for QSR compliance. Some retooling, development and validation work will need to be done to even bring the instrument onto the regulatory playing field. The total amount of work that might be required to make the instrument approvable is unknowable without extensive auditing. But it's going to be a lot of work, in all likelihood.
It's not uncommon for instrument manufacturers to form alliances with diagnostic companies to seek clearance in parallel 510(k)s. It's what Roche did with Affymetrix. It's what Abbott has done on more than one occasion. More recently, it's what the CDC did with ABI (now Life Technologies). It's pretty typical to see these instruments produced under the test provider's brand so that the instruments and test can be sold as a single branded "system".
But you might notice something about that list of partnerships above: There aren't any small organizations on it. Roche, Abbott and the CDC are not $20 million start-ups. They have enormous resources, established distribution channels and will put in months of careful planning before green-lighting a project like this. Even with all those advantages and leverage, this is still a very challenging type of partnership to create, manage, and benefit from.
When I mentioned just how much work and long term challenges this type of partnership requires I felt like I poured a whole lot of cold water on the team. They were eager to pursue a partnership with BCT and were very excited about keeping this option on the table. We eventually agreed to take the decision slow and really start plan on whether this was the approach. This was a very good outcome, as only a detailed plan would reveal whether this was a good idea or not.
Partnerships can be a powerful asset to regulatory and marketing success. Valuable, long-term partnerships need to be based on good plans, however... and hope is not a good plan.
