EVALUATION METHODOLOGY FOR

HIGH-TECH AND INNOVATIVE R&D

PROJECTS PROPOSED BY SME,

START-UP OR SPIN-OFF

Peter Erni

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i

EVALUATION METHODOLOGY FOR

HIGH-TECH AND INNOVATIVE R&D PROJECTS PRO-

POSED BY SME, START-UP OR SPIN-OFF

by

DR. PETER ERNI

from Altishofen in Bern

to obtain the title

EXECUTIVE MBA HSG

submitted to the

University of St. Gallen (HSG), School of Management,

Economics, Law, Social Sciences and International Affairs

authorized at the request of

PROF. DR. DIETMAR GRICHNIK

Entrepreneurship and Technology Management, ITEM-HSG

September 2012

ii

Erni, Peter:

Evaluation methodology for high-tech and innovative R&D pro-

jects proposed by SME, Start-up or Spin-off

90 pages, 15 figures, 7 tables

Peter Erni

Kramgasse 63

3011 Bern

Switzerland

Email: info@petererni.ch

Online version available under: http://www.petererni.ch

Cover picture: Technology Push versus Market Pull along the Sys-

tem/Value Chain (illustration P. Erni)

Copyright © Peter Erni 2012; v3r1

iii

Some regard private enterprise as if it were a

predatory tiger to be shot. Others look upon it

as a cow that they can milk. Only a handful

see it for what it really is – the strong horse

that pulls the whole cart.

Winston S. Churchill

iv

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v

ABSTRACT

Small and medium sized enterprises (SMEs) are the engine and

backbone of the Swiss economy. They are an essential source for

the creation of jobs, entrepreneurial spirit and innovation and

therefore fundamental for fostering competitiveness (J. Suter,

2011). In an export oriented economy and in order to outperform

national and international competitors they often focus on niche

markets and/or follow an innovative approach. In a dynamic mar-

ket no company can afford to rest on its laurel and focus on past

achievements (paradox of success) but must engage in a sustaina-

ble process of continuous adaptation and innovation in order to

remain successful on longer terms.

Only few companies dispose of sufficient cash flow and are in the

favorable situation where their product line generates enough bene-

fit to provide sufficient R&D funding for the development and in-

dustrialization of the next generation of bestsellers. In many cases

only modest internal financial R&D resources are available and,

hence, many SMEs depend on investors or sponsors that are most

of the time – due to the SMEs’ high level of specialization – not

experts in that particular niche.

The aim of this work is to provide potential evaluators that are

not necessarily specialists in a given field with a methodology

that helps assessing various types of funding requests for high-

tech and innovative R&D projects proposed by SMEs. Addi-

tionally, the methodology takes also into account, up to a certain

vi

extent, the particularities of start-ups and spin-offs.

The data acquisition, the basis for any evaluation process, general-

ly takes place through interviews, application forms, project de-

scriptions or a combination of the foregoing. Commonly used

evaluation methodologies show a great variety and are often lim-

ited to one specific filed, type of activity or type of company.

This work goes beyond fully automated processes, e.g. dedicated

evaluation tools/software, that are either rather coarse or often

highly custom tailored. Further, many complex or unconventional

facets (as e.g. typical for innovative approaches) cannot be as-

sessed appropriately by applying a given and rigid algorithm with-

out making use of human intelligence.

The number of experts that have an in-depth knowledge of given

high-technology and/or innovative developments is rather limited.

Potential investors, on the other side, are in some cases aware of

the latest technology trends but usually do not dispose of the nec-

essary expert knowledge. Therefore, it is not surprising that poten-

tial investors often show difficulties in assessing funding requests

for high-technology projects or projects with an innovative ap-

proach. The goal of this work is finding a ideal symbiosis be-

tween forms, questionnaires, project descriptions, algorithms

and human intelligence that will enable the investor to assess a

great variety of types of funding requests. The here proposed

methodology does, however, not replace an in-depth analysis by an

expert that should take place in a second step, provided that the ini-

tial evaluation suggested so.

vii

Keywords: evaluation, high-tech, innovation, SME, start-up, spin-

off, funding, investment, R&D

viii

TABLE OF CONTENT

ABSTRACT ............................................................................... v

LIST OF FIGURES ................................................................ xi

LIST OF TABLES ................................................................ xiii

LIST OF ACRONYMS ......................................................... xiv

1 INTRODUCTION .......................................................... 17

1.1 How to evaluate? .............................................................. 17

1.2 The here presented approach ............................................ 18

2 CONCEPT, SYSTEMATICS AND LIMITATIONS . 22

3 DATA COLLECTION ................................................... 25

3.1 Eligibility .......................................................................... 25

3.2 Potential misuse ................................................................ 25

3.3 Data collection: What is the best approach? .................... 26

3.4 Data collection: Flexibility & simplicity .......................... 27

4 MAPPING THE REQUESTOR’S PROFILE ............. 31

4.1 The requestor’s profile at a glance ................................... 31

4.2 Requestor’s profile: Set of characteristic parameters ....... 33

4.3 Example of an experienced SME ..................................... 36

5 MAPPING THE REQUEST.......................................... 37

5.1 The request at a glance ..................................................... 37

5.2 The proposed project: Set of characteristic parameters ... 39

5.3 Example of a realistic request ........................................... 40

6 MAPPING POTENTIAL BENEFITS AND

EFFECT/AIM/CLAIM .................................................. 41

ix

6.1 The claim at a glance ........................................................ 41

6.2 The claim: Set of characteristic parameters ..................... 43

6.3 Example of a credible claim ............................................. 43

6.4 Value creation ................................................................... 44

7 THE EVALUATION PROCESS: ASSESSMENT ..... 46

7.1 Evaluation approach ......................................................... 46

7.2 Evaluation methodology ................................................... 48

7.3 Evaluation: Interchangeability & comparability .............. 50

7.4 Mapping in matrix form with 2 parameters (2D) ............. 50

7.5 Evaluation in matrix form with 2 parameters (2D) .......... 51

7.6 Evaluation in matrix form with 3 parameters (3D) .......... 55

7.7 Evaluation criteria of particular interest: Business case .. 59

8 THE EVALUATION PROCESS: OUTCOME,

CONCLUSION AND RECOMMENDATION ........... 60

9 CONCLUDING REMARKS ......................................... 62

ANNEX ..................................................................................... 63

More characteristic parameters: Requestor’s profile (“who?”) 63

More characteristic parameters: The request (“what?”) .......... 65

More characteristic parameters: The claim (“why?”) ............... 67

GLOSSARY ............................................................................. 69

BIBLIOGRAPHY ................................................................... 80

EIDESSTATTLICHE ERKLÄRUNG .................................. 82

ALPHABETIC INDEX .......................................................... 83

ACKNOWLEDGEMENTS .................................................... 86

x

CURRICULUM VITAE ......................................................... 88

xi

LIST OF FIGURES

Fig. 1: The two interacting entities: the requestor

(submitting the funding request) and the

investor (evaluating the funding request).

The aim of this work is to provide an

evaluation methodology for a first

evaluation of funding requests with a focus

on high-tech and/or innovative projects

proposed by SMEs. .......................................................... 19

Fig. 2: The evaluation process at a glance. .................................... 20

Fig. 3: Example of type of overview form (extracts;

source: STARTFELD; www.startfeld.ch) ....................... 28

Fig. 4: Example of a type of overview form: CTI

form for CTI application for funding

(extract; source: CTI) ....................................................... 29

Fig. 5: Example of a custom tailored overview form.

(Source: Swiss Space Office) .......................................... 30

Fig. 6: The comparison of the two characteristic

parameters size and heritage yields to

additional information regarding the nature

of the requesting company. .............................................. 35

Fig. 7: The comparison of the two characteristic

parameters turnover / project cost and TRL

yields to information regarding the risk

associated to the proposed project. .................................. 37

Fig. 8: The comparison of the two characteristic

parameters market potential and time to

market yields to indications regarding the

quality of the business case. ............................................. 41

xii

Fig. 9: Mapping of three aspects combined in one

plot: Who is proposing what and why? .......................... 47

Fig. 10: Schematic illustration of the 3-dimensional

case (only one aspect shown per axis,

example of a 444 matrix) ............................................. 56

Fig. 11: Example of a presentation of the evaluation

outcome. ........................................................................... 61

Fig. 12: Illustration of the Break Even Point (BEP) ...................... 69

Fig. 13: Capital needs of an evolving firm .................................... 72

Fig. 14: Blue (new) and red (existing) markets ............................. 74

Fig. 15: Technology Push vs. Market (Demand) Pull ................... 76

xiii

LIST OF TABLES

Tab. 1: Set of four characteristic parameters for the

mapping of the requestor’s profile. .................................. 33

Tab. 2: Set of characteristic parameters for the

mapping the content of the request. ................................. 39

Tab. 3: Set of characteristic parameters for the

mapping of the claim of the request. ............................... 43

Tab. 4: Risk matrix (severity vs. likelihood) ................................. 75

Tab. 5: Risk matrix (severity vs. consequences and

likelihood) ........................................................................ 75

Tab. 6: SME Definition (Source: 2003/361/EC) ........................... 75

Tab. 7: TRL Definition (Source: ESA’s Technology

Readiness Levels Handbook for Space

Application)...................................................................... 78

xiv

LIST OF ACRONYMS

BA Business Angel

BEP Break Even Point

BC Business Case

BM Business Model

BP Business Plan

B2B Business-to-Business

B2C Business-to-Consumer

CTI Commission for Technology and Innovation

EC European Commission

ESA European Space Agency

FFF Family, Friends and Founders

FTE Full Time Equivalent

IP Intellectual Property

IPO Initial Public Offering

IPR Intellectual Property Rights

KO Kick-Off

KTT Knowledge & Technology Transfer

MBO Management Buy-Out

xv

MY Man Year

NASA National Aeronautics and Space Administration

NGO Non-governmental Organization

OECD Organisation for Economic Co-operation and

Development

OTC Order to Cash (sometimes O2C)

PoC Point of Contact

P&L Profit and Loss

ROI Return On Investment

R&D Research and Development

SME Small and Medium sized Enterprises

TRL Technology Readiness Level

USP Unique Selling Proposition

VC Venture Capitalist

xvi

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1 INTRODUCTION

1.1 How to evaluate?

First, we should get a clear understanding what is meant by the

term evaluation. There are many different types of evaluations that

do not necessarily serve all the same purpose. And obviously there

is more than only one definition used. Frequently, evaluation is re-

ferred to as being a systematic assessment of the worth or merit of

some object (where the deliberately ambiguous term “object”

could refer to a program, policy, technology, person, need, activity,

etc.). When emphasizing the characteristics of information-

processing (acquiring and assessing) and feedback functions, one

could refer to an evaluation as a procedure describing the systemat-

ic acquisition and assessment of information to provide useful

feedback about some object. Emphasizing information acquisition

and assessment makes perfectly sense because all evaluation work

involves collecting and reviewing various types of information.

The information has to be judged about the validity that it provides

and the conclusions that are derived from it. Following the above

considerations (Trochim, W. 2000) one might say:

Definition: Evaluation is the systematic assessment

of the worth of some object based on a systematic

information acquisition with the aim to provide a

useful feedback.

- 18 -

What different types of evaluation can we distinguish? Actually,

there exists a rather large variety of different approaches depend-

ing on the object being evaluated and the purpose of the evaluation

itself.1 For example, the OECD has published an extensive report

(OECD Code: 922012051E1) that addresses best practices for

evaluation in technology and innovation. Among other, it is em-

phasized that a combination of quantitative and qualitative ap-

proaches is needed in order to cover all aspects of the evaluation

process (Papaconstantinou, G. & Polt, W. 1997).

1.2 The here presented approach

The aim of this work is to provide an evaluation methodology for

funding requests with a focus on high-tech and/or innovative pro-

jects proposed by SMEs (see also red rhombus symbol in Fig. 1).

Such funding needs lead in most cases to a contact between a high-

ly specialized company (most of the time an SME) and a potential

investor (bank, BA, VC, private individual, NGO, governmental

1 Many classification can be found in literature. For illustration purpose I

present here the classification as given by Research Methods Knowledge

BaseHere (Trochim, W. 2000):

Evaluation Strategies: Scientific-experimental models, management-

oriented systems models, qualitative/anthropological models, and partici-

pant-oriented models.

Types of Evaluation: formative evaluation (strengthens or improves the ob-

ject being evaluated) such as needs assessment, evaluability assessment,

structured conceptualization, implementation evaluation, and process

evaluation; or summative evaluation (examines the effects or outcomes of

the object) such us outcome evaluations, impact evaluation, cost-

effectiveness and cost-benefit analysis, secondary analysis, and meta-

analysis.

- 19 -

institution, international organizations, institutional program coor-

dinators, etc.). For the sake of simplicity, the two parties will be

referred to as requestor and investor throughout this work.

Fig. 1: The two interacting entities: the requestor (submitting the

funding request) and the investor (evaluating the funding request).

The aim of this work is to provide an evaluation methodology for a

first evaluation of funding requests with a focus on high-tech

and/or innovative projects proposed by SMEs.

Practice shows that communication between the requestor and the

investor is of utter importance. This is not really surprising as the

two parties are in most cases experts in very different fields. Fur-

ther, the requestor’s focus on one (or several) very particular

niche(s), combined with a strong technology focus, makes is rather

difficult for a non-expert, i.e. the (potential) investor, to get a clear

picture of the situation, the necessity for the proposed development

and thus the value that might be created. A key characteristic of

- 20 -

• The aim is to gather enough unbiased information in the right format in order to be able to run the subsequent evaluation process. pg. 25 ff.

Data Collection (Chapter 3)

• Who is asking? pg. 31 ff.

• What is asked? pg. 37 ff.

• What is claimed? pg. 41 ff.

Mapping the Request (Chapters 4 - 6)

• The actual evaluation that is an appraisal of the collected data, i.e. a qualification of two different characteristic parameters out of the different aspects “who?” “what? and “why?” being compared among themselves. pg. 46 ff

Evaluation (Chapter 7)

• Gives the outcome of the evaluation in appropriate form, extent and level of details. pg. 60 ff.

Outcome (Chapter 8)

the here presented methodology is that it takes into account the

rather different natures of the requestor and the investor.

Fig. 2: The evaluation process at a glance.

It is important to facilitate interaction and communication between

the two parties. Therefore, the concept of this work emphasizes

the process of systematic information acquisition and preparation

- 21 -

(referred to as mapping) in Chapters 4-6 with no assessment at all.

The result of the data collection and preparation process is an un-

biased data set that serves as information basis and starting point

for the actual evaluation process given in Chapter 7 and Chapter 8.

The work was built up using the following structure (see also Fig.

2): Chapter 1 introduces the topic and aim of this work. Chap-

ter 2 deals with the concept itself and its limitations. Chapter 3

focuses on the approach on how to collect in an efficient and man-

ageable manner the needed information. Chapter 4 deals with the

nature of the requestor itself with the intention to pin-point the re-

questor’s profile (“Who is asking?”). Chapter 5 deals with the

content of the request (“What is proposed?”). Chapter 6 intends

to capture the value creation as claimed/presented by the requestor

(“Why?”- claim, benefit, added value etc.). The subsequent evalu-

ation process itself is twofold: Chapter 7 is about the assessment

of the proposal and Chapter 8 about the outcome of the evalua-

tion, final conclusion and recommendation. Finally, some conclud-

ing remarks and an outlook are given in Chapter 9.

- 22 -

2 CONCEPT, SYSTEMATICS AND LIMITATIONS

Today, quite a variety of assessment tools – public or not – exist.

Some tools use more or less sophisticated algorithms to process a

well-defined data set (e.g. derived from a form filled in by the re-

questor or information stemming from interviews, presentations or

similar). Although this approach has certain advantages, like for

example the possibility to benchmark proposals, there are several

draw backs that are mainly linked to the necessity of a standard-

ized input and an inevitably generic algorithm logic. The other ex-

treme would be an assessment that is entirely carried out by an ex-

pert based on his or her specialized knowledge and extensive ex-

perience.

The above extreme cases – i.e. pure program code or pure brain-

work – show both clear drawbacks: A standardized evaluation al-

gorithm (e.g. a web-based tool) is clearly bound to a restricted pe-

rimeter and can only process proposals of a given type and certain

range within well-defined parameters. This is a rather limiting fac-

tor, in particular when considering the fact that many business cas-

es with a high potential often deviate from the conventional ap-

proach. On the other hand, an analysis entirely run by an expert is

not only problematic in the sense of availability of personal with

the necessary expertise but is also often a process with rather low

standardization and unclear methodology

The here proposed concept is a combination of the above de-

scribed approaches, extended by a methodology that allows to pre-

serve the advantages of both pure expert/brain-work and pure algo-

- 23 -

rithm logic to the best possible extent. Further, the data acquisition,

i.e. the input to the process, shall build upon a symbiosis between

forms and questionnaires while the evaluation process itself shall

be a combination of a simplified algorithm combined with human

intelligence.

The concept is based on the following key prerequisites:

- (P1) a standardized input that still allows a certain

flexibility,

- (P2) a simplified and hence transparent algorithm

that is easy to modify/adapt/customize, and

- (P3) a non-expert evaluator that brings in the neces-

sary common sense and human intelligence.

The main advantage of this approach is that more flexibility is in-

troduced and that a rather large variety of different proposals (dif-

ferent in topic, approach or type of requestor) can be processed

without the need of an expert involvement beforehand. The main

drawback is that this approach does not allow an in-depth analysis

without the involvement of an expert. This is, however, not a limit-

ing factor in many cases where a potential investor does not ask for

more than a first and rough evaluation in the beginning. In other

words, the here proposed methodology allows the investor to

separate the chaff from the wheat and that is already of great

value.

In many cases the outcome of such a first assessment does provide

enough information in order to decide on a subsequent in-depth

expert analysis, to request a revised funding request, to reject the

- 24 -

proposal or – in cases that are straightforward – to approve the

funding request.

Although in principle applicable to a great variety of different

fields/sectors and different types and sizes of firms, the here pro-

posed evaluation process shall be limited to:

- (L1) high-tech and innovative funding requests,2

- (L2) requests from micro, small or medium enter-

prises, and

- (L3) requests that are in terms of funding not above a

give percentage of the firm’s annual turnover.

The last restriction, L3, on the amount of requested funding with

respect to the company’s annual turnover (or similar indicators) is

introduced because many start-up firms initiate typically only one

project in the beginning. In this case, there is a given risk that the

particularities are too pronounced so that an evaluation with the

here proposed approach might lead to varying results and hence

rather vague conclusions only (see also Chapter 4).

2 Services: Proposals dealing with services, that are commonly of rather dif-

ferent nature than classical R&D activities, cannot be processed with the

here presented methodology. This remains valid to some extent for pro-

posals dealing with software development too.

- 25 -

3 DATA COLLECTION

3.1 Eligibility

At first sight it might not make much sense to consider the eligibil-

ity of a requestor and the data collection method at the same time.

Fact is that in some cases questions about a requestor’s eligibility

are straight forward. In other cases, specific information on the

company (set-up, structure, strategy, etc.) and the proposed project

(e.g. consortium, public funding, programmatic context, etc.) are

needed in order to determine if the requestor is eligible or not.

Hence, an eligibility check should be part of the evaluation

process (or should be done before the evaluation is initiated).

3.2 Potential misuse

The investor should be aware that some requestors “tune” their

application in function of the investor’s requirements. This

might lead to a situation where the requestor provides information

on the company and/or the proposed project in a somewhat modi-

fied manner (information bias) in order to be compliant with the

given boundary conditions and to satisfy the investor’s require-

ments or expectation. As a consequence, the requestor must have

a certain understanding of the evaluation logic but details of

the evaluation process should not be disclosed by the investor.

- 26 -

3.3 Data collection: What is the best approach?

The data collection method is not a straightforward process and

worth some general considerations. The great many and different

approaches that are used today have, however, all the same aim:

gather enough unbiased information in the right format in or-

der to be able to run the subsequent evaluation process.

Top-down: In practice, we see often that a requestor is asked to

provide a very well-defined set of information based on a rather

stringent form or questionnaire. Such an approach is appropriate if

the evaluation process is dedicated to a specific type of projects,

typically following a top-down approach, or of high recurring na-

ture. In this case, the investor3 has already a well-defined idea of

the project. In some cases only the project’s cornerstones are giv-

en, in other cases the requestor’s proposal or bid has to comply

with a full-fledged statement of work. This is typically the case in

a tendering process (e.g. via call for proposals) for pre-defined pro-

jects derived from a roadmap, work plan, development strategy or

similar.

Bottom-up: In a bottom-up approach, it is the requestor that de-

fines the project and its content. In most cases the project is tai-

lored to dedicated and specific needs expressed by a customer

(or a community) or the needs identified for a given market seg-

3 Simplify the notation – We should be aware that it is not the classical role

of an investor to define projects according to a given broader need (top-

down) but this is usually done by the requestor (bottom-up). For the sake

of a simplified notation we refer to the funding entity as the investor

throughout this work (according to the convention given on page 10) and

independent whether a bottom-up or top down approach is perused.

- 27 -

ment. In this case the type of information an investor needs in or-

der to assess a funding request from the requestor is of rather dif-

ferent nature and varies from case to case.

3.4 Data collection: Flexibility & simplicity

It is important that we keep a certain flexibility in order to be able

addressing a wide variety of different types of requests from dif-

ferent types of firms. Although a well-defined and stringent ap-

proach, e.g. via a form to be filled in, is an easy way to collect da-

ta, we should bear in mind that this would limit the use of the

methodology to mostly top-down activities only.

The mandatory efforts needed in order to run a sophisticated and

complex evaluation processes in a compliant manner can be rather

high – for the investor as well as the requestor. Therefore, we

should also not forget that even the best ever made evaluation

tool will not be used if practicability, efficiency and transpar-

ency are not given. Hence, it is important that the data collection

process must be limited in complexity. This means also that for the

sake of a limited complexity trade-offs must be made in the data

collection process. Otherwise, the threshold for the investor and

requestor might be too high to use a given tool or method.

In consequence, and compliant to the aim of this work, the follow-

ing definition is proposed: A funding request consists of an over-

view form plus a project description. Or in short:

Funding request = overview form + project description

- 28 -

The overview form filled in by the requestor (template defined by

the investor). The project description is written by the requestor

but follows guidelines that were defined by the investor.

While the overview form (some possible examples are shown in

Fig. 3 - Fig. 5) is rather stringent with the aim to collect key figures

(e.g. company domicile, PoC, annual turnover, FTE, founding

year, project cost and duration, deliverables, etc.) the project de-

scription is less stringent and allows for example also prosaic an-

swers or explanations. The investor shall define in a concise refer-

ence document (e.g. guidelines or vade mecum) where key issues

the investor expects to be addressed by the requestor are outlined.

Fig. 3: Example of type of overview form

(extracts; source: STARTFELD; www.startfeld.ch)

- 29 -

Fig. 4: Example of a type of overview form: CTI form for CTI ap-

plication for funding (extract; source: CTI)

- 30 -

Fig. 5: Example of a custom tailored overview form.

(Source: Swiss Space Office)

- 31 -

4 MAPPING THE REQUESTOR’S PROFILE

The question we seek answering in this chapter is:

Who is asking?

4.1 The requestor’s profile at a glance

We first start with the requestor’s profile that shall be characterized

with a few but important characteristic parameters.4 For exam-

ple, the requestor’s annual turnover is important information. Fur-

ther, the requestor’s size is an important information too and can be

measured (value attribution to parameter) by the number of em-

ployees in units of FTE or e.g. the annual turnover. Another help-

ful indicator is the company’s heritage or experience in a given

sector. But how can we measure this indicator? Or in other words:

How to transform a qualitative indicator into a

quantitative measure?

While for example the determination of the characteristic parame-

ter of the size of a company is straight forward this is, however,

not always the case for other indicators of interest. In order to ex-

plain and better discuss the problem that is a systematic issue, i.e.

quantitative and qualitative measures, let us use the example of the

characteristic parameter heritage. A company’s heritage is clearly

of qualitative nature and would be measures with a proxy varia-

4 A parameter is a variable with a fix attributed value and different from a

constant in the sense that a parameter is only constant for the presently

considered case.

- 32 -

ble.5 However, for the mapping and the subsequent evaluation a

qualitative measure, i.e. a (characteristic) parameter, will be need-

ed. The conversion can be done by finding a link between the

proxy variable and the (characteristic) parameter. In the case of a

company’s heritage we can assume that the number of years that a

company is successfully active in a given sector is already quit a

good indicator for its heritage. Hence, we can convert the quantita-

tive indicator (proxy variable) into a qualitative measure (the char-

acteristic parameter heritage) by using the above assumption. For

the sake of practicability, we introduce here a measuring scale that

runs from 1 to 3 with , and in or-

der to be able attributing a quantitative value to the characteristic

parameter heritage.

Further valuable information for the mapping and the evaluation is

the importance of R&D to the requestor. The corresponding char-

acteristic parameter R&D share can be assess via e.g. the relation

of number of employees dedicated to R&D with respect to the total

number of employees. Or, instead of looking at the employees dif-

ferent functions, we can also assess the importance of R&D to a

company by looking at its annual R&D investments, its technology

and product development strategy (roadmap), or, in more general

terms, to its business model. As above, we have here the situation

that the proxy variable cannot be directly measured or only hardly

5 A proxy variable is a variable that measures a property that is in general

not accessible to a direct measurement and not highly reliable, i.e. it can-

not be determined reliably at reasonable expense.

- 33 -

quantitatively assessed. We therefore introduce the same measur-

ing scale that runs from 1 to 3.6

4.2 Requestor’s profile: Set of characteristic parameters

We define a set of characteristic parameter ,

where stands for the aspect “requestor’s profile” or “who?”. Fur-

ther, for illustration purposes and for the sake of simplicity, let

. Note that a more extensive list of further possible character-

istic parameters is given in the Annex. Any investor is encour-

aged to define its own set of characteristic parameters.

We define four characteristic parameters:

Characteristic

Parameter

Units Comments / Description

turnover [MioCHF/yr] Annual business turnover

size [FTE] Number of employees in terms of full

time equivalents

heritage [yr] or

{1,..,3}

How strong is company’s expertise in

their core business (or, if not identical,

the domain relevant to the proposed

project)?

R&D share {1,..,3} How important is R&D for the compa-

ny’s success? , ,

.

Tab. 1: Set of four characteristic parameters for the mapping of the

requestor’s profile.

6 The span of the measuring scale can of course be more detailed and does

not need to be limited to three gradation levels only.

- 34 -

With the above four characteristic parameters we can now derive

more information regarding the requestors profile. Please note that

this exercise is still part of the mapping exercise and not yet part of

the evaluation that will assess the funding request taking into ac-

count all three components covered in this and subsequent chapters

(i.e. the aspects Who? What? Why?). The comparison of two

characteristic parameters is without any appraisal, i.e. without

any judgment if the finding is good or bad.

The information content given by one characteristic parameter is

limited. However, the comparison of two (or more) characteris-

tic parameters can yield to a clear information increase that is

higher than the sum of the information content of the individual

parameters. For example, the simple comparison of the two char-

acteristic parameters size and heritage yields to information re-

garding the nature of the requestor. In Fig. 6 we see that the com-

parison of the two characteristic parameters provides us

with a good indicator on type of firm that is submitting the funding

request. This is a remarkable information increase!

We should be aware that the outcome of the comparison of two

characteristic parameters varies in function of the combination that

was chosen. Therefore, the investor (i.e. the evaluator) should de-

fine its own set of characteristic parameters according to his or her

particular need.

If we refer to Fig. 6 we see that poor heritage is an indicator for a

start-up company (typically with few employees) or a newcomer

company. If a clear heritage is given then this is a typical indicator

for a well-established company or a spin-off company. This simple

example shows further that the company’s founding year would

- 35 -

not be a very reliable parameter to learn more about a company’s

experience in a given field.7

Fig. 6: The comparison of the two characteristic parameters size

and heritage yields to additional information regarding the nature

of the requesting company.

Another example would be the comparison of from which

we can deduce that a high turnover with few FTE is most likely a

business with little added value such as e.g. trading. Low turnover

and many FTE, on the other hand, would point to a business that is

rather labor intensive (e.g. substantial R&D) with a high added

value. However, the evaluator should remain vigilant and not jump

7 Note that a spin-off company can have considerable heritage – usually

tightly bound to key personal – while the legal entity might be founded

only recently.

- 36 -

to conclusions at this stage.8 Again, the mapping is a systematic

information acquisition process, gathers information without any

appraisal, and does not judge if good or bad. This comes later in

the evaluation part of this work in Chapter 7 and Chapter 8.

4.3 Example of an experienced SME

Let us consider as a demonstrative example the following case: An

SME with 9 employees, corresponding to 7.5 FTE, is since

10 years world market leader developing and manufacturing highly

specialized components for the chip industry. The company’s turn-

over is slowly but steadily increasing and reached last year round

25 million CHF. For this case, the value attribution is:

We see that the requestor is not a micro enterprise (annual turnover

above 10 M€) and indicates that labor and most likely al-

so R&D is only a minor part of the company’s cost. Most likely

this is a small enterprise that is successfully focusing on a very

pronounced niche that involves substantial procurements. Further,

an extremely good upstream and downstream coordination seems

to be essential for the success of this company. However, the high

importance of R&D to the company (and its products) compared to

the very high turnover needs to be looked at more closely.

8 Note that there is a particular danger with respect to start-up and spin-off

companies. This is because their business model has not yet proved to be

valid and sustainable. Hence, the above deductions might be misleading

or wrong.

- 37 -

5 MAPPING THE REQUEST

The question we seek answering in this chapter is:

What is proposed?

5.1 The request at a glance

The aim of this chapter is to map the content of the request. Like

for the requestor’s profile in Chapter 4, we take the example of the

two characteristic parameters, e.g. turnover / project cost (or total

FTE / project work load) and TRL (Technology Readiness Level).

Fig. 7: The comparison of the two characteristic parameters

turnover / project cost and TRL yields to information regarding the

risk associated to the proposed project.

- 38 -

In Fig. 7 we see that the comparison of the two characteristic pa-

rameters turnover / project cost and TRL yields to some interesting

indication with respect to the risk to which the company is expos-

ing itself. In case the project fails the consequences, i.e. the impact,

to the company can be substantial or even existential. We see that

the requestor is exposed to a lower risk (i.e. impact on the compa-

ny if the project fails) in the case the project is close to the market

and the project cost are rather modest with respect to the compa-

ny’s annual turnover. On the other hand, if the project is not close

to the market and the project cost is considerable when compared

to the annual turnover, the company exposes itself to a high risk.

The typical case for a start-up company – and to some extend to a

spin-off company too – is that the project is close to the market and

that the project cost are rather high with respect to the company’s

annual turnover.

The mapping of the request is, as this was also recalled for the

mapping of the requestor’s profile in the previous chapter, part of

the mapping exercise with the aim to gather information without

any appraisal and without any judgment if good or bad. In this

sense, the findings following the comparison of the two charac-

teristic parameters turnover / project cost and TRL as shown in

Fig. 7 is not yet an evaluation per se but is an indicator to the

investor (i.e. the evaluator) where to look more closely or, if

deemed necessary, where more detailed information will be need-

ed.

Note that so far strictly no statement was made about the inherent

risk (and probability of failure) that is linked to any R&D project.

Common risks are e.g. the risk linked to cost (cost overruns),

- 39 -

schedule (delays) or scope (e.g. quality). But of course many more

potential risks do exist. In the worst case, the project fails after the

consumption of substantial resources (maybe even more than fore-

seen) but without any usable findings or deliverables. In many cas-

es the consequences (impact) for smaller companies can be disas-

trous. Hence, in particular for substantial funding requests (e.g.

with respect to the company’s turnover) of smaller entities risk

considerations should be taken into account in the evaluation pro-

cess. A common method is to compare impact of risk (severity) in

function of probability of occurrence (likelihood). An example of

such a risk matrix is given in the glossary.

5.2 The proposed project: Set of characteristic parameters

We define a set of characteristic parameter ,

where stands for the aspect “content of the request” or “what?”.

Characteristic

Parameter

Units Comments / Description

TRL {1,..,9} Project starting and ending TRL

{1,..,3}

Compared to the company’s turnover,

how high is the project cost envelope?

, , .

schedule [month] Project duration

scope

{1,..,3} How realistic is it to fully achieve the

planned scope and all the requested

project deliverables ? ,

, .

Tab. 2: Set of characteristic parameters for the mapping the content

of the request.

- 40 -

For illustration purposes and for the sake of simplicity let .

We then define the four characteristic parameters as shown in Tab.

2. A more extensive list of further possible characteristic parame-

ters is given in the Annex. Any investor is encouraged to define

its own set of characteristic parameters.

5.3 Example of a realistic request

Let us consider as an example the following case: The aim of the

project (subject to external funding) is the development at compo-

nent level of a critical item with an increased reliability as request-

ed by a system-integrator (i.e. the customer). The company (with

an annual turnover of 15 MCHF and 80 FTE) can build upon an

existing product that has been successfully introduced onto the

market three years ago. The starting/ending TRL is 6/7. The pro-

ject cost is 500 kCHF and the planned duration is 12 months. For

this case, the value attribution is:

(= high)

If we focus on the request itself, we can see that the technology

span compared to the project duration and project cost is, at first

view, consistent. Further, is a good indicator that the necessary

workload for this project lies well within the company’s capacities.

Brief, the above indicates that the company’s proposal is realistic.

Such consistency checks are part of the mapping (information

gathering) and are important input for the evaluation yet to come.

- 41 -

6 MAPPING POTENTIAL BENEFITS AND

EFFECT/AIM/CLAIM

The question we seek answering in this chapter is:

Why? Claim, benefit, added value etc.

6.1 The claim at a glance

Our aim is to map the motivation and rational of the funding re-

quest, i.e. why does the requestor believe that implementing the

proposed project is a good thing? Like in the previous chapter we

take two characteristic parameters to illustrate the approach. As an

example we take market potential and time to market.

Fig. 8: The comparison of the two characteristic parameters market

potential and time to market yields to indications regarding the

quality of the business case.

- 42 -

We see in Fig. 8 four different scenarios. The most interesting

combination is a high market potential combined with a short time

to mark (“cash cow”). The combination of a low market potential

and a rather long time to market is, on the other hand, seems to be

the least interesting combination. The implementation of such a

business opportunity is, obviously, a different matter for considera-

tion.

The reader should be cautious and not jump to conclusions based

on the above findings. For example, we do not know how sustain-

able the business model is or what risk is involved. Further, the

case of the “cash cow” looks very promising but might be linked to

severe risks. Similarly, it is not impossible that the seemingly bad

case of a long time to market and a low market potential could turn

out to be rather interesting because it is addressing an extremely

stable market with (almost) guaranteed sales over a long period of

time.

Although we are at this stage still at the stage of the information

gathering (mapping) it is clear that the above information derived

from the two characteristic parameters give good hints at what as-

pects to look closely in the evaluation itself. This is why the evalu-

ation process should not be too rigid but flexible in order to ad-

dress such aspects. The here presented methodology takes this into

account by allowing each investor (i.e. evaluator) to choose, define

or adapt its own set of characteristic parameters that are fed into

the evaluation.

- 43 -

6.2 The claim: Set of characteristic parameters

We define a set of characteristic parameter ,

where stands for the aspect “the claim” or “why?”. Further, for

illustration purposes and for the sake of simplicity let . We

then define the four characteristic parameters as shown in Tab. 3.

Please refer to the Annex for a more extensive list of further possi-

ble characteristic parameters. Any investor is encouraged to de-

fine its own set of characteristic parameters.

Characteristic

Parameter

Units Comments / Description

market pull {1,..,3} Technology push vs. market demand:

(clear technology push), , (clear market pull)

recurrence {1,..,3} Is the development followed by an indus-

trialization and commercialization?

1 = one-off (one unit only), 2 = some re-

current units, 3 = high recurrence

T2M [month] Time to Market

market po-

tential

{1,..,3} Market potential: ; ;

Tab. 3: Set of characteristic parameters for the mapping of the

claim of the request.

6.3 Example of a credible claim

As an example, let us consider the following case: A company (i.e.

a customer) has requested from a company (i.e. the requestor) the

development of a component that shall enhance the performance of

- 44 -

a next generation of a product that is well established in the institu-

tional market. The technology span is considerable, the margins

only modest but the recurrence is very high and sales are guaran-

teed (strategic supplier). For this case, the value attribution is:

The combination of a clear market pull with a high recurrence

compensates for the rather long time to market. Hence, the claim

that the development has a promising and high market potential

seems justified.

6.4 Value creation

It is obvious that this third aspect, i.e. the expected (claimed) bene-

fit or added value, is of high importance to the evaluation. The

problem is that it is rather difficult to map the claim qualitatively

(with proxy variables) or quantitatively (with parameters). Never-

theless, there are several aspects – without appraisal – that we

should be aware of:

- What is the business model?

- How do you crate and capture value?

- What is the benefit to your company?

- How do you create value for you company?

- What is the benefit to the customer?

- How do you create value for the customer?

- etc.

- 45 -

According to the particular need of the investors (i.e. the evaluator)

for general and dedicated information the set of characteristic pa-

rameter can be defined accordingly. Note that the above list is only

given for illustration purpose.

Important remark: This work is not intended to be a tool for

the assessment of a business case but, instead, provides an

evaluation methodology (where the assessment of the business

case is one element out of many9).

9 Information for business case assessment are numerous and publicly avail-

able. A few helpful example are: Amit, R. & Zott, Ch. 2001; Cristea, A. et

al. 1997; Gassmann, O. & Sutter, P. 2008; Osterwalder, A. & Pigneur, Y.

2010; Leon, N., Martínez, J.J. et Castillo, C. 2005. Other helpful web-based

information and tools (with a focus on innovation) can for example be found

here: www.innobe.ch or www.tcw.de/app/webroot/tools/innovationsaudit.

- 46 -

7 THE EVALUATION PROCESS: ASSESSMENT

So far we have gathered information about the requestor, the con-

tent of the proposed R&D work and the justification for it. This da-

ta collection shall be as neutral as possible and without any a priori

appraisal.

In this chapter we will deal with the actual evaluation procedure

that is an appraisal of the collected data. For this we will assess a

characteristic parameter (out of the different aspects “who?”

“what? and “why?”) in function of another characteristic parame-

ter. A methodology that is able to process a great number of

different characteristic parameters, and hence to assess fund-

ing requests of rather different type and nature at best possible

extend, will be presented in the following. Note that the approach

does not limit any potential evaluator in the use of this methodolo-

gy as it can be easily adapted and custom tailored to his or her spe-

cific need.

7.1 Evaluation approach

In Sections 4.1, 5.1 and 6.1 it was showed that a first view (“at a

glance”) can already tell us a lot about who is proposing what and

why. While we compared in Chapters 3, 4 and 5 two characteristic

parameters out of the same aspect, the evaluation will compare the

characteristic parameters of one aspect with the characteristic pa-

rameters of another aspect.

- 47 -

At this stage it is most appropriate to introduce a clearly need-

ed systematic approach for the evaluation process that is based

on the characteristic parameters as earlier defined. A combina-

tion of the three aspects “who?” “what? and “why?” in one plot

(see Fig. 9) provides very condensed information but can be rather

confusing. Most limiting, however, and not suitable for a sound

and comprehensive evaluation is the fact that the information is in-

complete.

Fig. 9: Mapping of three aspects combined in one plot:

Who is proposing what and why?

- 48 -

For a sound and extensive evaluation we need to compare a

larger number of characteristic parameters of one aspect (e.g.

“who?”) with a larger number of characteristic parameters of

the other aspects (e.g. “what?” and/or “why?”). Obviously, a

comprehensive comparison of the three aspects (i.e. the respective

characteristic parameters) among themselves is far more complex

and calls for a more sophisticated approach instead of the compari-

son of two characteristic parameters with the help of two-

dimensional plots only.

The remainder of this chapter will deal with the necessary

systematic approach that is needed for the evaluation. At the

same, this systematic approach is the heart of the here pre-

sented evaluation methodology.

7.2 Evaluation methodology

The evaluation consists of comparing the three aspects among

themselves (permutation possible). Each aspect is given by a set of

characteristic parameters (or evaluation criteria; see also glossary).

Earlier, for the mapping exercise we compared two characteristic

parameters of one aspect , e.g.:

,

or, when expressed as a function:

- 49 -

,

with , where is the aspect “the requestor’s profile” (or

“who?”).

Contrary to the mapping exercise, we aim for the evaluation at a

comparison and appraisal of the different characteristic parame-

ters of all three aspects and , with the aspect “the request”

(or “what?”) and is the aspect “the claim” (or “why?”). Hence,

we compare and assess:

,

or, when expressed as a function:

,

with , , and .

As seen earlier, the combination of two (or more) characteristic pa-

rameters of one and the same aspect (e.g. characteristic parameters

only out of the aspect ) can yield to an information increase

(without any appraisal). Note that the combination of two charac-

teristic parameters of one and the same aspect can be considered as

an additional characteristic parameter, i.e., the logic extension of

the above consideration is then the comparison:

( ) ,

or, when expressed as a function:

,

with , , and .

- 50 -

7.3 Evaluation: Interchangeability & comparability

Interchangeability: In the case an investor makes use of several

internal or external evaluators (e.g. via a pool of experts), we must

make sure that the method remains valid. This is assured by the

fact that the investor will define which criteria-combination shall

be assessed and what weighting is used. These are the investor’s

settings and cannot be influenced by the evaluators – but they have

the possibility to skip a given combination if they find the combi-

nation inappropriate.

Absolute Ranking / Comparability: If several evaluators are in-

volved and the investor would wish to benchmark the evaluators’

outcomes then we need to transform the relative rankings into ab-

solute rankings, i.e. the outcomes need to be calibrated. This can

be implemented by adjusting the investor’s predefined weighting

matrix (see Section 7.5) by a calibration factor in function of the

evaluator’s specificities. A rather good and straight forward cali-

bration method would be to initially run for any evaluator a refer-

ence (dummy) funding request that then will provide the a calibra-

tion factor for each evaluator taking into account his or her speci-

ficities accordingly.

7.4 Mapping in matrix form with 2 parameters (2D)

Let us consider the example given in Section 4.3. The four charac-

teristic parameters are compared to each other. Note that

some of those comparisons are not a priori meaningful. This is for

example the case when a characteristic parameter is compared with

itself, i.e. . Because of the symmetry of the matrix it is

- 51 -

also obvious that the comparison makes the comparison

obsolete. We mark these combinations with the value

which leaves us with totally 6 combinations (empty fields) shown

below in a 44 matrix:

0

0 0

0 0 0

0 0 0 0

For the remaining combinations we attribute the value to the ma-

trix elements, i.e.: matrix:

0 1 1 1

0 0 1 1

0 0 0 1

0 0 0 0

In other words, this convention translates into:

1 = “keep” and 0 = “skip”.

7.5 Evaluation in matrix form with 2 parameters (2D)

If we combine the three aspects with its characteristic parameters

into one matrix, while following the above convention, we get a

1616 matrix that looks as follows:

- 52 -

WHO WHAT WHY

WH

O

0 1 1 1

0 0 1 1

0 0 0 1

0 0 0 0

WH

AT

0 0 0 0 0 1 1 1

0 0 0 0 0 0 1 1

0 0 0 0 0 0 0 1

0 0 0 0 0 0 0 0

WH

Y

0 0 0 0 0 0 0 0 0 1 1 1

0 0 0 0 0 0 0 0 0 0 1 1

0 0 0 0 0 0 0 0 0 0 0 1

0 0 0 0 0 0 0 0 0 0 0 0

The evaluation now consists of assessing the remaining combina-

tions (empty fields above) where we define the following rating

scale:

2.5 = perfect

2 = excellent

1.5 = very good

1 = good

0.5 = barely acceptable to fair

0 = „skip“

-0.5 = inappropriate

- 53 -

The filled-in unweighted matrix then could e.g. look like this:

WHO WHAT WHY

WH

O

0 1 1 1 -0.5 1 2.5 2 0 2 1 2

0 0 1 1 1 1 0 1.5 0 1 1 2

0 0 0 1 1 0 1 0 1 1 0 1

0 0 0 0 1 1 1 -1 1 1 1 0.5

WH

AT

0 0 0 0 0 1 1 1 2 0 1 0.5

0 0 0 0 0 0 1 1 1 1 0.5 1

0 0 0 0 0 0 0 1 -0.5 1 0 0

0 0 0 0 0 0 0 0 1 2 0 1.5

WH

Y

0 0 0 0 0 0 0 0 0 1 1 1

0 0 0 0 0 0 0 0 0 0 1 1

0 0 0 0 0 0 0 0 0 0 0 1

0 0 0 0 0 0 0 0 0 0 0 0

At first sight, the number of possible combinations seems rather

high. However, and taking into account the above considerations

on not meaningful or obsolete consideration, the maximum number

of combination10

is . In practice this number will be

clearly lower because several combinations will be skipped.

10

Or in other words: The maximum number of questions the evaluator hast

to answer.

- 54 -

As mentioned already above, some combinations are of more im-

portance than others. We can take this into account by introducing

a weighting scale according to the following definition:

3 = triple

2 = double

1 = simple

0 = skip

For the here considered example, the weighting matrix then looks

e.g. like this:

WHO WHAT WHY

WH

O

0 1 1 1 1 0 3 2 1 2 1 1

0 0 1 1 1 2 1 2 0 2 3 1

0 0 0 1 1 1 3 1 1 1 1 1

0 0 0 0 1 0 1 1 3 2 1 2

WH

AT

0 0 0 0 0 1 1 1 1 1 0 1

0 0 0 0 0 0 1 1 1 2 1 3

0 0 0 0 0 0 0 1 1 2 2 1

0 0 0 0 0 0 0 0 1 1 1 1

WH

Y

0 0 0 0 0 0 0 0 0 1 1 1

0 0 0 0 0 0 0 0 0 0 1 1

0 0 0 0 0 0 0 0 0 0 0 1

0 0 0 0 0 0 0 0 0 0 0 0

- 55 -

Finally, the weighted matrix (not to be confused with the

weighting matrix above) – or summary matrix – is simply the re-

sult of the multiplication of each element of the unweighted matrix

with the corresponding element of the weighting matrix:

WHO WHAT WHY

WH

O

0 1 1 1 -1 0 7.5 4 0 4 1 2

0 0 1 1 1 2 0 3 0 2 3 2

0 0 0 1 1 0 3 0 1 1 0 1

0 0 0 0 1 0 1 -1 3 2 1 1

WH

AT

0 0 0 0 0 1 1 1 2 0 0 0.5

0 0 0 0 0 0 1 1 1 2 0.5 3

0 0 0 0 0 0 0 1 -1 2 0 0

0 0 0 0 0 0 0 0 1 2 0 1.5

WH

Y

0 0 0 0 0 0 0 0 0 1 1 1

0 0 0 0 0 0 0 0 0 0 1 1

0 0 0 0 0 0 0 0 0 0 0 1

0 0 0 0 0 0 0 0 0 0 0 0

7.6 Evaluation in matrix form with 3 parameters (3D)

The above 2-dimension approach might already allow assessing

many different combinations of given characteristic parameters

and it is possible that this will already provide a sufficient basis for

the investor in order to conclude on the funding request. However,

and if needed, the 2-dimensional assessment can be extended to a

- 56 -

3-dimension assessment (an in theory even to an n-dimensional as-

sessment) where we compare three parameters in one go instead on

only two parameters.

For the 3-dimensional case of a 444 matrix we consider the fol-

lowing comparison:

( ) ,

or, when expressed as a function:

,

with , , and .

An illustration of the 3-dimensional case for the here discussed

444 matrix is given below:

Fig. 10: Schematic illustration of the 3-dimensional case

(only one aspect shown per axis, example of a 444 matrix)

- 57 -

We then can extend the approach of a 444 matrix to a 121212

matrix by considering more than one criteria per axis. For this, we

consider the criteria , , and with

on the -, - and -axis and the evaluation functions be-

comes:

,

with and the element of a 121212 ma-

trix.

Note that the entire evaluation (if limited to 4 characteristic param-

eters to each of the 3 aspects) is a 121212 matrix. However, in

some cases an appraisal of only two instead of three characteristic

parameters makes more sense. Because of this, and in order to re-

main in 3D space, we extend the characteristic parameters with a

dummy entity:

,

which results in a 151515 matrix.

The maximum number of combination for this 3-dimensional case

will be but in practice, analog to the 2-

dimensional case, clearly lower.

The weighting matrix and the weighted matrix – that build to-

gether the summary matrix – in the 3-dimensional case are ana-

logue to the above 2-dimensional case and are not given here for

practical reason.

For illustration purpose slice of the unweighted matrix is giv-

en below:

- 58 -

WHO WHAT WHY

W

HO

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 1 1 1 0 -0.5 1 2.5 2 0 0 2 1 2

0 0 0 1 1 0 1 1 0 1.5 0 0 1 1 2

0 0 0 0 1 0 1 0 1 0 0 1 1 0 1

0 0 0 0 0 0 1 1 1 -1 0 1 1 1 0.5

WH

AT

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 1 1 1 0 2 0 1 2

0 0 0 0 0 0 0 0 1 1 0 1 1 1 1

0 0 0 0 0 0 0 0 0 1 0 -1 1 0 0

0 0 0 0 0 0 0 0 0 0 0 1 2 1 1

WH

Y

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 1 1 1

0 0 0 0 0 0 0 0 0 0 0 0 0 1 1

0 0 0 0 0 0 0 0 0 0 0 0 0 0 1

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

As already mentioned earlier it is not the aim of this work to pro-

vide another evaluation tool but it focuses on methodological eval-

uation aspects. We have now a solid basis on which such a tool

could be constructed upon. No special (and often costly and not

necessarily user-friendly) software is needed. A simple spreadsheet

software, such as e.g. Microsoft®

ExcelTM

, can do the job. As a

matter of fact, this methodology could even be used for a process

without no use of any IT infrastructure at all.

- 59 -

7.7 Evaluation criteria of particular interest: Business case

The business case (BC) and a company’s business model (BM) are

important for the value creation and for innovation aspects. Nu-

merous tools and methods for the evaluation of BC or BM already

exist and it is not the aim of this work to add provide another tool

of that type. Nevertheless, some more information on the BC and

BM and possible criteria for the assessment are provided in the

glossary with the aim to provide some basic guidelines to the inex-

perienced evaluator.

- 60 -

8 THE EVALUATION PROCESS: OUTCOME,

CONCLUSION AND RECOMMENDATION

If needed, the outcome can be differentiated by different categories

(e.g. technical excellence, business case, etc.). This approach holds

the advantage that weak and strong aspects of a proposal are much

better visible.

If such a differentiation is not needed, the outcome of the evalua-

tion can be given by simply summing up all matrix elements. This

is legitimate because the matrices are weighted and calibrated. Fur-

ther, the identifier skip=0 and redundancy=1 make sure that no

unwanted effects will bias the outcome.

For the above example, we can very simply derive the following

information:

Max. assessed criteria: 164 (with weighting = cst)

Assessment value: 79.0

Overall score out of 100: 48.2

Of course the outcome of the evaluation can be manifold – depend-

ing on the type of proposal and on the specificities defined by the

investors. The above could be a basis for deciding on a respective

funding request. However, it is recommended to differentiate the

outcome according to the investor’s needs (e.g. priorities, sectors,

aspects of interest, etc.).

- 61 -

A this work focuses on the evaluation methodology and does not

intend to provide an evaluation tool or similar, the way to present

the findings is here not of particular interest. However, the presen-

tation is often very important to decision makers that need to have

a clear picture with few and concise information. The evaluation

and the outcome might be very clear and comprehensible to the

evaluator but this is rarely the case for the decision maker. Hence,

the way to present the findings should be given the necessary at-

tention and importance. Fig. 11 shows what such a presentation

could look like.

Fig. 11: Example of a presentation of the evaluation outcome.

- 62 -

9 CONCLUDING REMARKS

There is no universal evaluation approach but asking the right

questions is already half the battle. What the right questions are has

to be decided following the given circumstances (e.g. type of re-

quest, sector, technology, financial volume, the investor’s strategy,

risk, potential, particularities, priorities, etc.) that might be im-

posed by the topic, the investor or other circumstances.

This work presents a methodology that is flexible enough to take a

great variety of different requirements into account. It is a solid ba-

sis on which the investor (e.g. the evaluator) can build upon his on

tool that is custom tailored to particular needs. The here presented

methodology provides a basis that allows deriving from it a whole

span of different tools, from a simple and handy a tool a highly

complex and sophisticated process – according to the investor’s

needs.

- 63 -

ANNEX

More characteristic parameters:11

Requestor’s profile

(“who?”)

turnover [MioCHF/yr] Annual business turnover

size [FTE] Number of employees in terms of full

time equivalents

heritage [yr] or

{1,..,3}

How strong is company’s expertise in

their core business (or, if not identical,

the domain relevant to the proposed pro-

ject)? How strong is the company’s ex-

pertise in the sector relevant to the fund-

ing request?

R&D share {1,..,3} How important is R&D for the compa-

ny’s success? , ,

.

competence {1,..,3} Does the requestor dispose of the neces-

sary core competencies with respect to

technologies, processes and skills? In-

house or outsourced?

resources {1,..,3} Allocation and availability of the neces-

sary resources (capacities)? In-house or

outsourced?

phase {1,..,7} In which development phase is the com-

pany currently? ,

, ,

, ,

,

11

In random order and non-exhaustive

- 64 -

growth {1,..,3} How fast is the entity growing? What is

the growing potential?

3rd

party

funding

[MioCHF/yr] What contribution/investments are re-

ceived (in average over e.g. 5 years)

from third parties? How much is institu-

tional?

market posi-

tion

{1,..,4} ,

,

innovative {1,..,4} ,

,

sustainability {1,..,3} How sustainable is the company strategy

or the company’s approach?

controlling {1,..,3} Is an appropriate internal controlling

system in place?

R&D mgmt {1,..,3} How professional is the R&D and pro-

ject management?

performance {1,..,3} How well did the company perfume

over the past 5 years? In which sectors?

network {1,..,3} Network aspect: Is the entity organized

in a network, pool or similar?

role {1,…,3} Role of the requestor in the project:

1 = contractor (with or without subcon-

tractors), 2 = sub-contractor,

3 = supplier

valorization {1,…,3} Valorization of earlier investments?

dependence {1,…,3} How strong is the company depending

on e.g. key personal, loans, mandates,

existing and potential orders, etc.? As-

sociated risk?

- 65 -

More characteristic parameters: 12

The request (“what?”)

TRL {1,..,9} Project starting and ending TRL

{1,..,3} Compared to the company’s turnover,

how high is the project cost envelope?

, , .

schedule [month] project duration (incl. KO)

scope

(or delivera-

bles)

{1,..,3} How realistic is it to fully achieve the

planned scope and all the requested pro-

ject deliverables? ,

, .

market type {list} What type of market is targeted? Nice

market, mass market, B2B, B2C, OTC,…

novelty

(or degree of

innovation)

{1,..,3} What is the degree of novelty? 1 = new to

the world, 2 = incremented product (i.e.

improved existing product), 3 = me-too-

product

time to market [month] By when will the corresponding product

be available on the market?

breakthrough {1,..,3} Breakthrough potential is ,

, or .

precondition {1,..,3} Are the necessary preconditions for a

successful project accomplishment giv-

en? , , .

push vs. pull {1,..,3} 1 = clear technology push, 2 = “valley of

death”, 3 = clear market pull

labor share [%] What percentage of the requested sum

will be used for R&D labor? In other

words: What share will be used for out-

sourcing, services, rental fees, procure-

ments, jigs & tools, etc.?

12

In random order and non-exhaustive

- 66 -

work load [h],[MY] What is the work load in this project?

role {1,…,3} Role of the requestor in the project:

1 = contractor (with or without subcon-

tractors), 2 = sub-contractor,

3 = supplier

excellence {1,…,3} What is the technical and/or scientific

excellence of the proposed project?

, , .

funding mix [%] Percentage of the requested amount with

respect to the overall project cost? Or:

What is the degree of own/in-kind contri-

bution? Contribution from third parties?

strategy {1,…,3} How well does the proposed project fit

with the company strategy or policy?

, ,

.

compliance {1,…,3} It the proposed project compliant with the

requirements (typically in the case of a

top-down approach)? ,

, .

risk mgmt {1,…,3} Where the risks assessed? Where external

risk considered as well? Is the risk man-

agement appropriately addressing all

risks? , ,

.

context {1,…,3} Is the project to be seen in a larger con-

text (e.g. part of a larger project, com-

plementing activities, etc.) or is it fully

independent of other activities? 1 = inte-

gral part of another project, 2 = partly

depending , 3 = fully independent.

IPR {1,…,3} Fore- and background IPR protected?

, , .

- 67 -

More characteristic parameters: 13

The claim (“why?”)

market pull {0,..,3} Technology push vs. market demand:

(clear technology push), , (clear market pull),

recurrence {1,..,3} Is the development followed by an industri-

alization and commercialization? 1 = one-off

(one unit only), 2 = some recurrent units,

3 = high recurrence. Another good indicator

for R&D activities would be to assess the

ratio of the non-recurring cost (NRC) vs. the

recurring cost (RC).

T2M [month] Time to Market

market po-

tential

{1,..,3} Market potential: ; ;

BC {1,..,3} Credibility of overall business case:

; ;

other than

BC

{1,..,3} Are the justified reasons that would speak

for a support other than a sound business

case? ; ;

interest {1,..,3} How strong is the interest from potential

customers: 1 = very strong: contract signed

(first sales accomplished); 2 = strong (letter

of intent available); 3 = not known.

risk {1,..,3} Do the risk measures taken/planned justify a

financial support? 1 = yes; 2 = maybe;

3 = no.

follow-up {1,..,3} Are the subsequent steps after the accom-

plishment of the project (subject to this

funding request) such as e.g. industrializa-

tion and commercialization known?

13

In random order and non-exhaustive

- 68 -

1 = fully and detailed; 2 = partly; 3 = no.

potential for

sales

{1,..,3} Potential for sales: ; ;

value crea-

tion

{1,..,3} Value creation: ; ;

synergies {1,..,3} Will the project enable the requestor to ac-

quire new or additional market shares?

1 = yes; 2 = maybe; 3 = no.

market as-

sessment

{1,..,3} The market assessment is 1 = credible;

2 = incomplete; 3 = missing

BEP [month] Break even expected after what time?

ROI [month] Return on Investment expected after what

time?

indirect

benefits

{1,..,3} Are there any indirect benefits expected?

1 = yes; 2 = maybe; 3 = no.

leveraging {1,..,3} Is leveraging expected? 1 = yes;

2 = modestly; 3 = no.

time critical-

ity

{1,..,3} How important is a swift implementation of

the project (details should be given in the

business case): ; ;

KTT {0,..,3} Knowledge & Technology Transfer:

1 = might take place but is not desirable, 2 =

takes place and is desirable, 3 = none, 0 =

not known or no information provided.

sustainability {0,..,2} Is it the requestor’s intention to remain in

the market segment and to consolidate the

company’s position or is a buy-out an option

too? 1 = buy-out is an option, 2 = buy-out is

no option, 0 = not known or no information

provided.

- 69 -

GLOSSARY

Bottom-up Approach: A company defines tailored R&D projects

on a case-by-case basis according to developments with a promis-

ing market potential (technology push) or as a reaction to the clear

identification of a market need (market pull).

Break Even Point: The Break Even Point (BEP) is the volume of

sales required to generate an income that is equal to the expenses.

At the BEP there is no profit and no loss. See also illustration be-

low:

Fig. 12: Illustration of the Break Even Point (BEP)

Blue Ocean: New market. New value proposition (e.g. Nespresso),

revolutionarily value chain architecture (e.g. Hilti), or a change in

the source of revenue (e.g. Dell14

). See also Red Ocean.

14

A firm that has a negative working capital is, in a sense, using supplier

credit as a source of capital, especially if the working capital becomes

larger as the firm becomes larger. A number of firms, with Walmart and

Dell being the most prominent examples, have used this strategy to grow.

- 70 -

Business Angel:15

A Business Angel (BA) is a private investor that

typically invests in unquoted SMEs. BAs provide not only finance

but also experience, skills, network etc. The motives are typically

financial return, adventure & fun and portfolio diversification. An

investment from a BA is mostly a one-time investment.

Business Case: In literature the terms “Business Model” (BM) and

“Business Case” (BC) are often used in similar contexts (rarely the

term “Business Plan” (BP) is used as synonym for “Business Mod-

el”). BM and BC are similar in the sense that they both are argu-

ments for an investment combined with a plan to return the in-

vestment (e.g. both measure or provide information on: ROI, net

present value, cash flow, etc.). The main difference of a BM and

BC is the scope and subject they analyze: The Business Case pro-

vides arguments defending the viability of a product or service.

The scope is a project or an initiative. It answers the question: "If

we introduce this product or service, will it be successful, and if so,

why?". The Business Model describes how (content, structure and

governance of transactions) a company creates value (economic,

social, or other forms of value) through the exploitation of business

15

Business Angel Networks

Regional Associations: European Business Angel Network (www.eban.org);

SECA / Seed Money / Business Angels (www.seca.ch); Business Angels

Network Deutschland (BAND) (www.business-angels.de); Kickstarter,

the world's largest funding platform for creative projects

(www.kickstarter.com)

Private Networks in Switzerland: BAS Business Angles Switzerland

(www.businessangels.ch); BrainsToVentures AG (www.b-to-v.com);

Club Valaisan des Business Angels (www.bizangels.ch); Go Beyond

(www.go-beyond.biz); MSM Investorenvereinigung (www.fininco.com);

Start Angels (www.startangels.ch)

- 71 -

opportunities. Not in general but in many cases it is safe to say that

the BM describes the mechanics how a company makes money off

a product or service. The scope is the whole company or business

unit. The business model answers the question: "What is our strat-

egy for making money?". Note that the design of the BM affects

the company’s performance (Zott, Ch., & Amit, R., 2007).

In order to provide some basic guidelines for the inexperienced

evaluator, the below eight criteria might be helpful:

Executive Summary

(concise overview of the entire plan)

Business Idea / Strategies

(customer benefits and needs, profit mechanism, IPRs)

Company Description, Organization and

Management Team

Market Analysis / Marketing & Sales (customers and

markets): highlights and conclusions of any marketing

research data

Service and/or Product Line

(What are you selling? Customer benefits and needs?

USP?)

Schedule (implementation plan)

Risk Analysis (internal & external)

Funding Request (funding needed to start or expand

your business) and Financing Plan (P&L, liquidity,

capital needs)

Business Model: See Business Case.

Capital Needs: A firm’s capital needs change in function of its

evolution (e.g. seed → Start-up → early growth → sustained growth

- 72 -

→ Expansion → replacement capital → buy out). While the capital

needs increase for a growing company, the risk is usually decreasing.

See also illustration below:

Fig. 13: Capital needs of an evolving firm

Causation: Typical approach for an investor. Only what is predict-

able can be controlled. See also Effectuation.

Characteristic Parameter: A quantitative measure of a given

characteristic (e.g. turnover, excellence, recurrence, etc.). To some

extent, the term “characteristic” and “evaluation criteria” might be

uses as synonyms.

Coopetition: Coinage of „Competition“ and „Cooperation“ con-

necting the market (competition, delivery of services, performanc-

es, profit) and social networks (cooperation, trust, commitments).

Demand Pull: See Market Pull and Fig. 15.

Demand Push: See Technology Push and Fig. 15.

Downstream: Closer to the point of sale than to the point of pro-

duction or manufacture. See also Upstream and Fig. 15.

- 73 -

Effectuation: Typical approach for entrepreneur. Independent de-

cision approach preferably used by experienced entrepreneurs in

uncertain situation. There is no need to predict everything that can

be controlled. See also Causation.

Evaluation Criteria: See Characteristic Parameter

Innovation: An innovation is something new and creates better

products, services, processes, etc. An innovation must be replicable

at economical cost and satisfy a specific need. Many innovations

are created from inventions but it is possible to innovate without

inventing. Or: Innovation is the use of a new idea or method.

Invention: An invention is novel (first occurrence), not derived

from an existing idea and can be a method, process, idea for a new

product, discovery or similar. Or: Invention is the creation of a

new idea or method.

Leveraging: A relatively small amount of cost yields a relatively

high level of return.

Man Year [MY]: A man-year (or person-year) is the amount of

work performed by an average worker in one year. A frequently

used value for Western Europe is 2050 hours. However, note that

this value can vary greatly, e.g. from 1389 hours for the Nether-

lands to 2316 hours for South Korea (Source: OECD, 2007)

Market Pull: Clear market need, that is expressed or was e.g.

identified following a market assessment, leads to dedicated R&D

activities with the aim to satisfy this needs. See also Technology

Push and Fig. 15.

Micro Enterprise: See SME.

- 74 -

Paradox of Success: A successful firm has the tendency to stick to

a strategy that has worked in the past. But success can lead to stra-

tegic persistence. In a changing environment (e.g. competition,

technology, social, legal etc.) this can become detrimental.

Parameter: A parameter is a variable with a fix attributed value. A

parameter is different from a constant in the sense that a parameter

is only constant for the presently considered case. A different value

can be attributed to the parameter for a subsequent case.

Proxy Variable: A proxy variable is a variable that measures a

property that is in general not accessible to a direct measurement

and not highly reliable, i.e. it cannot be determined reliably at rea-

sonable expense. Examples: Per-capita GNP (Gross National

Product) is often used as a proxy for measuring the standard of liv-

ing.

Red Ocean: Existing (consolidated) market. Differentiation

through: price, service, quality, performance. See also Blue Ocean.

The figure below illustrates the concept:

Fig. 14: Blue (new) and red (existing) markets

- 75 -

Risk Matrix: Several variations can be found in the literature, ba-

sically, a risk matrix is the comparison of impact of risk (severity)

in function of probability of occurrence (likelihood):

RISK MATRIX LIKELIHOOD

rare unlikely possible likely almost certain

SE

VE

RIT

Y insignificant low low low low low

minor low low low medium medium

moderate low low medium medium medium

major low medium medium high high

extreme low medium medium high extreme

Tab. 4: Risk matrix (severity vs. likelihood)

The consequences (or impact) can also be compared in function of

the severity. This then leads to a combined risk matrix:

RISK MATRIX CONSEQUENCES LIKELIHOOD

people environment reputation -- - +/- + ++

SE

VE

RIT

Y insignificant no injury no effect no impact

minor minor injury minor effect minor impact

moderate moderate injury moderate effect moderate impact

major major injury major effect major impact

extreme massive damage massive effect massive impact

Tab. 5: Risk matrix (severity vs. consequences and likelihood)

SME: According to its recommendation 2003/361/EC, the EC de-

fines that enterprises qualify as micro, small and medium-sized en-

terprises (SMEs) if they fulfill the following criteria:

Enterprise category Headcount Turnover Balance sheet total

medium-sized < 250 ≤ 50 M€ or ≤ 43 M€

small < 50 ≤ 10 M€ or ≤ 10 M€

micro < 10 ≤ 2 M€ or ≤ 2 M€

Tab. 6: SME Definition (Source: 2003/361/EC)

- 76 -

Spin-off: Many heterogeneous definitions exist. In a broad sense,

an existing company is divided through a spin-off process into

usually a bigger (parent) company and a smaller (spin-off) compa-

ny. This leads to the creation of an independent company through

divestiture. A spin-off process is often initiated by the parent com-

pany in a restructuration process or by one or more individuals

(spin-off entrepreneurs) with the aim to exploit their personal ex-

perience.

Start-up: A young, not yet well-established company (typically 1-

3 years with limited heritage). The founder/entrepreneur intends to

implement an innovative business idea, often with the help of ex-

ternal funding.

Technology Push: A company can nota bene follow a pull and/or

a push strategy.

Fig. 15: Technology Push vs. Market (Demand) Pull

- 77 -

Based on its heritage, competence and experience, a company an-

ticipates that the development of a technology would respond to a

future need in an existing market (see Red Ocean) – or could lead

to the creation of a new market (see Blue Ocean). A technology

push strategy inherits the risk that technologies or products are be-

ing developed but fail in the market introduction because the de-

velopment was not enough market-oriented (so-called “happy en-

gineering”). See also Market Pull.

Technology Readiness Level: A concept jointly developed and

used by the US National Aeronautics and Space Administration

(NASA) and the European Space Agency (ESA). TRLs are a set of

management metrics that enable the assessment of the maturity of

a particular technology and the consistent comparison of maturity

between different types of technology - all in the context of a spe-

cific system, application and operational environment:

Readiness

Level

TRL Definition Commonly Used Engineer-

ing / R&D Terms

TRL 1 Basic principles observed and

reported

Scientific Research.

TRL 2 Technology concept and/or ap-

plication formulated

Systems Analyses. Pre-Phase

A Studies.

TRL 3 Analytical and experimental crit-

ical function and/or characteris-

tic proof-of-concept

Laboratory Experiments.

TRL 4 Component and/or breadboard

validation in laboratory envi-

ronment

Component. Breadboard.

TRL 5 Component and/or breadboard

validation in relevant environ-

ment

High-Fidelity Breadboard.

Brassboard. Engineering

Breadboard. Function-

Oriented Model.

- 78 -

TRL 6 System/subsystem model or pro-

totype demonstration in a rele-

vant environment (ground or

space)

High-Fidelity Laboratory

Prototype. Engineering Qual-

ification Model. Subsystem

model. Development Model.

System Model.

TRL 7 System prototype demonstration

in a space environment

System Demonstration.

TRL 8 Actual system completed and

“flight qualified” through test

and demonstration (ground or

space)

Theoretical First Unit. Flight

Unit. Flight Spare.

TRL 9 Actual system “flight proven”

through successful mission oper-

ations

Mission Operations. Flight

Qualified Hardware.

Tab. 7: TRL Definition (Source: ESA’s Technology Readiness

Levels Handbook for Space Application)

Top-down Approach: The breaking down of a general prob-

lem/project/need into its compositional subunits. See also Bottom-

up Approach

Upstream: Closer to the point of production or manufacture than

to the point of sale. See also Downstream and Fig. 15.

Vade Mecum: Latin phrase for a handbook.

Value Chain: The value chain can be seen as the entire cycle of a

product, from the raw material (upstream) to the end-customer

(downstream). The common case is that a company is focusing on

a well-chosen segment of the value chain. Note that the value chain

can also be understood in a sense restricted to a company, i.e. as a

sequential set of activities that an company performs to turn inputs

into value-added outputs (Porter 1985). In this sense, the compa-

ny’s value chain is part of a lager system that includes upstream

value chains (e.g. suppliers) and downstream value chains (e.g.

- 79 -

customers). Porter calls this series of value chains the value system.

A company's success in developing and sustaining a competitive

advantage depends not only on its own vale chain but also on its

ability to manage the value system of which it is part. The degree

to which a company owns/occupies upstream and downstream ac-

tivities is referred to as vertical integration. The expansion of a

company to downstream (upstream) activities is called forward in-

tegration (backward integration). See also Fig. 15.

Valley of Death: Refers to the common funding gap at an inter-

mediate stage between basic research and commercialization of a

new product.

Value System: See Value Chain.

Venture Capitalist: A venture Capitalist (VC) invests typically on

a duration limited to 3-5 years what calls for a clear exit strategy

(e.g. MBO, trade sale, IPO, other investors, etc.). Contrary to a

BA, a VC is often willing to provide the necessary funding for re-

financing.

- 80 -

BIBLIOGRAPHY

Amit, R. & Zott, Ch. 2001, Value Creation in e-Business. Strat.

Mgmt. J., 22, 493 [web link]

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FinanzBuch Verlag GmbH, München, ISBN 978-3-86881-279-4

Gassmann, O. & Sutter, P. 2008, Praxiswissen Innovationsma-

nagement, Carl Hanser Verlag München, ISBN 978-3-446-41481-

5

Leon, N., Martínez, J.J. et Castillo, C. 2005, Methodology for the

evaluation of the innovation level of products and processes, Pro-

ceedings of the Altshuller Institute TRIZCON2005, Brighton MI

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Governance: International Co-operation in Science, Technology

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17870-0, OECD Code: 922012051E1 [web link]

Osterwalder, A. & Pigneur, Y. 2010, Business Model Generation,

John Wiley & Sons, Inc., ISBN 978-0470-87641-1

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vation and technology: an overview, OECD Publishing (ISBN:

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Porter, M. E. 1985, Competitive Advantage: Creating and Sustain-

ing Superior Performance, Free Press

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Porter, M. E., 1996. What is strategy? Harvard Business Review,

November–December, 61-78, The value chain

Suter, J. 2011, Die KMU sind das Rückgrat unserer Wirtschaft,

Credit Suisse Entrepreneur, 1/2011, 14

Trochim, W. 2000, The Research Methods Knowledge Base, 2nd

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Wiehle, U. et al. 2010, Die 100 wichtigsten Finanzkennzahlen,

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1811 [web link]

- 82 -

EIDESSTATTLICHE ERKLÄRUNG

Ich, Peter Erni, geboren am 7. Juni 1971 in Luzern, erkläre hiermit,

1. dass ich die vorliegende Arbeit ohne fremde Hilfe und ohne

Verwendung anderer als der angegebenen Hilfsmittel verfasst ha-

be,

2. dass ich meine Projektarbeit bisher weder im In- noch im

Ausland in irgendeiner Form als Prüfungsarbeit vorgelegt habe,

3. dass ich, falls die Arbeit mein Unternehmen betrifft, meinen

Arbeitgeber über Titel, Form und Inhalt der Projektarbeit unter-

richtet und sein Einverständnis eingeholt habe.

……………………… ……………………………

Ort, Datum Dr. Peter Erni

- 83 -

ALPHABETIC INDEX

Advantage ....................................................................................... 23

Aim (of this work) .................................................................... 18, 19

Approach .................................................................................. 18, 46

Assessment .................................................................................... 46

Blue Ocean ..................................................................................... 69

Bottom-up ................................................................................. 26, 69

Break Even Point ............................................................................ 69

Business Angel ............................................................................... 70

Business Case ........................................................................... 59, 70

Business Model ........................................................................ 59, 71

Calibration ...................................................................................... 50

Capital Needs ................................................................................. 71

Causation ........................................................................................ 72

Characteristic Parameter .......................................................... 31, 72

Claim .............................................................................................. 43

Comparability ................................................................................. 50

Concept ........................................................................................... 23

Coopetition ..................................................................................... 72

Data Acquisition .............................................................................. vi

Data Collection ....................................................................... 25, 26

Demand Pull ................................................................................... 72

Demand Push .................................................................................. 72

Downstream .................................................................................... 72

Drawback ........................................................................................ 23

Effectuation .................................................................................... 73

Eligibility ....................................................................................... 25

Evaluation ............................................................................... 17, 46

Evaluation Criteria ......................................................................... 73

Funding Request ............................................................................. 27

- 84 -

Innovation ....................................................................................... 73

Invention ......................................................................................... 73

Investor ........................................................................................... 19

Leveraging ...................................................................................... 73

Limitations ...................................................................................... 24

Man Year ........................................................................................ 73

Mapping .......................................................................................... 21

Market Pull ..................................................................................... 73

Methodology ...................................................................... 20, 23, 45

Micro ........................................................................................ 72, 73

Micro Enterprise ............................................................................. 73

Misuse ............................................................................................ 25

Overview Form ............................................................................... 27

Parameter .................................................................................. 31, 74

Proxy Variable ................................................................................ 74

Qualitative Indicator ....................................................................... 31

Quantitative Measure ..................................................................... 31

Ranking ........................................................................................... 50

Red Ocean ...................................................................................... 74

Requestor ........................................................................................ 19

Risk Matrix ..................................................................................... 75

SME .............................................................................. v, xiv, 69, 75

Spin-off ........................................................................................... 76

Start-up ........................................................................................... 76

Technology Push ............................................................................ 76

Technology Readiness Level ......................................................... 77

Top-down ................................................................................. 26, 78

Upstream ......................................................................................... 79

Vade Mecum .................................................................................. 79

Valley of Death .............................................................................. 79

Value Attribution ............................................................................ 44

Value Chain .................................................................................... 79

Value Creation .............................................................................. 44

Value System .................................................................................. 79

Venture Capitalist ........................................................................... 79

- 85 -

What? .............................................................................................. 37

Who? ............................................................................................... 31

Why? ............................................................................................... 41

- 86 -

ACKNOWLEDGEMENTS

I would like to thank Prof. Dr. Dietmar Grichnik for all his energy,

professionalism and knowledge that he has brought to this work.

Special thanks go to Raiffeisen Schweiz for supporting me and this

work with their generous corporate grant. I further thank the State

Secretariat for Education and Research, my former employer, for

the support I needed in order to accomplish the Executive MBA

Course #38 at the University of St. Gallen. Finally, my sincerest

thanks to the people at the University of St. Gallen for their unfail-

ing support and advise, in particular to the Director of the Execu-

tive MBA, Prof. Dr. Wolfgang Jenewein, the Vice Director of the

Executive MBA, Dr. Markus Seitz, and the Program Managers of

the Executive MBA, Ms Gesa Jürgens and Ms Velka Savic.

- 87 -

- 88 -

CURRICULUM VITAE

Dr. Peter Erni

Kramgasse 63

3011 Bern, Switzerland

Email: info@petererni.ch

PROFESSIONAL CAREER

09.2012 –

onward

06.2007 –

08.2012

Director EURESEARCH

Federal Department of Home Affairs (FDHA), State Secre-

tariat for Education and Research (SER), Swiss Space Of-

fice (SSO), Bern: National Program Manager Space R&D

03.2007 –

05.2007

Federal Department of the Environment, Transport, Ener-

gy and Communications (DETEC), Swiss Federal Nucle-

ar Safety Inspectorate (HSK), Würenlingen [today Swiss

Federal Nuclear Safety Inspectorate ENSI)]:

Scientific Advisor

03.2004 –

03.2007

Argelander-Institut für Astronomie (AIfA), University

of Bonn, Germany: Scientific Collaborator

12.1999 –

08.2002

Galileo Planet Sàrl, Lausanne: Co-Founder and Co-CEO

08.1995 –

10.1996

Ware Software GmbH, Luzern: Head Software Devel-

opment

11.1992 –

07.1995

Hirt Umweltschutztechnik AG, Kirchleerau: Technical

Draftsman and Planner

- 89 -

EDUCATION AND FURTHER TRAINING

03.2010 –

09.2012

Executive MBA in General Management at the Univer-

sity of St. Gallen (HSG)

03.2004 –

03.2007

Ph.D. in astrophysics (Dr. rer. nat.) at the Argelander-Institut

für Astronomie (AIfA), University of Bonn, Germany

10.1996 –

08.2003

M.Sc. in Physics (phil. nat. II) at the Federal Polytechnic

School of Lausanne (EPFL) and the University of Basel

01.1993 –

07.1996

High school diploma at the Maturitätsschule für Erwach-

sene (MSE), Lucerne

04.1988 –

04.1992

Tin-smith and plumber apprenticeships at the

Lehrwerkstätten der Stadt Bern (LWB), Bern

OTHER ACTIVITIES

05.2009–

onward

Member of the Aeronautics Exhibition Committee at the

Swiss Museum of Transport, Lucerne

01.2008 –

07.2010

Vice president of the Staff Council of the Secretariat for

Education and Research (COMPERS)

10.2007–

onward

Member of the Free Democratic Party of the city of Bern,

section president, cantonal delegate, city councilor

06.2004–

onward

Member of the International Max Planck Research

School (IMPRS) for Radio and Infrared Astronomy

07.2001–

onward

Dive Master und Instructor with employments in the

Dominican Republic, Indonesia, Thailand, Galapagos

10.1996–

onward

Foundation member of the astronomical association

CALLISTA of EPFL and University of Lausanne

05.2005–

onward

Panel member of the Robert A. Naef Price Committee

LANGUAGES

German (native speaker), English (fluent), French (fluent),

Spanish (conversation), Japanese (basics), Russian (basics)

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