Technology Balance Sheet Rules 135
The following are some specific rules applicable to the technology balance sheet.
Can the team, at the concept stage, show how all the technology will come together to form a product that will be not only unique but also self-sustaining (i.e., capable of evolving into future generations)?
The technology balance sheet should be used to account for both uniqueness and mastery of the technology. Mastering the technology means being able to assemble the "to be acquired" engineering team, consultants, patents, standards, components, design process, CAD tools, etc. This rule tests whether the organization has a way to evolve its product and extend it into future generations or whether it is merely starting on a one-shot basis.
The same rule should be applied again at the seed stage, continually challenging the founders about the uniqueness of their technology. It examines whether the technology remains sufficiently unique, yet implementable, to support a self-sustaining company. The rules in Chapter 8, "The Product," also examine uniqueness.
Can the team, at the concept stage, show how the technology can be developed while requiring fewer than three breakthroughs or significant advancements in the state of the art?
This rule tests whether the technology is too high (sometimes reaching in unity), such that the new venture is engaging in research instead of product development. Applied research or advanced development is being done if a project schedule contains major loops with conditional branches or multiple exploratory paths in its PERT chart. Such a company is likely to be fatally flawed if it has been funded with the goal of developing a product, as opposed to being funded as a research and development partnership. In the latter case, investors are cognizant of the risk, and the goal is to first master the technology before building a product.