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Biotechnology, Health and Business in Canada, the United States and Worldwide

Tag Archives: Capital Rants

Existential Question for 2009: Is a Virtual Company Virtually as Good?

A thought-provoking piece over at Capital Rants (and the BlackBerry Partners Fund Blog) from Pierre Donaldson says, basically:

virtual-schmirtual, there’s no substitute for the interpersonal benefits of a physical headquarters where the whole team is regularly under the same roof and interacting face to face.

On the legal side, we have a tendency to view virtual/physical, outsource/in-house issues from a straightforward economic perspective, basically:

is the price of the virtual/outsourced service, plus the cost of managing the service, plus the transaction cost of setting up the service, less than the cost of providing it in-house?

Nominally, the issues Pierre is talking about fall into the service management costs bucket, but his post draws attention to some opportunity costs of virtualization, something generally not given enough attention in the  accounting cost version of these calculations.

Overall,  I agree that lack of physical interaction is an impediment to team spirit — the post’s central “Locker Room Theory”.  

The point I want to quibble with is:

“We can e-mail, IM, SMS, blog, tweet… you name it.  It is exactly as if we are constantly sitting right next to each other, right? … I’m sorry, but I don’t buy that at all…

“It’s about the water cooler conversations and finding out that your sysadmin’s favourite uncle has a golf buddy who is CIO at that large corporation you’ve been trying [to] partner with.” 

Lumping e-mail with Twitter, and leaving out LinkedIn and Facebook from his list is obviously leaving out a lot of nuance.  All three are useful virtual tools with far greater reach (though maybe less (normalized) utility) than sysadmins and uncles and golf buddies.

But, can we really virtualize networking the way we’ve virtualized companies?  When the BlackBerry Partners Fund shackles their portfolio company teams to an office and sends them on corporate trust-building retreats, are they building the next … BlackBerry … or are they taking valuable time away from meetups and status updates and the next great tweet

The current economic climate will likely result in a large-scale experiment as companies in a variety of industries either hunker down and go back to the water cooler or attempt to tweet their way out of their individual crises.  Hindsight, no doubt, will be 20/20.

Pharma and biotech companies are constantly faced with these virtual/physical outsource/in-source questions; and I expect we’ll continue to see a lot of comepeting approaches.  Fully virtual companies are possible and successful, with R&D, formulation, CMC, regulatory and clinical trial capabilities fully available on a contract basis from a bevy of worldwide competitors.

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