Bus 632 : The Commercialization

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Bus 632 The Commercialization Marketing of
High Tech ProductsSession 9

• Instructor Paul Weber
• Office Schlegel Centre SBE 2218
• Phone [phone]
• Email paul_at_webercommunications.com

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Agenda for Tonight

• Speakers
• Gerry Remers, President, Christie Digital Systems
• Discussion of Readings
• Meeting the Challenge of Disruptive Change

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Speaker Bio Gerry Remers

• Current Role
• President and Chief Operating Officer Christie
  Digital Systems.
• Gerry has global responsibility for operations,
  engineering and marketing for CDSI (200M sales,
  325 employees).
• Prior to Christie
• Progressive Roles at Electrohome Projections
  Systems
• President and COO,
• Vice President and General Manager
• Director of Marketing,
• Various management positions with Nortel Networks
  
• Education
• Post Grad Scholarship in International Business,
  DAAD (German Government) from Cologne University.
  
• MBA from York University
• MA, Philosophy from University of Waterloo
• Double Honours, German and Philosophy from
  Wilfrid Laurier University,

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Reading 1 Meeting the Challenge of Disruptive
Change

• What are some examples of industries that have
  gone through disruptive change?
• Name some companies that have been successful /
  unsuccessful in managing through this transition.

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Reading 1 Meeting the Challenge of Disruptive
Change

• According to the article, what 3 factors affect
  what a organization can and cannot do?

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Reading 1 Meeting the Challenge of Disruptive
Change

• What dilemma does an established company face
  with regard to its established processes?

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Reading 1 Meeting the Challenge of Disruptive
Change

• What are some examples of how values impact a
  companies capabilities to pursue new
  opportunities?

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Reading 1 Meeting the Challenge of Disruptive
Change

• How do capabilities migrate over the evolution of
  a company?
• What areas are start-ups typically strong in?
• How does this shift as a company grows?

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Reading 1 Meeting the Challenge of Disruptive
Change

• What is the Innovators dilemma?
• What are the characteristics of a sustaining
  innovation vs. a disruptive innovation

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Reading 1 Meeting the Challenge of Disruptive
Change

• How does the article suggest that a large company
  should deal with disruptive change?
• What options are provided?
• When do you use the different strategies?

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Reading 1 Meeting the Challenge of Disruptive
Change
Poor
Use a heavyweight team within and existing
organization
Use a heavyweight team in a separate spinout
organization
Fit with Organizations Processes
Development may occur in-house through a
heavyweight team, but commercialization almost
always requires a spinout
Use a lightweight or functional team within the
existing organization
Good
Good
Poor
(Sustaining Innovation)
(Disruptive Innovation)
Fit with Organizations Values
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Next Class

• Session 10 March 23, 2004
• Topic
• Funding commercialization
• Speaker
• Tim Jackson, Partner, Tech Capital Partners LLP

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Resource Slides for Project
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Developing a Business Concept

• From Idea to Feasible Business.

Feasible Business
Business Concept
Commercial Opportunity
Idea
Turning an idea into a technology product with
commercial potential
Defining product/service, benefit, customer and
distribution
Testing the concept to ensure a feasible business
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Feasibility Analysis

• Are there enough customers to make the business
  work?
• Do the capital requirements to start the business
  make sense?
• Does the entrepreneur have the right team to
  execute?

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Feasibility Testing the Concept
Opportunity Environment Industry - Concept
Market/Distribution Risks/Benefits
Product Service Risks / Benefits
Market Analyses
Customer Test
Financial Risks / Benefits
Customer Definition
Development
Timeline
Go Forward / Rework
Team
Product Service Development Management
Concept
Statement
Competition Grid
Patterns of Change
Industry Status
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Analyzing the Industry

• Stage of Industry
• Birth
• Typically based on disruptive technology
• Growth and Adaptation
• Volatility
• Trying to establish standards
• Intellectual rights important
• Differentiating and competition
• High level of competition price is more
  important
• Standards are set
• Shakeout
• Consolidation of industry few major players
• Maturity and Decline

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Analyzing the Industry

• 5 Forces Analyses 1
• Barriers to Entry
• Threat of substitute products
• Buyer Power
• Degree of competitor rivalry
• Technology
• Enables business goals and drives change
• Shortens planning cycles
• Disrupts value chains and economic models

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Analyzing the Competition

• What to look for
• Strategies, and goals
• Positioning
• Motivations
• Tools
• Competitive grid
• Sources of Information
• Web, advertising and promotional material
• Annual reports and SEC filings
• Talk to competitors
• Purchase products (look at tech and how they
  treat their customers)
• Government Web sites
• Trade associations

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Plan for Industry Analysis

• Questions to Ask
• Is the industry experiencing growth?
• Where are the opportunities in this industry?
• How does the industry respond to new technology?
• How much is spent on RD?
• Who are the major competitors?
• Are young firms surviving in the industry?
• Where is the industry going?
• What are the threats to the industry?
• What are the gross margins in the industry?

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Analyzing Technical Feasibility

• Assessment Stages
• Concept testing
• Primitive prototype
• Near-production quality
• Product Risks and Benefits
• What are the features and associated customer
  benefits of the product or service?
• What product development tasks must be undertaken
  and what are the timelines?
• Is there potential for intellectual property
  rights?
• How is the product or service differentiated from
  others in the market?

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Market Analysis

• Key questions to ask
• Who is most likely to be the first customer for
  this product?
• What does the customer typically buy, how do the
  buy it, and how do they become aware of it?
• How often does this customer buy and what is
  there buying pattern?
• How can the company meet the customers needs?

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Market Analysis

• Evaluate your information needs
• Research secondary sources
• Conducting the customer test
• Focus groups and interviews
• Surveys mail, phone and internet
• Creating a customer profile
• Forecasting demand based on
• Entrepreneurs knowledge
• Analogous products
• Industry experts

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Analyzing Distribution Channels
Direct Channel
Manufacturer
Customer
Indirect Channel
Raw Material / Supplies
Wholesaler Distributor
Manufacturer
Retailer
Customer
Agent / Manufacturers Rep
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Analyzing the Distribution Channel (contd)

• Factors to consider
• Costs
• Market coverage
• Control
• Speed and reliability.

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The Founding Team

• Factors to consider
• Key Functional Areas Finance, Marketing and
  Operations
• Industry experience
• Good credit ratings
• Well networked contacts

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4 Alternatives for Commercialization

• Licensing the technology to third parties
• Selling the technology outright to a third party
• Partnering with a larger company
• Starting a new venture

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Reasons to Partner

• Access resources and skills
• Gain cost efficiencies
• Speed time-to-market
• Develop innovations and new products
• Develop complementary products
• Define industry standards
• Gain market clout

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Types of Partnerships
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Types of Partnerships (cont.)

• Vertical partnerships with members at other
  levels of the supply chain
• Suppliers
• Distribution channel members
• Customers
• Horizontal partnerships with members at the same
  level of the supply chain
• Complementors makers of jointly-used products
• Competitorscoopetition

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Strategic Planning Process in High-Tech Markets
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1. Define the Business Arena

• Potential customer segments that could be served
•  Potential applications or functionality that
  could be provided to these customers
•  Possible technologies and capabilities that
  could be used to create the applications or
  functionality and
•  Possible role for the organization in providing
  the value to the customer versus the roles of
  others in the market chain.

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 2. Identify Attractive Opportunities

• Thoroughly segment the market
• Assess profitability of serving each segment

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3. Understand the Market Environment

• Depict market flows/supply chain
• Understand buyer behavior

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4. Assess Resources and Competencies

• Financial resources
• Technology platforms
• Intellectual capital
• Manufacturing capacity
• Brand equity
• Capabilities (including skills and knowledge)

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5. Understand the Competitive Challenge

• Identify the actual, potential and indirect
  competitors
• Determine
• How each competitor competes
• Their current and likely future performances
• What drivers underlie their business strategies
• Consider likely competitive responses to
  opportunity
• What are this competitors areas of weakness or
  vulnerability that the firm could exploit?

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6. Make Tough Strategic Choices

• Decide whether opportunity should be pursued
• What will it be worth to win?
• Is the market opportunity attractive enough?
• Is the strategy powerful enough to generate a
  sufficient level of profitability?
• If not, are there compelling reasons to proceed?

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6. Make Tough Strategic Choices (Cont.)

• Select/develop best strategy to take advantage of
  opportunity
• Achieve leadership position in the opportunity?

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6. Make Tough Strategic Choices (Cont.)

• Do synergies exist within the portfolio of
  opportunities being considered
• Leverage a common technology
• Leverage a common market chain
• Are the strategies for the various opportunities
  reasonably consistent?

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7. Plan Critical Relationships

• With other firms in the market chain
• With organizations outside the market chain
• Company with a complementary product or service

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 8. Complete the Winning Strategy

• Pricing
• Marketing Communications

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9. Understand the Profit Dynamic

• Develop a detailed financial model for each
  opportunity
• More refined profitability analysis based on
  detailed understanding of complete marketing
  strategy and associated costs
• Look for modifications to enhance opportunitys
  overall profitability.

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10. Implement the Strategy

• Make sure people who will implement are involved
  in the strategy formulation process
• Commitment

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Summary

• Success will be determined on the ability to
• Effectively define the customer
• Identify the value of the benefits delivered
• Proper distribution channels
• Primary and secondary research
• The founding team is key
• Execution
• Feasibility study will provide a clear picture as
  the conditions necessary for success