Converting Technology to Wealth Workshop

1

• Converting Technology to Wealth Workshop
• Module 2
• Market Research

2
Define the Opportunity

• You dont know your customer as well as you think
  you do
• Ready, fire, aim is a sure way to find surprises,
  usually not good surprises
• Market validation is a continuous process based
  in direct connections to your customers and
  partners

3
Validate the Marketplace

• Market validation
• Know your customer
• Know what is important to the customer
• Explore the pain
• Envision the solution
• Find the quality influencers, get the product
  right
• Establish credibility

4
Research Stages

• Project definition
• Project execution
• Project analysis
• Project results dissemination

5
Project Definition

• Understand the internal dynamics of the
  stakeholders
• Understand the goal of the research
• Understand what decision is being made
• Understand the strengths and weaknesses of the
  company
• Understand the commercialization options

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Project Definition Exercise (30 minutes)

• Define the goals of the research
• List key questions to be answered or key
  information that needs to be gathered
• Try to guess who will know or where you will be
  able to find the information sought

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From Lab To Business

Market Research Methods
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Gathering Information

• Primary Research
• Internal Primary Research
• External Primary Research
• Secondary Data Collection
• Internal Sources
• External Private Sources
• External Government Sources

9
Primary Market Research

• Creates data through interviews and other direct
  feedback mechanisms
• Addresses the specific technology and information
  needs
• Relies on the skill of the interviewer or
  questionnaire design
• Delivers real-time feedback to the researcher

10
Listen to the Voice of the Customer

• Understand what is really important
• Understand customer motivations
• Understand the buying cycle and how decisions are
  made
• Provide a sanity check to the internal
  perceptions of the technology

11
Getting Feedback on Benefits

• Expected level of quality of the product
• Linear performance quality improvements may not
  be enough
• Exciter qualities can be the real sellers
• may not be the obvious ones to the technology
  developer
• may become expected qualities over time

12
Internal Primary Sources

• Interview the inventor or analogue
• Brainstorm with other internal technical experts
• Brainstorm with the sales staff that have direct
  interaction with customers
• Beta test the technology with internal customers

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Internal Primary Research

• Benefits
• Interviewees have a keen understanding of the
  technology and its possibilities
• Research is fast and inexpensive
• Researcher gains an understanding of how the
  technology fits into the internal goals and
  product mix
• Drawbacks
• Can be myopic and rely on unfounded market
  assumptions

14
External Primary Sources

• Collecting data directly from the marketplace
  through
• Phone Surveys
• Mail Surveys
• E-mail and Newsgroups
• Focus Groups
• In-depth Customer Interviews

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In-Depth Interview Advantages

• Provides background data on the marketplace
• Answers specific questions
• Ensures the right experts are contacted
• Examines corporate buying behavior
• Identifies industry trends

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In-Depth Interview Advantages

• Follows a theme with one respondent from
  beginning to end
• Has a flexible structure that can be modified as
  learning occurs
• Topics can be expanded upon
• Identifies other industry players to contact

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Goals of In-Depth Interviewing

• Use open ended questions and conversations to
  uncover
• perceptions, opinions, beliefs and attitudes
• Understand the motivating buying factors
• Qualitative data that informs the quantitative
  research

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Interviewer Qualities

• Good interviewing skills
• good listening, clear communication
• An eye for detail without getting lost in the
  trees
• Ability to appear genuinely interested
• Interest in the subject and the interview results

19
Learn the Customers Language

• Never assume you know what they are talking about
• Question every nebulous term
• Dont be afraid of asking the obvious
• They are the experts, acknowledge that and use it
  to your advantage

20
Types of Responders

• Yeasayers - only tell you the good
• Ask them to pin down why it is good
• What would a benefit mean to them?
• Naysayers - only tell you the bad
• Ask why a benefit or feature is not important
• Ask for suggestions on how to make it better
• Use them to identify barriers and improvements to
  the technology

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Telephone Interviewing

• It can be the right tool when
• interviewing busy executives
• your interview population is geographically
  dispersed
• interviewing people for their knowledge
• speed is important
• You hear the voice of the customer

22
Primary Market Research Tips

• Techniques to get responses
• Emphasize benefit to responders of their input
• Know who you want to talk to
• Offer pre-market use of the technology
• Offer beneficial items for responding
• Allow time for the research to be done
• Conversations are good

23
Ask Open-Ended Questions

• Encourage speaker to talk at length rather than
  enable a yes or no answer
• Who
• What
• When
• Where
• Why
• Decrease the probability of asking leading
  questions

24
Summarize and Paraphrase

• Briefly rephrase the information given by the
  speaker in the listeners own words
• Shows you are listening and that you understand
  what the speaker is saying
• Helps you make sure you do understand
• Allows speaker to expand, but does not suggest
  the listener agrees
• Gives the listener time to comprehend what was
  said

25
More Clarifying Needed!

• Comparators
• Better/Worst
• Under/Over
• Slow/Fast
• Early/Late
• Ahead/Behind
• Less/More

• Example
• Our software is better.
• Response Better compared to what?

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External Primary Market Research

• Benefits
• Tailored to company needs
• Real time feedback
• Answers specific questions
• Feedback on specific products/services
• Drawbacks
• Can be expensive and time consuming
• Strategy/product direction may be publicized

27
Secondary Market Research

• Collects information that already exists
• Provides comprehensive data that can be further
  analyzed
• Provides industry quantitative data
• Provides general industry data rather than data
  specific to the technology or business
  proposition being researched
• Provides historical or trending data

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Internal Secondary Sources

• Mine past internal research reports
• Collect secondary sources that are already
  in-house
• purchased reports and subscription data
• customer lists and contacts
• collected competitor information
• reports and directories of associations that the
  company belongs to

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Internal Secondary Research

• Benefits
• Fast and inexpensive
• Internal secondary sources could uncover good
  internal primary sources
• Information may already be tailored to the
  company or product line
• Drawbacks
• Data may be out of date
• Sole reliance on past reports may compound past
  biases

30
External Secondary Private Sources

• Collect research reports that already exist on
  the web or in libraries
• Purchase existing research reports from market
  research firms
• Gather compiled company data, e.g.
  DunnBradstreet (US and Europe)
• Gather trade group compiled data
• Visit competitor Web sites
• Mine university libraries for sources

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Fee Databases

• General sources can provide clearinghouses
• Dialog, www.dialog.com
• OneSource, www.onesource.com
• Specific industry sources can provide difficult
  to find or unique information
• www.vlsiresearch.com
• www.imshealth.com

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Web Surfing Shortcuts

• Use compiled Web resource lists from universities
• Use compiled Web resource lists from
  organizations
• http//computer.org/internet/links.htm
• Use private search tools
• http//www.delphion.com

33
External Secondary Private Research

• Benefits
• May be inexpensive
• Accumulates quantitative data
• Gives a macro view of the market
• May give insight into competitors market and
  financial positions
• May answer specific questions about market
  share, demographics, and buying habits

34
External Secondary Private Research

• Drawbacks
• Data can be out of date
• Data categories may be overly broad
• Information usually cannot address specific
  technology questions
• The most interesting data can be expensive

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Surfing Tips

• Develop a search plan
• Who else would be interested in the information
• If an agency regulates it, they probably collect
  information on it
• If you think the information should exist, it
  probably does

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Searching Tips

• Slow down and read what you find
• Go to the source when you find interesting
  information
• Pick up on new buzzwords and phrases and search
  using them
• Bookmark when you find good sources

37
External Secondary Government Sources

• Trade bureaus for international trade assistance
• Census Bureau for business and company
  demographic information
• Federal agencies for data and reports on relevant
  industries
• Patent databases for competitive technology
  information

38
Trade Bureau Secondary Data

• US International Trade Administration
• Excellent source of industry information from
  across the globe
• Country and region primers on business practices
  and opportunities
• http//www.ita.doc.gov/

39
Departments of Statistics

• Source for demographic and business statistical
  information
• Source for hundreds of compiled industry reports
• Business reports are more prevalent than
  population reports
• Most publications are free and on the Internet

40
Individual Agencies

• More than 70 US federal agencies collect data and
  issue reports in relevant industries
• Identify agency interest areas and search the
  agency sites
• Use the US federal clearinghouse site of
  http//www.fedstats.gov/

41
Patent Office

• Search for competitive technologies using
  advanced search capabilities
• Download full text patents with pictures
• Search the trademark database
• Link to other nations patent sites
• Link to international patent treaties

42
Government Secondary Data

• Benefits
• Data can be trusted and pedigree is clear
• Data is usually free and Internet available
• Data may be very detailed
• Data can be found for most industries in most
  countries or regions
• Drawbacks
• Data can be out of date
• Data categories may be overly broad

43
The Internet Factor

• Access to secondary information has become much
  easier and cheaper with the explosion of the
  internet
• The old paradigm was library research with paper
  reports and books
• The new paradigm is electronic library research
• Learn by surfing, find sites, techniques, and
  information that is critical to you

44
Examples of Local Information Sources

• What has been useful to you?

45
From Lab To Business
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Vijay Jollys Model of Technology
Commercialization
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Arriving at a Techno-Market Insight

• Parallel activities
• Technology exploration
• Generating new understanding
• Arriving at a good model or proof of principle
• Market exploration
• Preliminary need
• Need to be explored for commercialization

48
How to Arrive at the Dual Insight

• Context of the research
• Idea for a future new product
• Solving a customers problem
• Reaction to competitor moves
• Exploring new principles to build a general
  capability
• All paths can lead to commercially viable products

49
Build the Research Environment for Commercially
Viable Products

• Customer driven does not mean customers are sole
  source of ideas
• Pursue problems deeply
• Be prepared for serendipity
• Alternate between push and pull
• Curiosity driven research in the right market
  context

50
Speeding Up the Dual Insight

• Commercialization is a willful act
• Accelerate the rate of experimentation
• Working on known problems
• Not just short term problem solving but problem
  solving in depth
• Greater contacts between researchers and the
  market

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Mobilizing Interest and Endorsement

• Bringing a new technology to market is an
  exercise in resource assembly
• Agree?
• Importance of reaching out to external
  stakeholders?

52
How to Get Early Buy In

• Dispel criticism and convince others
• Allow others to verify the idea
• Have a good model
• What are the consequences of not dispelling
  criticism early?

53
Understand Support Criteria of Different
Organizations

• Venture capital
• Individuals and commercial potential
• Private companies
• Strategic fit and risk/return profile
• Broad estimates of need
• Government agencies
• Sociopolitical and technical merits
• Generic technology
• High risk

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Reach Out to Others for Support

• Mobilizing interest is enabled by sharing
• Share information with peers
• Collaborative research
• Wide involvement in the development process, both
  internal and external

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Communicating the Vision

• Create champions and remove roadblocks
• Balance promotion and secrecy
• Create pull without hype
• Danger of hype?
• Communicate broadly and individually
• Sustain stakeholder interest with progress

56
Incubating the Technology

• Technology must be made commercializable
• Build expected value
• Size of payoff
• Probability of success
• Moving towards commercial viability
• Achieving technical milestones
• Conceiving of attractive applications
• Assembling IP

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Adding Commercial Value

• Achieving technical milestones
• Cross a functional threshold
• Rapid progress
• Mobilize other researchers
• Conceiving multiple applications
• Look beyond the initial context
• What do you want to protect?
• Build a portfolio of applications
• Link intellectual property to commercial strategy
• When and how much to patent?

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The Innovators Solution

• Concepts

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Types of Innovation

• Sustaining Innovation
• Better products
• Sold to existing, attractive customers
• Incumbents have the advantage
• Disruptive Innovation
• Simpler, more convenient product
• Sells for less money
• Goes after new or unattractive customers
• New entrants have an advantage

60
Reasons Disruption Works for New Entrant

• Target market is unattractive customers or
  non-consumption
• Incumbents likely will not fight for the market
  share
• Allows focus on serving a set of customers needs
• Low end customers get good enough products at
  low cost
• New customers get simplicity and convenience

61
Two types of Disruption

• New-market Disruption
• New customers enabled by simplicity, portability
  or product cost
• After a foothold is gained, sustaining
  improvements increase market share
• Examples pocket radio, PC, cellphone
• Low-end Disruption
• Addresses least profitable, over served existing
  customers
• After a foothold is gained, go up market
• Examples minimills, Wal-Mart, Kia

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New Market Disruption Litmus Test

• Large population, previously not able to purchase
  due to lack of money, equipment or skill
• Previously, customers had to go to an
  inconvenient centralized location

63
Low-end Disruption Litmus Test

• Are there over served customers looking for good
  enough products
• Can the business model make profit at lower end
  discounted prices
• Is the innovation disruptive to all significant
  incumbents

64
What Is Disruptive

• Disruption is not just about technology
• Business models can be disruptive with no
  significant technology advances
• Very innovative technologies may not be
  disruptive at all
• Disruption is ultimately about how you make money
• Who are the customers
• What problems are you solving

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Using Market Research

• Find out what jobs customers are trying to
  accomplish (leads to the selling benefits)
• Best way to do this is to observe and ask the
  customers
• Understanding the customer is more critical than
  quantifying and segmenting the customers and
  market

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Sustaining the Disruption

• How do you sustain growth with low end disruption
  from good enough products?
• Go up market
• How do you sustain growth with new market
  disruptions?
• Choose the right improvements by understanding
  your customer
• Segment to avoid one size fits all

67
Why Incumbents Segment Poorly

• Fear of focus
• May lead to more focused products than more
  generally capable products
• Demand for quantification of opportunity
• Segment based on easy information to gather
• Structure of channels
• Potential misfit with channel partners
• Advertising economics
• Focus impacts economies of scale

68
Other Takeaways from Christensen

• To act like start-ups large companies need to
• Do more than defend market share
• Grow in new markets
• Validate the market constantly and focus on the
  pain
• Create smaller units
• Keep RD vital
• Harness entrepreneurial energy
• Create autonomy and intrapreneurship