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Converting Technology to Wealth Workshop

Module 2Market Research

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Define the Opportunity

You don’t 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

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Validate the Marketplace

Market validation– Know your customer– Know what is important to the customer

Explore the painEnvision the solution

– Find the quality influencers, get the product right

Establish credibility

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Research Stages

Project definition

Project execution

Project analysis

Project results dissemination

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Project Definition

Understand the internal dynamics of the stakeholders

Understand the goal of the researchUnderstand what decision is being madeUnderstand 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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Market Research Methods

From Lab To Business

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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

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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

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Listen to the Voice of the Customer

Understand what is really importantUnderstand customer motivationsUnderstand the buying cycle and how

decisions are madeProvide a sanity check to the internal

perceptions of the technology

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Getting Feedback on Benefits

Expected level of quality of the productLinear performance quality improvements

may not be enoughExciter qualities can be the real sellers

– may not be the obvious ones to the technology developer

– may become expected qualities over time

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Internal Primary Sources

Interview the inventor or analogueBrainstorm with other internal technical

expertsBrainstorm with the sales staff that

have direct interaction with customersBeta 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

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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 questionsEnsures the right experts are

contactedExamines 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

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Learn the Customer’s Language

Never assume you know what they are talking about

Question every nebulous termDon’t be afraid of asking the obviousThey are the experts, acknowledge

that and use it to your advantage

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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

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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

Elevator Pitches for Market Research

The Introduction and Call to Action

Who are you– Where are you from, what are you doing

What are you talking about– SHORT technology description

Why do they want to talk to you– Benefit to the interviewee

Why do you want to talk to the interviewee– What expertise did you seek out

Call to action– Opening question

Good Example – End User

My name is Brett Cornwell and I have been working with the State of Texas’ Bioenergy initiatives. Texas A&M has developed a line of high biomass sorghums that can produce 15 to 20 dry tons of biomass per acre. Because Iogen is the leading cellulosic converter in North America, I would like to understand what Iogen looks for in a feedstock. As part of our effort to optimize the feedstock for the converter, would you share the general parameters of an acceptable feedstock in terms of moisture content and chemical composition?

Bad Example – End User

My name is Brett Cornwell, I am the Director of Commercialization Services for the Texas A&M University System. One of the Texas A&M components, the Texas Agricultural Experiment Station, has developed a line of high biomass sorghums that produce between 15 and 20 dry tons of biomass per acre. The sorghums are brown mid-rib sorghums that have been bred so that they are photoperiod sensitive, meaning that they do not flower until the day length is shorter than 12 hours.

Bad Example Continued

These traits give good standability to the crop and ensure that during the growing season the crop puts all of its energy into producing biomass. In addition, the high biomass sorghums are drought tolerant so they can be grown with 25-50% of the water requirements for corn. I believe that this will be the premiere dedicated bioenergy crop for cellulosic ethanol and I would like to get some information from Iogen about your current feedstock requirements to see if high biomass sorghum could replace those feedstocks. What is the moisture content and chemical composition of your current feedstock?

Example – Potential Licensee

My name is Brett Cornwell and I work in the Office of Technology Commercialization at Texas A&M. Texas A&M has developed and patented a line of high biomass sorghums that are available for license. They can produce 15 to 20 dry tons of biomass per acre. The genome is completely mapped and a number of interesting traits such as drought and disease resistance have been isolated. As part of our effort to understand the cellulosic market, I am talking to a number of seed companies. Because Monsanto is a leading seed company in biofuels, I would like to understand what Monsanto sees as the need and opportunity for cellulosic ethanol. Does Monsanto see dedicated bioenergy crops as a growth area?

Example – Technical Expert

My name is Brett Cornwell and I have been working with Texas A&M researchers in understanding the logistics chain for a cellulosic ethanol feedstock. Texas A&M has developed a line of high biomass sorghums that can produce 45 to 60 fresh tons of biomass per acre. Our challenge is developing a harvest and storage system to deal with fresh biomass. I read your paper on cellulosic logistic systems and would like to tap into your and INL’s expertise in this field. Texas A&M is designing field trials this fall for harvest and storage of the high biomass sorghums. How would you suggest we design the trials and would you be willing to test some of our samples?

Example - Supplier

My name is Brett Cornwell and I work at Texas A&M on our bioenergy initiative. Luis Ribera, your local extension agent, gave me your name as a leading grower in the area. We have developed a drought resistant high biomass sorghum that could be used as an ethanol feedstock. Our goal is to develop crops that make money for Texas farmers. To that end, would you help me understand the kind of net returns per acre that would be enticing to you as a grower to plant a new bioenergy crop?

Elevator Pitches

ShortTargetedMake sure the benefit of them talking to

you is in the pitchHave a call to action as a door opener

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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

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Summarize and Paraphrase

Briefly rephrase the information given by the speaker in the listener’s 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

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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

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Secondary Market Research

Collects information that already existsProvides comprehensive data that can

be further analyzedProvides industry quantitative dataProvides 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 reportsCollect 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 lineDrawbacks

– Data may be out of date– Sole reliance on past reports may

compound past biases

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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. Dunn&Bradstreet (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

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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

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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 findGo to the source when you find interesting

informationPick up on new buzzwords and phrases

and search using themBookmark when you find good sources

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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

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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/

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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

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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/

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Patent Office

Search for competitive technologies using advanced search capabilities

Download full text patents with picturesSearch the trademark databaseLink to other nations’ patent sitesLink to international patent treaties

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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

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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

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Examples of Local Information Sources

What has been useful to you?

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From Lab To Business

Vijay Jolly’s Model of Technology Commercialization

Source: Jolly, Vijay. 1997. From Mind to Market.

3.Incubate

define

Commercializ-ability

7.Promote adoption

9.

Sustain commercialization2.

Mobilize Interest

and endorse-

ment

5.Demonstratecontextually

in products

and processes

4.Mobilize resource

forDemo

6.Mobilize market consti-tuents

8.Mobilize

complimentary assets for delivery

1.Imagine the dual(techno-market)insight

Sub-Processes: Building the Value of a New Technology

Tech Assessment

Venture AnalysisBusiness Plan

Bridges: Mobilizing the Stakeholders

Going Global – Parallels each stage/process in the model

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Arriving at a Techno-Market Insight

Parallel activitiesTechnology exploration

– Generating new understanding• Arriving at a good model or proof of principle

Market exploration– Preliminary need

• Need to be explored for commercialization

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How to Arrive at the Dual Insight

Context of the research Idea for a future new product Solving a customer’s problem Reaction to competitor moves Exploring new principles to build a general

capability

All paths can lead to commercially viable products

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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

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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?

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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?

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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

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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?

The Innovator’s Solution

Concepts

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

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 customer’s needs– Low end customers get “good enough” products

at low cost– New customers get simplicity and convenience

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

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

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

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

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

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

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

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 R&D vital– Harness entrepreneurial energy

• Create autonomy and intrapreneurship