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

6
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

7

From Lab To Business

Market Research Methods
8
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

13
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

15
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

16
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

17
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

18
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

21
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

Elevator Pitches for Market Research

24
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

25
Good Example End User

• My name is Brett Cornwell and I have been working
  with the State of Texas Bioenergy initiatives.
  Texas AM 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?

26
Bad Example End User

• My name is Brett Cornwell, I am the Director of
  Commercialization Services for the Texas AM
  University System. One of the Texas AM
  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.

27
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?

28
Example Potential Licensee

• My name is Brett Cornwell and I work in the
  Office of Technology Commercialization at Texas
  AM. Texas AM 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?

29
Example Technical Expert

• My name is Brett Cornwell and I have been working
  with Texas AM researchers in understanding the
  logistics chain for a cellulosic ethanol
  feedstock. Texas AM 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 INLs expertise in this field.
  Texas AM 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?
  

30
Example - Supplier

• My name is Brett Cornwell and I work at Texas AM
  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?

31
Elevator Pitches

• Short
• Targeted
• Make sure the benefit of them talking to you is
  in the pitch
• Have a call to action as a door opener

32
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

33
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

34
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?

35
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

36
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

37
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

38
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

39
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

40
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

41
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

42
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

43
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

44
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

45
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

46
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

47
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/

48
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

49
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/

50
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

51
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

52
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

53
Examples of Local Information Sources

• What has been useful to you?

54
From Lab To Business
55
Vijay Jollys Model of Technology
Commercialization
56
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

57
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

58
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

59
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

60
Mobilizing Interest and Endorsement

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

61
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?

62
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

63
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

64
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

65
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

66
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?

67
The Innovators Solution

• Concepts

68
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

69
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

70
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

71
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

72
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

73
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

74
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

75
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

76
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

77
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