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Siegel has applied this advanced form of what he calls "business development technology," to create new business directions for corporations such as AlliedSignal, CIGNA Insurance, Dow Chemical Co., Hoechst Celanese Corp., Kimberly-Clark, Rockwell International, WL Gore & Associates, Nokia and Swedish Tobacco. Siegel contends that part of the problem with unsuccessful R&D projects is that managers often have no idea if their product will sell or even where to find strategic market information from inside their own company. "Inside R&D Alert" talked with Siegel to find out what kinds of false assumptions sink projects from the start and what can be done to right the ship and sail to success. Inside R&D Alert: In your experience, what kinds of faulty assumptions most often undermine technology business plans? Dick Siegel: Faulty assumptions are often made about the marketplace and what it will and won't do; about the people put in charge of technology commercialization and what they can and can't do; about the technology itself and what it technically can and can't do. For example, companies often assume customers will perceive the same value in a technology as they do. Customers often don't. Companies assume that bright, accomplished technologists with limited or no actual business development experience can head up a commercialization project. They often can't and shouldn't. Assumptions are short cuts that help people justify avoidance of spending money or taking time; that is, doing the critical "homework" needed to improve the odds of success. These assumptions can cost technology-based companies a bundle in unjustified development investment. People-based assumptions also cost companies a great deal, particularly in lost opportunity. For example, many technology-based companies put technologists in charge of creating and implementing a business plan. Effective technology commercialization requires a strong multidisciplinary skill set, foremost among which are business and strategy skills. Technologists, no matter how accomplished, often have no chance of being successful on a major scale, unless they possess these disciplines as well. Generally, it's the lack of business development and customer experience that can lead solely technology-based project managers to knee-jerk conclusions, to focus on less critical issues and often to miss big opportunities entirely. IR&D Alert: Can closer contact with the sales force help strategically challenged technologists make better decisions? What kinds of valuable information can you extract from your company's sales force? DS: A good sales force knows the current situation in the markets it sells. Since it's on the firing line with customers every day, it can alert you to current product or service problems and shortcomings. Armed with this information, a good technology development department can effect product improvements, develop line extensions and improve technical support systems. But this information won't automatically flow from the sales force to your technical departments. You need to put infrastructure in place to enable and encourage it. Salespeople can also alert you to new competitive threats. But the problem is, once they hear about these threats, it's often too late to respond. You really need other market intelligence initiatives in place to detect such threats. IR&D Alert: In an article you wrote for "Technology Business", you suggest that R&D managers or project developers sit down with their customer counterparts. What should you talk about? DS: Since a great deal of value can result from these encounters, you need to make the most of them. Here are some suggestions:
IR&D Alert: At technology-driven companies, managers often assume that their technology is unique. What are the dangers inherent in that kind of thinking? In what ways does that kind of myopia adversely effect companies? DS: In the pocketbook. It's not unusual for technology-based companies to assume their technology is unique and therefore will be highly valued by current or prospective customers. This attitude sometimes stems from achieving a patent position. Other times it's based on ignorance or arrogance. The more unique a technology seems, the more value some companies believe it has, and the less likely they are to work with the market to determine its real value. Exploring your technology with innovative leading companies in your customer market can help you take a so-so technology and refocus it in ways that can generate substantially more value. While a technology may be unique from a patent standpoint, or to the best of the company's knowledge, it may not be the only or even a desirable way for a customer to solve a particular problem. The question is, with what other solutions will a given technology compete? IR&D Alert: What are some first steps to take in determining the potential market value of your technology? DS: In addition to traditional research into the competitive environment, speak with the people who know! These are people in the market who determine the future of their companies and their markets, and who could hypothetically have need for products enabled by your technology. These are people with a high level of technical expertise and influence within their companies and their companies set the trends in their markets. They are heads of technology, business development or marketing of companies who could be users of products that could be enabled by your technology. In our business we call these people Industrial Opinion Leaders (IOLs). You should be able to identify at least some of them. Find ways for these people to offer you their reactions and guidance. You might wonder why these type of people would spend the time to speak with you. The answer is simple: By having an input into your technology development and commercialization process, they could wind up with early access to a technology that can give them a competitive advantage in their market. When meeting with these people, encourage them to have other colleagues and subordinates in the meeting, people who are involved in manufacturing, engineering and marketing. Consider bringing similar people along from your company. Predetermine an agenda with the IOL and have an exploratory meeting--don't make a sales pitch. These "executive to executive" meetings can lead to substantive and creative discussions and result in some home runs. One message here is that upper management should take responsibility for driving technology commercialization, particularly when the stakes are high. IR&D Alert: What kinds of information can a technologist or R&D executive extract from customer/colleagues that can prove especially valuable in the short term? Long run? DS: You might be surprised at the variety of extremely valuable input Industrial Opinion Leaders can provide. You can secure vital directional information for product development, marketing and sales development, technical support and even next-generation product criteria. It's also possible to learn how to substantially optimize the revenue generating potential of a technology. This is so because technically savvy executives from prospective customers can often see application potentials you hadn't considered. For example, a well-known global materials company with a new polymer technology engaged in this process with us. IOLs in multiple markets saw strong potential for these polymers if they were thermoplastic, rather than thermoset, as the company had been developing. To follow the market's suggestions meant having to refocus R&D with the added time and investment that implies. It took them 18 months before they had sample materials of the type the market really wanted. Sure they had to make new unexpected investment, but with it they were looking at a $300 million plus opportunity rather than the $50 million they originally had hoped for. In another case, a European biotechnology company had developed a new fast way to detect pathogens for the food processing industry. Industrial Opinion Leaders saw value in the underlying technology and collectively provided input on the design of systems in ways that would comfortably integrate into existing production lines. These were not ways initially imagined by the technology's developer. Additionally, the company had only been thinking about stationary systems, but the market also and unexpectedly said they needed a portable device and described in detail what it needed to look like. The company rapidly developed the portable, introduced it in about 12 months at an industry trade show and received a very strong reaction. The business was off and running. One message here is to keep an open mind when working with IOLs. You could find more than you bargained for. Resist the urge to prove that your original ideas were the right ones. When working with IOLs in early stage projects, adopt a stepwise approach to commercial development and IOL engagement. Start by exploring your concept or lab results with IOLs. With their input, make adjustments and again secure their reactions. With more good signals from the market, develop pilot and again involve the IOLs. Use two-way secrecy agreements wherever possible. These should be two-way since, in the most effective IOL engagements, they will be sharing with you some of their new product plans. Expect some of these IOLs to be your market entry customers or partners. Continue to fine-tune your technology and business objectives with their input and keep moving. With this kind of systematic approach you may now be ready to commit to commercialization. By staging resource allocations and involving the market at critical mile stones, you'll limit financial exposure and risk. You'll also have the opportunity to shut the thing down before you need to make a significant financial commitment, if the market demonstrates unacceptable business opportunity.
R980171 2070898 Copyright 1998, John Wiley & Sons, Inc., New York, NY 10158 Details: Richard A. Siegel, President, ISIS International Inc., 588 Monroe Turnpike, Monroe, CT 06468 USA. Phone: 203-261-5300. Fax: 203-261-4911. E-mail: rsiegel@isisusa.com. Web: www.isisusa.com.
Article republished with permission of Technical Insights. |
