ISIS Press 0304

PRESS 0304

Alliances with Top-Level Executives Help R&D-driven Companies Crack New Markets

Issue: Large R&D-driven companies are maximizing results by thinking in terms of whole new markets rather than individual products. The idea is to take a new product or technology and quickly launch it into a new market or, better yet, several new markets simultaneously. Success comes in bunches and with dramatic speed.
Challenge: One of the biggest obstacles to such a strategy is accessing markets where a company is not recognized as a player. Dow Chemical normally sends salespeople to call on purchasing agents but found that approach painfully slow for introducing products based on new technology. Because Dow has many products and technologies in its R&D pipeline, it needs quick "go" or "no go" answers to guide funding decisions. Getting the right answers fast enables the company to focus its resources on innovations that can generate hundreds of millions of dollars in new revenues.
Solution: To commercialize its breakthrough Insite® technology (a new way to produce plastics) into the adhesives, sealants and coatings markets, Dow decided that instead of starting at the bottom by knocking on the usual doors, it would start at the top by accessing high-powered decision makers from leading companies in high-potential fields. To do this, it brought in a specialized intermediary, ISIS International, that could generate such access "on demand" through a systematic non-traditional process. In this process, the goal was first to brief, individually, a group of industry opinion leaders (a dozen or more decision makers from non-competing top companies in major industries) on the properties of an innovative material and later to bring them together at a Summit Conference to discuss high-value commercial applications of the material. Why would such high-level people agree to participate? Simple! They get first crack at the new technology.

In the case of Insite, Summit Panelists estimated that the near-term value of the new material to their companies alone would be in excess of $400 million annually.

This approach has been so successful for Dow and other large companies that it was covered last summer in an article in the Harvard Business Review (Breaking Out of the Innovation Box, August 2002, pages 77-83, by John D. Wolpert, who leads IBM's Extreme Blue, an innovation incubator).
As noted by Kurt Swogger, Vice President R&D for Dow's Olefins and Elastomers Business, "We get account penetration like we do not ever get unless we do ISIS. They manage to line up the senior decision makers, not just from purchasing, but from sales and marketing and research, so that when you actually go in for the first time to meet them, ISIS has the team there that can make the decision."
Advantages: R&D-driven companies like Dow can bring new products to new markets, even familiar markets, much faster and more profitably. At a time when CEOs are quick to terminate R&D projects, this approach enables companies to pinpoint which projects to push and which to eliminate.
Case Study: One panelist at the Insite® summit was H.B. Fuller, a leader in the adhesives field. At that summit Dow's identity was not revealed, nor was that of Insite®, just the technical data describing the new technology. The H.B. Fuller participant was intrigued by the ability of the new polymer to offer performance advantages over standard hot-melt adhesives. He had visions of a whole new line of adhesives with bonding and processing advantages. The Fuller summit panelist later brought other Fuller executives and scientists into the picture and eventually developed two blockbuster product lines (its Advantra and Clarity lines of hot-melt adhesives). "So we're making money" says Dow's Swogger, "and we know Fuller's making money; and we're developing other applications outside the fields that Fuller has, based on our agreement."
Overall, H. B. Fuller estimated that the commercial value of the new polymer to their company could be in excess of $100 million annually.
Speaking of process, Fuller's representative at the summit conference, John Greenzweig, noted: "We were already working on something similar with the chemical division of a major oil company, when we learned about the Dow innovation. We liked its properties better, plus the fact that Dow was interested in working with us to develop the polymers for specific applications. If I had not attended that summit, we surely would have gone with the other product and, most likely, one of our competitors would have developed the Dow polymer, to our disadvantage."
Twist: Dow has recently flip-flopped this approach to set direction for new product development: going into new markets, obtaining direction from decision makers via ISIS International, learning what needs are not being met, and then going back to the lab and developing products to meet those needs. One such example is Dow's recently introduced Dow XLA™ Elastic Fibers that are aimed at new stretch fabric markets where DuPont's Lycra® has difficulty working.
Dow now has a two-barrel approach to the marketplace: build the better mousetrap first and then find the right high value markets, or go to the market, learn what kind of new mousetraps they need and then go home and build them.