TechConnectMoving from Idea to Invoice

TechConnect afternoon agenda

Thinking about your customer:• Offering pain killers or vitamins• Creating the value proposition:

• Motivating your customer to change their behavior

Demonstrate your value proposition

Stimulating adoption• Making the customers’ decision easier

Thinking like a social scientist

Importance of innovation science

• Technologists believe that offering a better technology leads directly to market success

• Commercial success requires adoption: • How will customers become aware of solution?• How will they know it works? • What will motivate them to purchase?• How can you identify the early adopters?• How do you overcome innovation inertia?• How will you leverage early adoption to stimulate growth?• Who has biggest pain, and is most motivated to adopt?• Who has most to gain, and will easily see benefits?

Segmenting market by solution

• Take away a pain• Offer a pain killer that addresses a real problem that

the customer is already aware of

• Provide a gain• Offer a vitamin that will help the customer address

an issue that you have an anticipated

If you have a pain killer

• How big is customers’ pain: what does it cost?• Are they motivated to look for pain relief?• How do alternate solutions compare?• Can you demonstrate your pain killer works?• What features offer competitive advantage?• Typical pain points:

– High cost, – Low quality, – Poor service, – High risk

If you have a vitamin

• How would you build awareness of benefits?• How can you motivate interest?• How can you show it works?• How can you demonstrate/measure benefits?• How will customer measure outcomes? • Typical gains: Enhanced competitiveness, improved

performance, new levels of service, enhanced well being, reduced environmental/social impact

Customer segmentation

The Value Proposition exercise

Based on job mapping exercise• Identify distinct markets: solution is pain killer• Identify distinct markets: solution is vitamins• Identify two or more distinct market segments • Discuss the attractiveness of each • For two or three of market opportunities – develop

compelling value proposition• Find ways to increase perceived benefits for each• Choose the top one (or two)

Develop the value proposition to describe perceived benefits

• Explain what job the technology does• Explain how this creates value (pain killer or

vitamin) for a specific user• Identify how the customer will measure benefits• Demonstrate your solution is better than

alternates (including doing nothing)

Value is what people are willing to pay for it.

Three laws of innovation inertia

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1. There is a natural tendency for organizations to keep doing what they’re doing and resist changes. In the absence of a force, they will continue to do what they’ve always done.

2. Larger organizations require more force to change what they are doing than smaller organizations.

3. For every force there is a reaction force that is equal in size, but opposite in direction. When someone exerts a force on an organization, he or she gets pushed back in the opposite direction equally hard.

Innovation adoption

Don’t worry about people stealing your ideas. If your ideas are any good, you’ll have to ram them down people’s throats.”

Howard Aiken

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Aspects of perceived costs

• Cost to integrate with existing products/behaviours

• Costs to train, install, verify

• Costs to try

• Costs to evaluate/measure outcomes

• Costs to address performance risks

Crossing the chasm:Identifying first customers

Moore, G (1991) Crossing the chasm.

Tech

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enth

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Visionar

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(early

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(early

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Conserva

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(late

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Skep

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The adoption exercise

• We now have a value proposition for a:• Specific customer segment• For a specific application

• Challenge is to reduce the perceived costs to:• Make the perceived benefits dramatically exceed the

perceived costs (and risks) of adoption• Provide the motivation for adoption

Business model approaches to facilitate adoption

Social science questions:• How will you make your solution compatible?• How will you reduce complexity?• Can you enable trials?• Can you reduce costs, either short or long term?• Can you develop strong customer relationships?• Can you develop appropriate channel partners?

Alternate revenue models to facilitate adoption

• Offer for free (trial) before you have to purchase• Turn a capital purchase into a service agreement• Charge per use• Steeped charges for increasing use• Offer basic service for free, with premium options• Offer for free and have others pay for data access• Share use of underutilized resources

Licensing or new venture creation?

• When to create a new venture:• Technology is sold as a complete solution • Market for technology is growing, lacks

standards and is not dominated by major player• Technology + business dev. costs not excessive• Technology likely to disrupt the market • Required expertise and resources available

locally and not controlled by competitors• Inventor wishes to play critical role

5 forces influencing new venture creation (characteristic in brackets favour new venture creation)

Market dynamics

Input factors

Demand conditions

Barriers to entry

Disruptive potential

Market dynamics Market trends (growing, segmenting)Product life-cycle (short)Market concentration (low)Cost relative to total cost (discrete)Competitor diversity (high)

Disruptive potential Underserved customers (high)Changes in price/performance (high)Alternate revenue/business models (high)Defendable patent (high)

Demand conditions Customer/buyer characteristics (incentives)Performance measures (high)Perceived need (high)Price sensitivity (high)Switching costs (low)Government legislation (low)

Input factors Supplier concentration (low)Distributor concentration (low) Capital requirements (low)Economies of scale (low)

Barriers to entry Dominant technology (low)Level of vertical integration (low)Brand loyalty (low)Established relationships (low)Freedom to operate (high)