Phyllis SpeserForesight Science & Technology
www.foresightst.com401.273.4844, ext. 35
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M ar k et O r ien ta tio n Lau n c h T ac tic s
P r o d u c t Ad v an tag e
N ew P r o d u c t P er f o r m an c e O rg an iza tio n al P er fo r m an c e
Source: F. Lanerak, E. Hultink, H. Robben, “ The Impact of Market Orientation, Product Advantage, and Launch Proficiency on New Product performance and Organizational Performance,” Journal of the Product Development Management Association, V. 21, #2, March, 2004, p.89
The Key
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QFD House of Quality for Packable Camping Toaster
Direction of Improvement Customer Rating
Customer Requirements
Design Requirements
Import
ance
(1-
5)
Weig
ht
Avg
. tem
pera
ture
Po
wer
Tim
e t
o r
ech
arg
e
DSP
Inst
ruct
ion
s
1 2 3 4 5Heats evenly 3
Performance Toasts both sides 1Reusable 4Easy to carry in pack 5
Turns off automatically 3Usability Controllable settings 4
Safe 5Price Under $40 5
Absolute Importance 45 59 54 10 24Your Name 5 1 = low, 5 = high
Technical Competitor 1 4Evaluation Competitor 2 3
Competitor 3 21
Targets 1 lb 155 C 500 W10 min 200 MIPS
#X
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Product Advantage Changes over Time
W e ight
R o ad W ar r io rN o teb o o k
D es k T o pR ep lac em en t
P D A Traje c to ry o fE nd U s e r W e ightR e quire m e nt
Time
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Technology has to Change Too
5 W’s
Who is doing it?What is being done?Where are they doing itWhy is it being done?When are they doing it?
Sell intellectual assets that can provide “a proven solution for a repetitive activity.
Technology is a Tool for Doing Something
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Market Forces
D is tr ib u tio n w ith o u t M ar k e t F o r c e
D is tr ib u tio n w ithM ar k et F o r c eM ar k et F o r c e
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Competition Cuts Sales
Initi
al S
ales
Prod
uct O
ne
Time
Rev
enu
es
Swamping Caused By Product Two
Introduction Occurs
Originally AnticipatedTransition to
Market Maturity for Product One
Take-OffAnd Transition
to Market Growth PhaseFor Product One
Sales
Produ
ct Two
Continued Sales
Product One
Without Sw
amping
Continued Sales
Product One
With Sw
amping
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Product Advantage over Time
Cost
Yield
Requirement
S1
Trajectory Technology 1
Trajectory Technology 2
S2
Time
Yield
S1a
S1b
S2a
RequirementS2b
Time
YieldRequirementa
S1a
TrajectoryTechnology 1 S1c
Requirementb
S1b
S2c
S2b
S2a
TrajectoryTechnology 2
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Lead all Players
Be in Top 5% of all Players
Lead all Direct Competitors
Be in Top Half of all Players
Crucial for Future Growth
Crucial for Survival
Intellectual Asset
(R&D)
Intellectual Property
Capacity
BusinessUnitStrategyImportance
Technology Space Gap EvaluationStar Trek Gap Analysis
Huh?
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Consumer consumption will ultimately decide success
“Think Supply Chain”
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CORE
Technology Familiarity
Mar
ket F
amili
arity
Control
Partner
Divest orMonitor
STRATEGY
Control:Internal
DevelopmentAcquisitionsIn-License
Partner:Joint VenturesAlliancesInternal VenturesOut-License
Divest:AssignmentsSales
Monitor:Venture CapitalEducational
Acquisitions
Market Development
TechnologyDevelopment
Adapted from Roberts and Berry, SMR 1988.
Own the Technology Space
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“Product” Advantage
Technological Options
67 7
4
7 7 7
4
2 2
8
4
89
56 6
3
8 8
67
8 8
56
8 8
0
2
4
6
8
10
0 1 2 3 4 5 6 7
Performance, Ease-of Use, or Price
Yie
l
Needs
Tech 1
Tech 2
Tech 3
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Intellectual Asset Portfolio
Core
Enabling
Enabling
Competing
Time
Clustering Assets
Core
Extension
Extension
Extension
Time
Bracketing Assets
Core Strategic
Time
Enabling
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Turf
TradeSecret
MaskTrade Mark
Copyright
PatentLicense
UnprotectedAssets
0
1
2
3
Hits
Occurances by Bohn Knowledge Level
Patents 0 1 0 0 0 0 0 0
R&D Projects 0 2 3 2 1 0 0 0
1 2 3 4 5 6 7 8
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Value Chain Fit
0
2
4
6
8
10
AppliedRes.
Eng. Devel. Produc.Eng.
Manufact. Sales Cust.Support
Developer
Partner
Complete R&D
Design Product
ProductionEngineer
Produce
Market and Sell
Support
Distribute
Capabilities• Experience• Resources• Skills
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Dominant Designs and Market Orientation
• Product Innovation Stage– Bundle of
Features– Standard User
Interface
• Process Innovation Stage– Eliminate Steps– Improve Reliability– Improve Efficiency
of Resource Use
Dominant Design Emerges
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S kills
Absorptive Capacity
Ease- of- Use
T ime 2
T ime 1
Outputs
I nputs
CurrentS kills
CurrentCapacities
Goals
Dominant Design
T ime 1
T ime 2
D esi rabi l i t
y
of New S k i l l s
I n P ra ct i ce
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Finding Product Advantage: Ease of Use
• Expectations– Habitual Skills– Bohn Knowledge
Level (control over use)
• Know-how– Learned Skills– Experience
• Education“The eye of the masterwill do more work than the hand”
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P rac t ic e :L awye r ing
C o m pute rM anufac tur ing
Are na: L aw F irm
P rac t ic e :L awye r ingU ti l i ty
Utility
Are na: Trave l
Util
ity
P rac t ic e : P as s e nge r ing
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• Add-Ons• Ceiling
– Substitutes– Hurdle Rates (Average
Marginal Utility of Other Investments)
– Change-Over Costs– Avoids Sticker Shock
Finding Product Advantage: Price
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Time
Cost
Acquire
Develop
Decision
Sample Life-Cycle Cost Curves that Favor a Buy rather than a Make Decisions
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Introduction
Pioneering productsHigh productinnovation
Growing demandLow volumeProprietary focusMany new entrantsStandards wars
Decline/Disruption
New functionalitiesHigh product innovationNew demandMarket convergenceNew marketsNew competitionBarriers to entry dropNew business models
Growth
Dominant designMore processinnovationStabilizing demandHigher volumeStandards focusMany failuresAcquisitionsScale wars
Maturity
Generic productsHigh process innovationStable demandVery high volumeCost focusStable playersConsolidation and divestituresSupplier wars
Low
High
Labor Skill
Sales
Skeet Shooting the Opportunity
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new
mod
ified
exis
ting
Incr
em.
Rad
/Ada
ptD
isru
ptiv
e
Market Tech
Market Entry Riskfrom Bacon & Bulter, Planned Innovation
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The Pitch: Ability to Capture Value is Better* with you
* More Likely More Rapidly More Profitably
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Tactical Importance of Your Technology For Targets ≈ Importance For End-Users
• Offensive– Pacing– Emerging – Spare
• Defensive– Hedging– Imitative– Spare
Lead all Competitors
Be in Top 5% of all Competitors
Lead all Direct Competitors
Be in Top Half of all Competitors
Crucial for Future Growth
Crucial for Take-off
DefensiveOffensive
Impactfrom Use ofTechnology
Function
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Cost leadership Differentiation Focus
Appropriate Functional Product-team or FunctionalStructure Matrix
Integrating Center on Center on R&D Center onMechanisms Manufacturing or marketing Product or
Customer
Output Control Great Use Some Use (e.g. Some Use (e.g.(e.g. Cost quality goals) cost andControl) quality goals)
Bureaucratic Some Use (e.g. Great Use (e.g. Some Use (e.g.Control budgets, rules, budgets) budgets)
standardization)
Organizational Little Use Great Use (e.g. Great Use (e.g.Control (e.g. quality norms and norms and
control circles values) values)
R&D Focus Product and Emphasis on Customer needProcess innovation drivenDevelopment and speedingRather than productInnovation developmentWhich Riskier and internal(Bottom line technologyemphasis) transfer
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Source: McGrath & MacMillian, “Assessing Technology Projects Using Real Options Reasoning,Research Management,July-August, 2000
Your Technical Risk Decreases Value
Your Ability to AddressMarket Risk Increases Value
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Opportunity
Competitor
Competitor
Opportunity
Opportunity
Opportunity
Price
Performance
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Perform
ance
Ease- of- Use
S kills
Capacities
Goals
I nputs - Outputs
T ime 1
T ime 2
A t tra
cti v
eness
of Tec
h n ol ogy
Pri
ce
MarketForce
MarketForce
MarketForce
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Time
Re
ve
nu
es
Incremental RadicalAdaptive Disruptive
Type of Innovation
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Gra
yLi
tera
ture
Ref
erre
dPa
pers
CRA
DA a
ndR&
DAl
lianc
es
Pate
nts
Prod
uct
Dev
elop
men
t
Proc
ess
Deve
lopm
ent
Prod
uct
Anno
ucem
ent
Series1
Series2
Series3
TIME
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Basi
c R
esea
rch
Appl
ied
Res
earc
h
Dev
elop
men
t
Con
curre
ntEn
gine
erin
g
Prod
uctio
n
Sale
s
0
1
2
3
4
5
6
7
8
9
10
Capacity
University
Small Company
Large Firm
Contract Manufacturer
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How well Application is Defined
How well Technologyis Defined
Option or license for all IP
CRADA, Contract R&D,Strategic Alliance
Application/geographyspecific licensing
Venture
Sales, OEM
Control over Use
Control overKnowledgeand Know-How
Buy all Rights,Acquire Developer
Non-ExclusiveLicense
Joint Venture
VentureCapital Exclusive
General License
Exclusive Limited License. CRADA, Strategic Alliance
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Fundamental/ Exploratory Research
Applied Research and Development
Concurrent Engineering
Manufactur-ing, Sales, Supports
Post-Introduction Improvement
PRODUCTLIFE CYCLE
Expected Results
Demonstrable Steps and/ or Benefits
Relevant Stakeholders
Develop a distinct new technology connected to a market need
Establish technology’s practicability, market potential, and plans for development
Embody the technology in production engineered products and/or processes
Get the product or process quickly accepted in the market
Create long-term value by expanding applications of the technology
Technical proof of the ideas, patent, develop vision for the technology
Patent if relevant or not done; ready plans for com-mercialization; prototype, test with key targets
Beta test with key customers, unveil commercial version of the technology
Hit take-off (5% - 20% penetration)
Obtain substantial financial returns and establish the infrastructure for supporting a product family
Research partners, technical experts in the field
Technical experts, potential investors and other funding sources, targets, end users, opinion leaders in key entry niches
End-users, lead customers, sup-pliers of platform or complementary technologies and products, targets, opinion leaders
Targets, end-users, customers, opinion leaders, others in value network
Company management, others in value network, customers, opinion leaders, R&D partners
Pre-Phase I Phase I Phase II Phase III (and new Pre-Phase I)
Phase III (and new Phase I)
SBIR PHASE
Expanding upon V. Jolly, Commercializing New Technologies, Harvard Business School Press, 1997
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0
2
4
6
8
10
12
1 2 4 6 8
Year
Hit
s
Basic Research
Applied Research
Engineering Development
Concurrent Engineering
Production and Sales
0
1
2
3
4
5
6
7
8
9
1 2 4 6 8
Year
Hit
s
Basic Research
Applied Research
Engineering Development
Concurrent Engineering
Production and Sales
0
2
4
6
8
10
12
1 2 4 6 8
Year
Hit
s
Basic Research
Applied Research
Engineering Development
Concurrent Engineering
Production and Sales
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Con
text
Cap
acit
y
Domain CapacityAll
Necessary Capacity
Control
Partner
Divest or Monitor
Insignificant Sales and Sales Force
Weak Technology In-House Expertise
Mar
ket F
amil
iari
ty a
nd T
rack
Rec
ord
Technology Familiarity and Track Record
StrongGoodwill andBrand Loyalty
Strong R&D Teamand IP Portofolio
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End User Advice
End User Testing
Target Advice
TargetTesting
Adapted from R. Megantz, How to License Technology,Wiley, 1996
Idea – Design – Proof – Brass – Prototype – Product – Production – Sales – Distribution – Customer of of Board Engineering Marketing Support Concept Feasibility
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Process Schedule (in days)
0
0
124
10
367
457
640
852
0
1005
540
257
138
120
90
444
95
148
750
730
12/0
0
12/0
1
12/0
2
12/0
3
12/0
4
12/0
5
Research
Financing
Design Policy and Management
Functional Implementation and Engineering
Test Management
Manufacturing Planning & Control
Process and Equipment
Logistics and Disposal
Management
Distribution and Customer Services
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• The substantive process drives the cost calculation
• The cost calculation, together with the revenue projections, drives the net value
Net Operating Income/Loss and Cummulated Cashflows with Breakeven
-50000000
0
50000000
100000000
150000000
200000000
250000000
300000000
350000000
400000000
3652
5
3725
6
3798
6
3871
7
3944
7
4017
8
4090
8
4163
9
4236
9
4310
0
4383
0
4456
1
Net Operating Income/(Losses)
Net Difference of Cummulated Cashflows
Process Contribution to Total Project Cost(excl. Investments)
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
Res
earc
h
Fin
anci
ng
Des
ign
Imp
l & E
ng
Tes
t M
gt
Mfg
Pl &
Ctr
l
Prc
& E
qu
ip
Lo
g &
Dis
p
Man
agem
ent
Dis
t &
Srv
c
Co
st in
% o
f T
ota
l
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• Technical and firm specific risk is the basis for the discount rate
• Market risk is a probability distribution for outcomes
Cost vs. Delays for all Risks along Value Chain
0%
5%
10%
15%
20%
25%
30%
0% 5% 10% 15% 20%
Resulting DelaysR
esu
ltin
g C
ost
In
crea
ses
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J - Curve
I d ea Bas icR es ear c h
Ap p liedR es ear c h
P r o d u c tD ev elo p m en t
M ar k etI n tr o d u c tio n
P r o c es sE n g in eer in g
0 $
CU
MU
LA
TIV
E R
EV
EN
UE
S
T I M E
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Corporate
AAI Applied Design Corporation Agilient Air Products and Chemicals Allied Signal American Research Corporation of Virginia Arthur Anderson and Co. Boeing Management Company BRTRC, Inc. Charm Sciences Chemica Technologies, Inc. Chemonics Conductus Concurrent Technologies Corp Continuum Dynamics Consultec Corning Crossbow Ventures Coyote Found Candles Dow Chemical Environmental Toxicology Lab Fayette Environmental Foster Miller General Dynamics Advanced Information Systems General Dynamics Defense Systems Goodrich Aerospace Hartford Steam Boiler Inspection and Insurance Company Hoechst Celanese IBM I Am Fine ICET, Inc. Illinois Superconductor InteCap Inc. Infectec Infolink Intelligent Medical Imaging InVision Technologies Les Echos (France) Laser Focus World Litton System Inc. Lockheed Martin Missiles & Fire Control LMITCO Microstrain, Inc. NanoProducts Corporation Nanoworks Newport Corporation Northwest Research Associates Northrop Grumman Newport News The Owen Group, Inc. Phelps Dodge Photonic Systems
Pratt & Whitney PraxAir ProMet Technologies, Inc. UTD Incorporated Procter & Gamble Phoenix Science & Technology Quantum Magnetics Red Raven Science Applications International Corp. Sensor Research & Develop Corp. Sionex Corporation Space Works, Inc. Technology Systems, Inc. Telstar Int'l., Ltd. Theorex Incorporated Unisphere, Inc. United Technologies Optical Division
University, Non-Profit, Foundation,
and AssociationArizona State UniversityAtlanta University CenterBeth Israel Deaconess Medical CenterBoston UniversityCase Western Reserve University Central Florida Innovation Corp.Children’s Hospital of BostonConsortium of Social Science Societies Florida Atlantic UniversityGeorgia Institute of Technology (Georgia Tech)Harvard Medical SchoolIndiana UniversityInternational Society for Optical Engineering Iowa State UniversityHenry M. Jackson FoundationNational Coalition for Science & TechnologyNational Collegiate Inventors and InnovatorsAssociationMCNC-RDISan Diego State University FoundationResearch Foundation of the State University of New York Society for American ArchaeologySouthern Illinois UniversityStevens Institute of Technology Teacher PathfinderTufts University of California at IrvineU Mass STEP ProgramUniversity of HawaiiUniversity of Tennessee Research CorporationVanderbilt University
Government
Agency for International Development Amherst, New York EDABen Franklin Technology Partnership (Pennsylvania) CEA Valorisation S.A. (France)Center for Innovative Technology (Virginia) Department of Agriculture SBIR Program Department of Commerce-National Oceanographic and Atmospheric Administration-Technology Administration-National Institute for Standards and TechnologyDepartment of Defense-Army Research Laboratory-Communications and Electronics Command-Medical Research & Material Command-Naval Acquisition Reform Office-Naval Aerospace Medical Research Laboratory-NAVAIR SBIR Program-Naval Air Warfare Center -Naval Dental Research Institute -Naval Medical R&D Command-Naval Undersea Medical Research Laboratory-Naval Surface Warfare Center-Naval Underwater Weapons Center-Office of Naval Research-ONR SBIR Program-Office of Small and Disadvantaged BusinessDepartment of Education SBIR Program Department of Energy-Idaho National Engineering Laboratory -Lawrence Berkeley National Laboratory-Oak Ridge National Laboratory-Savannah River National Laboratory -SBIR ProgramHHS Center for Disease ControlDepartment of the Interior-Geological Survey-Bureau of ReclamationEPA -Office of Cooperative Environmental Management -SBIR ProgramLicentia (Finland)National Research Council (Canada) National Science Foundation SBIR ProgramNew York State Science and Technology FoundationMaryland Department of Community and Economic DevelopmentMaryland Technology Development Corp.Ministry of Defense (Canada)National Research Council (Canada)Ohio Edison BioTechnology Center Patuxent Partnership (Maryland)Small Business Administration Office of Advocacy
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