Eclipsed!

February / March 2005 By: Susan J. Gorges Volume 3 Number 1

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New technologies are possible only because of the scientific and engineering minds that conceived of the invention and then solved all the technical problems along the way to completing the prototype. But then what happens? More often than not, brilliant technologies never see the light of day in the commercial markets. They are lost, never to be utilized save by a few customers.
Certainly their inventors never reap the benefits of all of their efforts.

"How can this be?" one might ask. The answer is painfully simple: someone else has better timing, better management/business skills and certainly better marketing. You will note that "better technology" is not part of the list. All of us know of superior technologies that limp along in the marketplace or disappear altogether. Just as the smaller body (the moon) can block out a larger, more vibrant body (the sun), superior technologies can be blocked —€”even eliminated. Apple Computer. Lotus. WordPerfect. Betamax. The superior technology was eclipsed, the opportunity lost.

All of us are busy. We have little time to take in new ideas and the information about new ideas comes at us from everywhere. But we also have experienced that eerie moment, when the solution to one of our real problems is there—€”in the newspaper, in a TV ad, on the radio, in a conversation. For us, personally, that is perfect timing.

For example, there is, a real problem in an industry. While the industry tolerates the problem, possibly because there is no huge demand for a solution, or maybe everyone believes that there is nothing better—€”no real solution. Over time the cost of the partial solutions (and resulting rework when the solution fails) mounts up. Small, progressive steps improve the output to the point where demand for the technology is mounting. Eventually, the industry is "ready" for a new approach to solving the problem.

That is your magic moment. The so-called window of opportunity has opened. But beware; in this day and age, the window remains open for just a few quick heartbeats. Since the problem is real, i.e., the pain is grave, there are many others working to solve the same problem you are. First to fully understand and then respond to market need may be the critical success factor, not superior technology. Back to our examples of eclipsed technology: why don't they dominate?

The answer may lie in their non-responsiveness, or sluggish responsiveness to the market's idea of priority need. When first introduced, the Apple computer was more expensive than the PC. Did Apple reduce pricing right away to gain dominance? No, they relied on its idea that superiority in technology would win customers, ignoring the market demand for lower cost. It did have and still does have customers, but it missed its opportunity. Once it became obvious that PCs had a larger market share, software houses, particularly games companies, produced products for PCs before Apple. In some instances, they never did release their products for Apple computers. With more programs, consumers saw more reasons to buy a PC. And once network dominance was established through pervasive use of the PC, other superior products began to suffer.

For large organizations, internal IT support costs began to skyrocket as the computer moved from the air-conditioned room to the desktop. Microsoft introduced a bundle of office applications, MS Office. It was now more cost-effective to have everyone in an organization use an integrated suite for word processing and spreadsheets. This was particularly true in the early days when exchange of information between other products and MS Office was nearly impossible. Seizing the market need for standardized IT support in a large corporation and the corporation's growing need to share information easily, MS Office became dominant, superseding the use of Lotus and WordPerfect.

But being eclipsed can happen when ignoring the simplest of market demands.
Betamax had a shorter recording time than VHS; the convenience of not changing tapes won the heart of the consumer. VHS wins because they responded first to the real market pain—€”convenience not quality of recording. Now, of course, VHS is being superseded by CD technology.

Market awareness, timing, and responding quickly. Simple to put onto paper. Extremely difficult to put into action.

Better Management and Business Skills

In the world of research and engineering, working sequentially is essential. Until the precedent problem is solved, there is no need to move to the next issue. Indeed, the solution may uncover a new hurdle, previously unknown. Entrepreneurs who have a technical background have a comfort level in working methodically through a linear process. Unfortunately, in the world of business, this approach is a death sentence.

Let us imagine that the "window of opportunity" is about to open. You know from your industry contacts that the frustration level with current solutions is mounting. You know that the new technology you are working on is now feasible.
On the other hand, you have not yet finished your commercial prototype. And no one else yet knows what you are working on! Using an engineering methodology you would finish work on the commercial prototype and then move on to the downstream issues. The risk is that someone else beats you to the market. They seize your opportunity. They eclipse you.

Successful startups are not linear. The entrepreneur with a business background, sensing that the window of opportunity is about to open, would simultaneously (a) tie up the IP protection required, (b) secure ample funding to launch the business, (c) launch a marketing campaign to announce to the world the imminent delivery of the solution and (d) build a sales team to begin finding the first customers.

This is certainly not sequential. Launching your technology this way will take some intricate execution of several arms of the business. The engineering process must be resourced sufficiently to move quickly to conclusion. The marketing process must carefully launch the announcements to build a momentum that will peak at about the same time as engineering has their project completed. Sales efforts must be launched to find the early adopters and keep them focused on the delivery of the solution should their ardor get them to the "ready to sign" stage prior to engineering completion. (On the other hand, sales cycles of new products always take much longer than anyone would guess.)

In a small startup, the founder may be wearing several, if not all, hats. Yet the essential skill is to have the vision, not to mention the courage, to launch on all fronts in parallel. Sequential management, even in a startup, is a much bigger risk than having sales get to contract before engineering gets to product. The key to success for your future business is to firmly establish your solution in the marketplace as quickly as possible.

Better Marketing

Years ago I read the book by Al Ries and Jack Trout titled 22 Immutable Laws of Marketing. The book is now a little dated in some of the examples used, but the rules all remain true. Without covering all 22, allow me to point out the first two laws—€”ones I find most apply to high tech companies.

1. The Law of Leadership: It is better to be first than to be better.

2. The Law of Categories: If you can't be first in your category, then create a new category.

For high-tech startups, it is not often possible to be first in a category, but if you are launching a disruptive technology, it is always possible to create a new category. It is also a fundamental requirement for long-term success of your business. You must create, through marketing, a perception that you are the first to provide an essential solution. For example, instead of being an also-ran in sample preparation and analysis, you announce that you are the first in simultaneous, parallel, multiple analysis.

The word "disruptive" should tell all. If you are going to disrupt an industry sector, you will cut into the revenue streams of those already in the marketplace. You will, if successful, begin to threaten their financial well being. You have to expect some sort of pushback on that. And the pushback comes from someone who has more financial resources than you, the newcomer. The more you are successful, the more they will fight back. You must get ready, even before they sense you on their radar screen.

Your only defense is a growing and extremely loyal customer base and a clear and compelling perception in the marketplace that you have the best solution to a clearly understood problem. Publishing a scientific paper is not marketing, although it is an element of a complete marketing campaign. Newspaper mentions, customer testimonials, recommendations by industry gurus—€”the list is much too long for one article. But it is essential, if you are to succeed long-term, that you capture the imagination of the marketplace.

Avoiding Eclipse

How does one avoid being eclipsed by the rising moon of a new (and maddeningly inferior) technology? One wishes to have that recipe! There are theories out there, but no laws of nature. One truism bears repeating however: the best technology does not always win. The technology that captures a foothold in the marketplace and lasts over time is placed there by bold, courageous, dashing teams of managers who attack on all fronts. They seize the opportunity, win the minds and hearts of their customers, and hold onto their first place standing by eclipsing all newcomers.

Susan Gorges is director of Northern New Mexico Operations for Technology Ventures Corporation.