Radio Frequency Identification Tags (RFID)

Getting Smarter About Commercialization Opportunities

August / September 2005 By: Pamela Henderson, Andrea McMakin and Todd Arnold Volume 3 Number 4

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You have a new, exciting technology that is almost ready to parade in front of potential commercial partners. But how do you know which industry partners to pursue, or even which product applications are most likely to pay off? Are there promising market sectors for this technology that you and even your competitors have missed, and how do you unearth them? How realistic are those sales projections you're pitching to potential investors?

A new method, Disruptive Market Research—„, is helping government, industry and universities do a better job of answering these questions in their commercialization quests. More than 120 entrepreneurial organizations, ranging from the Department of Energy's Pacific Northwest National Laboratory to Fortune 500 firms, have used the method to evaluate the commercial potential of new products and to shape business strategies.

The results have been used to pursue unexpected markets, follow up on sales leads, find distribution partners and steer away from unproductive product development. The result: more successful technology products and business alliances in sectors ranging from energy, advanced materials and national security to healthcare, agriculture and consumer goods.

Needle in a haystack

Traditional market assessment methods—€”like focus groups, surveys and competitive intelligence—€”are not well suited for exploring new markets and product applications. Without an established business relationship, industry leaders, competitors and potential customers have little incentive to meet with you or fill out surveys. Competitive intelligence shows trends, but not opportunities that companies are overlooking.

Then there's the needle-in-a-haystack effect. You can end up buried in a massive pile of raw data, some of it conflicting. You still need a way to resolve discrepancies and translate the findings into strategies.

Disruptive Market Research uses an approach that goes beyond traditional techniques. The method looks across a wide array of industry members with different perspectives on opportunities. It repeatedly takes insights from one part of the industry and plays them off another part, which increases creative thinking and raises confidence in the resulting market forecasts. It grounds strategies in market realities and shows early indicators of the success of these strategies. The method is especially useful for emerging technology products, unknown markets and startups with limited industry connections.

The approach involves conducting a new type of highly motivating and collaborative interviews of industry leaders, suppliers, distributors, competitors and customers. Just as anthropologists must develop and evaluate concepts across all levels of a culture, the company captures the thoughts, perceptions and decision criteria across four dimensions. They are stages of a value chain from raw goods to finished product; levels of a distribution channel from manufacturer through various distributors; role in the market including industry experts, competitors, distributors and customers; and decision makers from the technical to the executive level. These dimensions are examined across a variety of markets and across time.

Skip the sales pitch

Researchers immediately involve interviewees in identifying the symptoms of unsolved problems and then engage them in solution-oriented brainstorming. The method achieves response rates as high as 85 percent and often reveals sales and partnering leads.

Company decision makers open up when they realize that instead of a sales pitch, the discussion is about their industry's problems and possible solutions. In one project, researchers exploring opportunities for a leading national chemical company learned from a worldwide cosmetic company executive about chemical properties needed for new cosmetics. The end result was a joint development project with the two firms.

Querying different levels of decision makers in the same company sharpens marketing strategies. A startup firm had developed an infrared-based technology to measure characteristics of food products. Quality assurance personnel in one food processing firm were satisfied with their ability to measure moisture in foods being dried. But financial executives in the same company immediately realized the profit potential from drying foods a fraction less. The recommended sales strategy targeted the financial leaders, emphasizing the potential for increased profit margins through an accurate, automated measurement system.

Data-driven forecasting

Carefully planned interviews drive financial forecasting and sales strategies.
Instead of the typical, "We plan to get X percent of the market," you know who in the company will buy the product and the likely amount to be purchased. This data-driven forecasting adds credibility when seeking internal R&D investment or outside equity capital.

One such example involved a spinoff technology from Pacific Northwest National Laboratory, an improved radiowave-based tag for identifying and tracking objects. To help the spinoff company understand potential markets and product options, a team interviewed 30 industry experts nationwide. The startup firm used the team's findings, including market size and business potential, in presentations to venture capitalists. The business was acquired within a year by a California-based electronics company, Alien Technology. It has since developed a handheld tag reader, which was one of the team's recommendations.

Unexpected markets

The ultimate satisfaction is when unmet demand collides with untapped markets. When a skillful interview turns up previously unarticulated needs, also unknown to competitors, it's like a big flashing light saying "opportunity here." In one case, in-depth customer interviews turned up a niche market for a worldwide technology systems integrator that both the competition and industry experts had overlooked.

As the Belgian artist René Magritte said, "Each thing we see hides something else we want to see." Disruptive Market Research is one tool to pull back the curtain.

Dr. Pamela Henderson, who developed the Disruptive Market Research Method, owns NewEdge, a marketing strategy firm specializing in technology companies. Andrea McMakin is with the Economic Development Office at Pacific Northwest National Laboratory. Dr. Todd Arnold is a marketing professor at Oklahoma State University.