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Innovative product development - how to use technology demonstrators for business impact
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Innovative product development - how to use technology demonstrators for business impact


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This presentation was given at Cambridge University as part of the Enterprise Tuesday programme run by the Centre for Entrepreneurial Learning. …

This presentation was given at Cambridge University as part of the Enterprise Tuesday programme run by the Centre for Entrepreneurial Learning.

Smart use of product development best practice can help you to use demonstrators to address the tough questions that investors will ask.

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  • 1. Bathtub to Warehouse Using demonstrators for business impact Paste an Paste an image over the image over the circle and use ‘Send circle and use ‘Send Backward’ tool 3 times Backward’ toolpicture OR delete the 3 times OR delete the picture frame and the white frame andno image square if the white square if no image is required. is required. CfEL Enterprise Tuesday - 15 Feb 2011 Duncan Smith, Ruth Thomson, Rachel Harker and Edd Brunner 17 February 2011 S3908-P-139_Slidesha v1.1We’re going to talk about demonstrators and models, when and why to build them, and how they can help you raise money, get orders and ultimately get to market faster.Presented by…Duncan Smith – Head of Products & Systems Division and Commercial Director for the Consumer businessRuth Thomson - Business Development Consultant for Consumer Products and Authentication Systems Page 1
  • 2. Do you want to take your idea… 2 17 February 2011 S3908-P-139_Slidesha v1.1We want to talk today about how you can take the idea that you had in the bath / in the shower/talking to friends or colleagues… from that inspiration point, to the point where you have a warehouse full of product.Clearly there is much to do between these points, much work to be done and obstacles to overcome. Today we want to begin to unpick this work into more manageable steps for you. Page 2
  • 3. No matter what market sector… 3 17 February 2011 S3908-P-139_Slidesha v1.1It doesn’t matter what market sector you are targeting, if you want to bring a product to market, you are going to have to convince investors of the value.Therefore demonstrators can help you whether you’re looking at the consumer market…or something for the office environment… or for the lab environment or for a hospital location. Page 3
  • 4. …or if your idea is for a product, a platform technology, or a service company… 4 17 February 2011 S3908-P-139_Slidesha v1.1Using demonstrators and models is also relevant to B2B services or platforms.Many of the principles of good design that we will talk about are relevant to services. Also many service companies use products to tie their customers in to their servicesFor platform technologies it is important to focus on the embodiment of your idea that will get you the biggest impact most quickly. Page 4
  • 5. ‘Open Innovation’… “[..] inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation [..].” Chesborough et al. , 2006 5 17 February 2011 S3908-P-139_Slidesha v1.1I want to talk for a moment about Open Innovation.The phrase ‘Open Innovation’ was coined by Henry Chesborough of Berkley University.Large organisations tend to have a funnel for development projects where projects move forward through stage gates. In Open Innovation this funnel is effectively ‘leaky’ and ideas and innovations can move in and out of the funnel. Page 5
  • 6. …if you’re a start-up… …or within a large corporate… 6 17 February 2011 S3908-P-139_Slidesha v1.1Using demonstrators and models to convince people of the value of your idea and to address key technical questions is important if…1) You’re a start-up looking to grow independently of a larger organisation and looking to raise investment e.g. through VCs2) You’re a start-up looking to licence your technology to a larger organisation, or looking to exit by acquisition3) You’re looking to a future career in a larger organisation – you will need to ‘sell’ your ideas to progress your ideas and projects through the organisation Page 6
  • 7. Cambridge Consultants – 50 years of Innovation 7 17 February 2011 S3908-P-139_Slidesha v1.1So who are Cambridge Consultants and why are we doing this talk?We are a product design and development companyFor 50 years we have been developing products for companies across a wide variety of market sectorsWe work with both large blue chips and dynamic, fast growth startups, either developing innovative parts of products or the whole product through to manufacturing handover.50% of my part of the business is working with fast-growing startup companies.Why are we doing this talk?Lots of startups come to us needing help with the same issues, and we always give similar advice to them while we are finding out whether to work together.So we wanted to try sharing some of this with a larger audience Page 7
  • 8. The investment ladder 8 17 February 2011 S3908-P-139_Slidesha v1.1The product development cycle maps onto the funding ladderTo raise more money, you need to credibly answer the tough questions your investors will askIn other words, at each stage, you will need to demonstrate that you have reduced the risks that are barriers to their investment.This slide shows three different generic stages, and the key questions that characterise each stage.There are lots of other detailed questions beneath these. Your potential investors will do due diligence on you and will send a junior analyst with a shiny new MBA to crawl all over your business and technology, looking for weaknesses and putting them in a spreadsheet. Your investors will use this to ask lots of awkward questions.Good demonstrators and models can help you answer these.Also they can help reduce upfront spend by answering questions in the right order.We’ll be concentrating at the front end – seed and round a funding – 8 Page for this talk.
  • 9. Types of demonstrator 9 17 February 2011 S3908-P-139_Slidesha v1.1We’ll cover these in more detail but types of demonstrator include….Sketches and storyboardsLooks-like models that don’t work but help communicate your messageWorks-like models that don’t look like the real thing but prove aspects of your technologyLooks-like works-like models that both work and look the part andMade like models that are ready to start commercialisation Page 9
  • 10. 10 17 February 2011 S3908-P-139_Slidesha v1.1Here is an example of an internet radio with a novel user interface.Over a lunchtime discussion a couple of our engineers were discussing internet radio which allows access to many thousands of radio stations, but in reality people only actually ever listen to between 3-4 stations, and access is very ‘techy’. They talked about how wouldn’t it be great to have a radio that was incredibly easy to use to make internet radio far more accessible.One of the engineers put together the first model (on the left) of a cube radio – the concept was that when you turned the cube over it played the station that was programmed to the upfacing side.A works-like (2nd model) and a looks-like (3rd model) model were created, and on the back of these demonstrators and the story they allowed us to tell, investment was secured to take this product to market.Cambridge Consultants worked with Armour Group to bring the cube radio to market. This was launched in Nov2010 under the brand name Q2 and they can be ordered at Page 10
  • 11. The investment ladder 11 17 February 2011 S3908-P-139_Slidesha v1.1Different demonstrators are very powerful at different stages to answer different investor questions.Questions are all covered in more detail in the ‘Bathtub to Warehouse’ booklet we are going to give you at the end.We aren’t going through all of it , we have picked the ones directly addressed by demonstrators.Let’s talk in more detail about some of the challenging questions you will face at the front end of this process… Page 11
  • 12. Early questions 12 17 February 2011 S3908-P-139_Slidesha v1.1These are prerequisite questions that you must answer as part of creating your business case Page 12
  • 13. Understand your customer Steve 13 17 February 2011 S3908-P-139_Slidesha v1.1A useful way of doing this is to create personas of your target consumers.Many inventors come up with an idea that is targeted at themselves, if you are targeting yourself you will have a very small market! (i.e. a market of 1!)Dont describe yourself! Generate user insight and consider using persona boards such as this to describe your target consumers. Page 13
  • 14. Understand your customer Martha 14 17 February 2011 S3908-P-139_Slidesha v1.1Make sure you know whether you are selling to Steve or Martha Page 14
  • 15. Understand your customer’s ecosystem Available workspace 15 17 February 2011 S3908-P-139_Slidesha v1.1You also need to consider your customer’s ecosystem, your product/service will not be used in isolation. You need to consider what else they will be doing at the same time, and any space and usage restrictions. Page 15
  • 16. Types of demonstrator: works-like models 16 17 February 2011 S3908-P-139_Slidesha v1.1What are some more of the typical early stage questions...There will be tough technical questions that will need to be addressed before the investment in the development stage can go ahead. This will likely be about some key part of the product/service design, the really difficult part that has investors raising their eyebrows in disbelief!Works-like rigs demonstrate the technical principles. Works like rigs don’t necessarily look anything like the product but they help answer the difficult questions. You should be able to put them in- front of investors, but bear in mind they are good for a technical audience NOT a marketing oneAsk yourself … what are the tough technical questions you will be asked? Page 16
  • 17. Risk assessment Level of Effort/Cost of Action risk mitigation High Low These are risks you should address in the first phase – easy wins that will build credibility Low High These are risks that will tend to get answered in the development phase and should be included in the plans for that phase Low Low Consider whether to mitigate or not – however if they are not important they may be a distraction at this stage High High These are the risks you cannot afford to address at this stage, but that you will need to have credible plans to address early in development 17 17 February 2011 S3908-P-139_Slidesha v1.1There are several approaches to working out what the tough questions will be.One is to use a risk assessment. These are not just for health and safety!List all the risks you can think of and how you would ideally mitigate them.Try being devils advocate…… ask questions like:how would your competitors dismiss your technology?What will your investors disbelieve in your pitch? What will make them raise their eyebrows?You can then prioritise as shown here…It could be easy to focus on the low risk level aspects that only require a low effort to mitigate – but these likely to be a distraction at the earlier stages. Use this process to help you focus where you spend your precious funds to get maximum valueAsk yourself……. What are your key risks? What difficult technical questions will investors ask you? Page 17
  • 18. Types of demonstrator: concept sketches and storyboards 18 17 February 2011 S3908-P-139_Slidesha v1.1You don’t necessarily have to use works-like models for all the risks – story boards or sketches can also help communicate the value of your technology….. One of the tough questions is often “what is the user experience?”You can often use storyboards and sketches to explain how your technology is going to work for your target customer in a real- world situation Page 18
  • 19. Types of demonstrator: looks-like model 19 17 February 2011 S3908-P-139_Slidesha v1.1Looks-like models are not just “smoke and mirrors”They help you answer the question “what will it look like”?They communicate your value proposition AND it is very powerful being able to put it in the hands of a stakeholder.In some cases you make something look DIFFERENT to get your message across. In the case of our radio being small enough to be portable instantly communicated that this technology was low power and small compared to the competition.In other case it may be important that the appearance is familiar – the target customer might reject something that looked out of the ordinary and made them think they’d have to learn a new process.Ask yourself what you need to communicate with your modelBeware of making them look too real as your investors might think it is finished! Page 19
  • 20. Types of demonstrator: assembly sketches 20 17 February 2011 S3908-P-139_Slidesha v1.1Assembly sketches –If you are going to make a looks like model often it’s important that you can credibly show how all the bits will fit in the box!Ask yourself how much effort you need to go to to show how it is going to integrate into the final product Page 20
  • 21. 21 17 February 2011 S3908-P-139_Slidesha v1.1If you are starting to work our what all the bits are, you can start to work out how much is it going to costYou might be thinking it is far too early, we don’t know what all the parts are yet.It is never too early to do a back of an envelope costingYou can ask yourself how much the market can afford it to cost, given the competition.If nothing else you will find out where there are gaps in your knowledge that need to be filled in the next stage.This will help support your business case as well as the product developmentAsk yourself what your market can afford it to cost Page 21
  • 22. The investment ladder 22 17 February 2011 S3908-P-139_Slidesha v1.1All these questions are at the front end concept stage…. Page 22
  • 23. Types of demonstrator: looks-like works-like models 23 17 February 2011 S3908-P-139_Slidesha v1.1By the end of that first stage you might even have made a looks-like works like demonstrator, to help answer the critical question:Can you show me it working?It may not be beautiful, not ready for mass manufacture, not even complete, but we’ve reduced the risk in the key areas, both business case and technical for an investor to see that this can be a real product….Ask yourself what do you need to show working? It’s not going to be complete but remember the risk assessment and try to show that you’ve reduced the KEY risks with this demo. It may even need to be different from a final product for you to do the market testing you need.You might want an all singing all dancing machine but it wasn’t the right thing to do with your budget. Page 23
  • 24. It works! 24 17 February 2011 S3908-P-139_Slidesha v1.1For the radio – the investment was received to develop it into CSR’s RadioPro platform. Page 24
  • 25. It works! 25 17 February 2011 S3908-P-139_Slidesha v1.1Following on from the radio platform development, the platform technology was used to design the Cube radio for our client Armour. This product was launched Nov2011 to rave reviews. Page 25
  • 26. Summary 26 17 February 2011 S3908-P-139_Slidesha v1.1So to summarise the product development cycle maps onto the funding cycleTo raise more money, you need to credibly answer the tough questions your investors will ask(or at least anticipate them and explain when and how they are going to be answered)This means demonstrating that you have reduced the risks that are barriers to their investmentSmart use of Good Demonstrators and models can help you be successfulEvery single one of our startup clients has had to address these questions – think about how you are going to answer them. Page 26
  • 27. 27 17 February 2011 S3908-P-139_Slidesha v1.1When we gave this presentation in April 2010 we were joined by Krishna from Encore Ventures. Page 27
  • 28. 28 17 February 2011 S3908-P-139_Slidesha v1.1Krishna talked about the key questions that VCs are looking for companies to address at the different funding stages. It was clear how demonstrators could be used to address these questions. Page 28
  • 29. What next?• Q&A• Read the ‘Bathtub to Warehouse’ booklet• Contact us with questions• If you need support on product development at any stage in the funding process, contact us• If you are at the University… 29 17 February 2011 S3908-P-139_Slidesha v1.1 Page 29
  • 30. Who we are 30 17 February 2011 S3908-P-139_Slidesha v1.1 Page 30
  • 31. Contact details:Cambridge Consultants Ltd Cambridge Consultants IncScience Park, Milton Road 101 Main StreetCambridge, CB4 0DW Cambridge MA 02142England USATel: +44(0)1223 420024 Tel: +1 617 532 4700Fax: +44(0)1223 423373 Fax: +1 617 737 9889Registered No. 1036298© 2010 Cambridge Consultants Ltd, Cambridge Consultants Inc. All rights reserved. 31 17 February 2011 S3908-P-139_Slidesha v1.1 Page 31