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Getting to Revenue


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Getting to Revenue

  1. 1. Phyl Speser, J.D., Ph.D,, CEO Foresight Science & Technology 401,273.4844, ext. 35, Foresight Science & Technology 1
  2. 2. Competitive Advantage Finding the Customer Market Orientation Determining the 4P’s Substitutes (Product, Price, End-User Needs Promote, Place) Selling First Sales Technology Buyers Long Term Sales Launch Tactics (4Ps) Foresight Science & Technology 2
  3. 3. Competitive Openings and Competitive Advantage Foresight Science & Technology 3
  4. 4. Revenues from Sales $ Saving from Operations Time (Life or death needs such as health, environment, or military requirements and aesthetics/taste for consumer items are the exception. ) Foresight Science & Technology 4
  5. 5. Developer Seek Producers/Distributors technology create awareness and legitimize and stimulate demand enhance desirability create awareness seek product and/or service and support Opinion legitimize End-Users and stimulate Leaders demand Foresight Science & Technology 5
  6. 6. Technology is a Tool for Doing Something 5 W’s Who is doing it? What is being done? Where are they doing it Why is it being done? When are they doing it? Foresight Science & Technology 6
  7. 7. Searching the Web Star Trek Gap Analysis Focus on Performance or Functionality Add Term Think Where it Gets Used Problem Need Requirement Check for Fit with Look for Contemporary Other Requirements Analogue Confirm by Calling Confirm by Calling Experts Experts and End-Users and End-Users Foresight Science & Technology 7
  8. 8. Foresight Science & Technology 8
  9. 9. Product Innovation Stage Bundle of Features Standard User Interface Process Innovation Stage Eliminate Steps Improve Reliability Improve Efficiency of Resource Use Foresight Science & Technology 9
  10. 10. Bohn Knowledge Level Utility ≈ Value Skills/Know-how UMPF Extension Extension Enabling Core Strategic Extension Competing Enabling Time Foresight Science & Technology 10 10
  11. 11. Ease‐of‐Use Foresight Science & Technology 11
  12. 12. Button C lothing Manufacturer Manufacturer Button C lothing Manufacturer Manufacturer Market Force Foresight Science & Technology 12
  13. 13. HEV Batteries Foresight Science & Technology 13
  14. 14. Li-ion Battery Functional Decomposition (B) Product Risks B-1.0 Lithium Ion Battery B-001 Available Energy B-002 Calendar Life B-003 Cold Cranking Power B-004 Cost B-005 Cycle Life B-006 Efficiency B-007 Equivalent Electric Range B-008 Max. System Weight B-009 Operating Temperature Range B-010 Peak Pulse Discharge Power B-011 Production Price B-012 Regenerative Pulse Power Green indicates a goal with B-013 Self Discharge specific numerical values B-175 Safety B-014 System Recharge Rate Red indicates a risk or B-015 System Volume B-016 Thermal Runaway common design hurdle B-1.1 Cathode B-017 Cost Yellow indicates a goal or a B-018 Electrochemical Capacity characteristic without a B-019 Ionic Conductivity specific value Foresight Science & Technology 14
  15. 15. Foresight Advanced Energy Storage Portal Foresight Science & Technology 15
  16. 16. Ease of Use Foresight Science & Technology 16
  17. 17. Trajectory Technology 2 Lithium Ion Battery Requirement S 2c Yield Trajectory S Requirement S 1c Technology 1 S 2b 1b Lead Acid Battery S 1a S 2a Time Foresight Science & Technology 17
  18. 18. Market Entry Risk from Bacon & Bulter, Planned Innovation new new Product modified modified Market existing existing Foresight Science & Technology 18
  19. 19. VarietyRate of Slow or “One Rapid or “Faster- Change Time” Paced “ Many Segment-Driven Dynamic or Needs Changing Needs (Screwdrivers) (Financial Renewable Clean Instruments) Energy Hybrid and Electric Vehicles Few Infrastructure- Network-Driven Driven Needs Needs (Hoes) (Cell Phones) Smart Grid Electronic Health Records Based on Sanderson and Uzumeri, Managing Product Families, (Iwin, 1997) Foresight Science & Technology 19
  20. 20. Distribution without Market Force or Barrier Distribution with Market Force Market Force and Barrier Foresight Science & Technology 20
  21. 21. Foresight Science & Technology 21
  22. 22. Trade-offs and Concerns affecting Metrics Matrix Technology’s Yields on Metrics Relationship Needs Importance Matrix of Needs Foresight Science & Technology 22
  23. 23. Patents and  Company Referred Literature Applications Trade Press Websites T‐n T0 time Patents Company Trade Press and  Websites Applications Referred Literature To T+1 T+5 time Foresight Science & Technology 23
  24. 24. COMPARING YOUR TECHNOLOGY WITH OTHERS YOURS Functionality of Tchnology Features and Relat ive Weig h t in g 3 Strong 2 Medium 1 Weak Customer Requirements Performance Ease-of-Use Price Other Total Weight 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Foresight Science & Technology 24
  25. 25. Is it in a Golden Triangle of Competitive Advantage Sustainability? If so file a Provisional and test market. Foresight Science & Technology 25
  26. 26. Is There a Competitive Opening? Foresight Science & Technology 26
  27. 27. Foresight Science & Technology 27
  28. 28. Six Degrees of Separation Start with People Likely to Know or Know Someone to Talk With Federal, State, and Local Program Managers Chairs and Members of Trade Association and Professional Society Committees Editors and Authors Center Directors and Professors who Consult Network Through to the Right People Make it Clear Up Front You are NOT SELLING Always Ask if You can Use their Name Foresight Science & Technology 28
  29. 29. STAKEHOLDER ANALYSIS Level of Commitment People or Group Supply Chain, Opinion Industry Regulators Customers Funders NGOs incl. Targets Leaders Assoc. Enthusiastic Helpful Compliant Hesitant Indifferent Uncooperative Opposed Hostile Key: O - Level Necessary for Success X - Current Level Foresight Science & Technology 29
  30. 30. Get 7 to 15 potential customers Sit them in a room with a recording device Ask questions and encourage them to “freewheel” about their needs Focus and facilitate the discussion by asking about needs you have identified in literature reviews or earlier discussions Confirm the Substitutes and their Prices Confirm who your Competitors are Do Gap Analysis Identify the Value Network 30 Foresight Science & Technology
  31. 31. Ask Experts who are the Experts Five to Seven Experts Same Questions Cycle Answers to Gain Consensus 31 Foresight Science & Technology
  32. 32. Email everyone, ask the questions and offer to chat, but do not rely solely on email Call early and then around the end of the day Look for common ground and leverage points Be a poor working stiff Ask who else to call when you reach someone Foresight Science & Technology 32
  33. 33. Target Target Advice Testing Idea – Design – Proof – Brass – Prototype – Product – Production – Sales – Distribution – Customer of of Board Engineering Marketing Support Concept Feasibility End User Testing End User Advice Foresight Science & Technology 33
  34. 34. Foresight Science & Technology 34
  35. 35. Offensive Emerging Lead all Competitors Pacing Impact Be in Top 5% of all Competitors Spare Lead all Direct Competitors from Use of Product, Be in Top Half of all Competitors Defensive Service, or Technology Crucial for Future Growth Hedging Crucial for Take-off Imitative Offensive Defensive Spare Function 35 Foresight Science & Technology
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  41. 41. High Past Present Future Long-Term Sustainable Competitive Advantage Staff Capacities of to Realize Plan Strength of Short and Mid-Term Intellectual Asset Competitive Advantage Portfolio Revenue From Entry Market Application Low © Foresight Science and Technology Foresight Science & Technology 41
  42. 42. CUMULATIVE REVENUES 0$ Idea Basic Applied Product Process Market Research Research Development Engineering Introduction TIME Foresight Science & Technology 42
  43. 43. 34% 34% 16% 14% 3% Innovators Early Adopters Early Majority Late Majority Laggards Foresight Science & Technology 43
  44. 44. Barriers to Entry Stability Of Rate of Rivalry Dominant Change Design Concentra- tion Foresight Science & Technology 44
  45. 45. 1) Product 2) Price 3) Promote 4) Place Foresight Science & Technology 45
  46. 46. Market Force Price Goals Time 2 Ea se -o f- Us e Skills gy ss e no en ch tiv Time 1 lo c of tra Capacities t A Te Market Force ce an rm rfo Pe Inputs - Outputs Market Force Foresight Science & Technology 46
  47. 47. Market Familiarity STRATEGY Control: Internal Development Divest or Acquisitions Monitor In-License Partner: Market Joint Ventures Development Alliances Internal Ventures Out-License Partner Divest: Assignments Sales Control Monitor: Technology Venture Capital Maximize Development Educational Acquisitions CORE Adapted from Roberts and Berry, SMR 1988. Technology Familiarity 47 Minimize Foresight Science & Technology
  48. 48. Foresight Science & Technology 48
  49. 49. Most Feasible Customer/Target Market  Capability Fit Fit Product/Maturity Fit Foresight Science & Technology 49 49
  50. 50. You You Do Deal You Walk Away Them They Do Deal $10m, $0.5m -$0.05m, -$0.01m They Walk $0.1m, -$0.01m, Away -$0.05m -$0.01m Foresight Science & Technology 50 50
  51. 51. Google, Bing, etc. On-Line Papers and Magazines Wall Street Journal, New York Times, etc. Business Week, Fortune, etc. Thomasnet, Globalspec, etc. Sector or Technology Specific Websites Cooperate Information Yahoo Finance Hoovers Company Sites SEC Edgar 51 Foresight Science & Technology 51
  52. 52. Frost and Sullivan Freedonia Gartner Foresight T2+2™ Entrepreneur 52 Foresight Science & Technology 52
  53. 53. Let’s try an expert, shall we? 53 Foresight Science & Technology 53
  54. 54. Hoovers Foresight T2+2™ Entrepreneur Foresight Science & Technology 54 54
  55. 55. Mailers Demonstrations Non-Proprietary Working, Tested Prototype Fact Sheet, Quad Chart, Presentation Slides Specifications Sheet, Brochure Follow-Along Manual and/or Check List White Paper Patents/ Published Patent Legal Documents Applications Standard Contract or License Proprietary One-Way and/or Two- Test Protocols and Way Non-Disclosure Results Agreements Unpublished Patent Materials Transfer Applications Agreement where Relevant Foresight Science & Technology 55
  56. 56. Process Contribution to Total Project Cost (excl. Investments) 0.4 0.35 0.3 The substantive process drives the cost Cost in % of Total 0.25 0.2 0.15 calculation 0.1 0.05 0 Log & Disp Financing Design Impl & Eng Test Mgt Prc & Equip Dist & Srvc Mfg Pl & Ctrl Research Management The cost calculation, Net Operating Income/Loss and Cummulated Cashflows with Breakeven Net Operating Income/(Losses) together with the revenue projections, Net Difference of Cummulated Cashflows 400000000 350000000 300000000 250000000 200000000 150000000 drives the net value 100000000 50000000 0 36525 37256 37986 38717 39447 40178 40908 41639 42369 43100 43830 44561 -50000000 Foresight Science & Technology 56 56
  57. 57. Cost vs. Delays for all Risks along Value Chain Technical and firm specific risk 30% are the basis for the discount 25% Resulting Cost Increases rate. 20% 15% Market risk is a probability 10% distribution for outcomes. 5% 0% 0% 5% 10% 15% 20% Resulting Delays Foresight Science & Technology 57 57
  58. 58. Risk Level Approximate DR(%) Description Risk Free 10-18 Existing product, high demand, building more of the same Very Low Risk 15-20 New well understood technology for an existing product Low Risk 20-30 New features, well understood technology into an existing market Moderate Risk 25-35 New product, well understood technology into market with competition High Risk 30-40 New product, not well understood technology into an existing market. Very High Risk 35-45 New product, new technology, new market Extremely High Risk 50-70 New company, unproven technology, new market Source: Richard Razgaitis, Early Stage Technology Foresight Science & Technology 58 58
  59. 59. Focus on the Significant Risks 59 Foresight Science & Technology 59
  60. 60. Targets and Means Matrix Objective 1 (Reduce/Increase) Objectives Action Plan Objective 5 Objective 3 Objective 4 Objective 2 Measure Time Line Resources Required Who? JFMAMJJASOND Task 1 Task 2 Task 3 Task 4 Task 5 Progress 60 Foresight Science & Technology 60
  61. 61. Any numbers in green found in the following fields can be changed and will be reflected in the tables below Factor Rate Weight Impact Industry Norm 0.0% 0.0 0% Significance (Breakthrough add 5-10%, Major add 0-5%%, Minor subtract 0-3% 0.0% 3.0 0% Refinement/Maturity of Technology (High add, Low subtract) 0.0% 2.0 0% Breadth and Strength of IP Protection (Yes add, No subtract) 0.0% 2.0 0% Portfolio, Not Single Patent Being Licensed (Yes add, No subtract) 0.0% 2.0 0% Exclusive Market Position in Field of Use Gained (Yes add, No subtract) 0.0% 3.0 0% Immediate Utility in Market (Yes add, No subtract) 0.0% 2.0 0% Commercially Successful (Already Successful in Market add, Not Yet Proven in Market subtract) 0.0% 3.0 0% Competition Exists which Will Inhibit Ability to Exploit (Yes subtract, No add) 0.0% 1.0 0% Foreign Rights (Yes add, No subtract) 0.0% 3.0 0% Sales Conveyed or Highly Likely (Yes add, No subtract) 0.0% 2.0 0% Duration (Over Ten Years add, Under Three Years subtract) 0.0% 1.0 0% Upfront Payment Required (Yes subtract, No or Conditional add, Standard neutral) 0.0% 2.0 0% Minimum Royalties (Yes subtract, no add, Standard neutral) 0.0% 2.0 0% Know-How Included in Deal (Yes add, No subtract, Standard neutral) 0.0% 3.0 0% Support/Training Provided After Initial Transfer (Yes add, No subtract, Standard neutral) 0.0% 2.0 0% Maintenance and Enforcement Burden (Licensee subtract, Licensor add, Standard neutral) 0.0% 2.0 0% Exposure to Liability (Yes subtract, No add, Standard neutral) 0.0% 2.0 0% Total 0% Add to Industry Norm 0.00% RATE 0.000% Foresight Science & Technology 61
  62. 62. There is always a reason for NO Understand it Respond to it Follow-up, Follow-up, Follow-up Foresight Science & Technology 62
  63. 63. Make a list Must Haves No Ways Nice to Have Be Fair and Reasonable Use Your Nice to Haves to Negotiate for the Others When you have: Your Must Haves None of Your No Ways Sign Foresight Science & Technology 63
  64. 64. Start at the Top and Work Down “Profit & Loss” Responsibility Gatekeepers Always have a Name Ask for the Secretary/Assistant Practice Your Elevator Speech Why Calling Them Value Proposition Foresight Science & Technology 64
  65. 65. 65 Foresight Science & Technology 65
  66. 66. There is a Market They Sell (or Want to Sell) to this Customer Segment Addressable Market Size Pull-Through Likely with Customer Segment Voice of Customer Heard Stakeholder Support Your Good(s) can Capture a Hefty Market Share A “PEPPY” Value Proposition: Performance, Ease-of- Use, Price, (PEP) and UMPF Concurrent Engineering Underway Lead Customers Participating Designed for Price Flexibility Foresight Science & Technology 66
  67. 67. Foresight Science & Technology 67
  68. 68. Poor Richard: “Pride is Everyone always Three Options: as loud a beggar as need Buy and a good deal more Wait/Stall saucy” Walk Away Ask for the Deal IF THEY DO NOT BUY … ASK WHY! Do not be a “true believer” Do not assume they are stupid Understand their needs, requirements, and constraints Foresight Science & Technology 68
  69. 69. Do you correctly understand why the technology is attractive? What is the decision process and who else is involved in what roles or Sponsor functions? How long does the decision process take? Technical What criteria will be important and Gatekeeper Project Leader Expert why? What information will they want? What kind of deals have they signed Champion End User in the past and what do they prefer? Who is (are) the decision maker(s)? Is there other insights they want to pass along to make the process smoother and quicker Foresight Science & Technology 69
  70. 70. Poor Richard: “The The deal has to made second vice is lying, the sound business sense or first is running in debt. it is a nightmare to …It is hard for an enforce empty bag to stand upright” Good Deals are: Win/Win: Net Positive Cash Flow for All Parties Fair: Allocation of Cash Flow Proportional to Value Contributed Self-Enforcing Foresight Science & Technology 70
  71. 71. Poor Richard: “Always Cash Flow is the Lifeblood of Business taking out of the pot The more risk a party bears, and never putting in the more upside cash flow potential it deserves one soon comes to the Cash today is worth less than bottom” cash tomorrow The likelihood of cash tomorrow decreases as total risk increases Allocate risk to the party able to control it or bear it. Use side payment(s) to make the deal “fair.” Foresight Science & Technology 71
  72. 72. Poor Richard: “Those Legal clauses must be taken seriously who will not be If you have not been there counselled cannot be before, work with someone helped” who has Not getting your cash Getting the wrong amount Getting Sued Get Financial folks to confirm the cash flow after taxes & interest Get a lawyer to confirm exposure to liability and difficulty of enforcing Foresight Science & Technology 72
  73. 73. Poor Richard: “Fair Value is defined by the product of: commerce is where (1) The contribution to the equal values are utility for the end-user (a percent) exchanged for equal, The number of units sold the expense of The gross profit per unit transport included.” Adjusted by the other costs for the buyer when creating that utility Adjusted by the risk of realizing the value (discounting) Foresight Science & Technology 73
  74. 74. Poor Richard: “We can The decision is give advice, but we management’s cannot give conduct” Decide on sound business reasons (personalities change as people change) Don’t get greedy Go back to your three columns: Must Have and No Way Cross off items on Must Have and No Way If no No Ways and all Must Haves, sign Foresight Science & Technology 74
  75. 75. Foresight Science & Technology 75
  76. 76. Allocate tasking to the most competent and cost- efficient party Allocate liability to the party best able to mitigate it Structure hand-offs for success Clear Deliverables Milestones Progress Payments Penalties Use transfer payments to make fair Foresight Science & Technology 76
  77. 77. Foresight Science & Technology 77
  78. 78. Develop a straw man Float it then try it Adapt it to reflect comments and reactions Continue to no adaptation is needed Foresight Science & Technology 78
  79. 79. Clarify Exit Strategy Set Goals and Make and Evaluate Plans Build Brand Name Loyalty and Goodwill Listen to Your Customers and Respond Obtain Advocates Among Stakeholders Always Set the Quality Bar Higher Run as Long as First Mover Advantage Lasts, then Consolidate Gains Sit on Standards Bodies Get on Industry Panels with Customers Increase Intellectual Assets Drive Absolute Cost Advantages Economies Control Over Inputs Create Barriers to Entry Foresight Science & Technology 79
  80. 80. Revisit Exit Strategy Hit Take-Off in Entry Niche then Expand Niches Go Where: Clear Expressions of Need Opinion Leaders Cross Over Communication Channels Already Carrying Your Messages Leverage Scalability and Producability Foresight Science & Technology 80
  81. 81. Foresight Science & Technology 81
  82. 82. Product Advantage Market Orientation Launch Tactics New Product Performance Organizational Performance Foresight Science & Technology 82
  83. 83. PRODUCT Fundamental/ Applied Concurrent Manufacturing - Post- LIFE CYCLE Exploratory Research and Engineering Sales, Introduction Research Development Supports Improvement SBIR Pre-Phase I Phase I Phase II Phase III (and Phase III (and PHASE new Pre- new Phase I) Phase I) Develop a distinct Establish Embody the Get the product or Create long-term Expected new technology technology’s technology in process quickly value by Results connected to a practicability, production accepted in the expanding market need market potential, engineered market applications of the and plans for products and/or technology development processes Technical proof of Patent if relevant Beta test with key Hit take-off (5% - Obtain substantial Demonstrable the ideas, patent, or not done; ready customers, unveil 20% penetration) financial returns Steps and/ or develop vision for plans for com - commercial and establish the Benefits the technology mercialization; version of the infrastructure for prototype, test technology, supporting a with key targets animal trials product family Research partners, Technical experts, End-users, lead Targets, end- Company Relevant technical experts potential investors customers, sup - users, customers, management, Stakeholders in the field and other funding pliers of platform opinion leaders, others in value sources, targets, or complementary others in value network, end users, opinion technologies and network customers, leaders in key products, targets, opinion leaders, entry niches opinion leaders R&D partners Expanding upon V. Jolly, Commercializing New Technologies, Harvard Business School Press, 1997 Foresight Science & Technology 83
  84. 84. Foresight Science & Technology 84
  85. 85. 85 Co m Pr o po Lan peti dsc tive ap Val sition e ue No De n-Pro E scr Ph mail ipt p. ion one & Cu Semi sto - Fee d Ma mize ter d Giv back e Foresight Science & Technology ial Ask Info a s s fo nd rM ore
  86. 86. Ease‐of‐Use Foresight Science & Technology 86
  87. 87. • Nothing happens without a sale. David Speser • If opportunity doesn’t knock, build a door. Milton Berle • A well-defined imagination is the source of great deeds. Chinese Fortune Cookie Foresight Science & Technology 87