Developing a Commercialization
Roadmap
Strategy and Trajectory:
A Technology to Product Plan
Gregory P. Pogue, Ph.D.
©2012 IC2 Institute at the University of Texas at Austin
Workshop Topics
1. Designing a Technology to Market Plan
2. Commercialization Roadmapping with Case
Studies
– Execution Risk
– Co-Innovation Risk
– Adoption Chain Risk
3. Developing a Commercialization Roadmap
4. Conclusions
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Institute at the University of Texas at Austin
Model Product
Our Previous Learning Tool
• A device that will enhance the solubility of
sugar in coffee.
• Some examples:
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Institute at the University of Texas at Austin
NO MORE SPOONS!!!!
• Take out your IR homework for your team
technology
• Get into your teams
• Time to get to work!!!!
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Executional Risks
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Institute at the University of Texas at Austin
Product Realization According to
the “Big Bang Theory”
Leonard: Ph.D.
Sheldon:
physicist in love
with Penny;
roommate of
Sheldon
Theoretical Ph.D.
physicist who is
highly socially
inept
Penny: Aspiring
actress who works
at the Cheese
Cake Factory
Howard: M.S.
Engineer who
desires women,
but can’t interest
one
Raj: Indian Ph.D.
physicist who
cannot speak to
women
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Technology to Market
Risk Reducing
Developmental
Milestones
Risk Reducing
Go-to-Market
Milestones
Market-Fitted
Product
Early Stage
Technology
Profit
Team
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Exercise: Development Step
Analysis
Market-Ready
Attribute
Existing Attribute
Developmental Steps
Each Team should list key market-ready attributes and compare with the
existing attributes in the product prototype. Using the differential, list the key
developmental steps required.
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Adapted from Cliff Zintgraff. – IC2 Institute – July, 2011
Exercise: Development Step
Analysis
Developmental Step Approximate
Cost
Approximate Responsible
Time
Group
IP
Involvement
(Y/N)
Each Team should list developmental steps required from previous table
and approximate the cost and time required to accomplish each.
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Adapted from Cliff Zintgraff. – IC2 Institute – July, 2011
Developmental Step Dependency
and Time Requirements
Time (months)
Stop/Start
Task 1
Dual Stop/Start
Task 2
Task 4
Dual Stop/Start
Task 3
Task 6
Task 7
Commercial
Prototype
Task 5
Each Team should list developmental steps from previous table (represent
each as an arrow) and use approximate time requirements and assemble in
sequential order noting dependencies between events.
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Team
• What team expertise is required to
accomplish the developmental tasks?
• Which do you have on-board now? Which do
you need to recruit?
• When do you need each new individual?
• Which individuals need to be full-time
employees? Which ones can be consultants?
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Focus
• Most companies focus attention on
executional strategy:
– Technology enablement – completing risk
reducing developmental milestones
• Some companies stop here, others move to:
– Market realization – completing risk reducing
Go-to-Market milestones
• But, is this enough?
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External Risks
• Co-Innovation Risk
• Adoption Chain Risk
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Michelin’s PAX System
• Need: solution for flat tires
– 60 of US drivers experience a flat tire every 5 years
– 250,000 accidents/year due to low tire pressure
• Inferior competition
– Self supporting, run-flat tires of Goodyear, Bridgestone,
etc. were too heavy, stiff ride, poor MPG
– These occupied <1% of market
• PAX System
– Run-flat tire with support ring clamped to alloy wheel
with pressure monitoring device
– Most radical and functional change since the radial tire
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Slide adapted from “The Wide Lens” by Ron Adner 2012
The PAX System
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Expectations and Reality
• Michelin and Goodyear collaboration lauches
product in 2001
• Rapid adoption on high end cars
• In 2004, JD Powers predicts 80% of cars will have
“run-flat” tires by 2010
• 2005, Link with Honda, PAX on Oddessy and
extended 2-year warranty
• In 2007, the PAX system was discontinued with
huge corporate loss
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Slide adapted from “The Wide Lens” by Ron Adner
What Happened?
Michelin’s Normal Business Practice:
Michelin Tires
Vehicle Manufacturer
Driver/Customer
Michelin Tires
Tire Dealer
Driver/Customer
What Was Required for Successful PAX Business Practice:
Michelin PAX
Tire System
Vehicle
Manufacturer
Tire
Dealer
Driver/Customer
Service Garage
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Slide adapted from “The Wide Lens” by Ron Adner
Learnings
• For successful products to produce revenue, you
must manage more than your internal ecosystem
(innovation, marketing and execution), you must
manage your external ecosystem as well!
• Michelin learned and found an ecosystem for the
PAX System – the US Military:
Defense
Department
Michelin PAX
Tire System
Defense Service
Garage
Vehicle Manufacturer
©2012
IC2
Institute at the University of Texas at Austin
Slide adapted from “The Wide Lens” by Ron Adner
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Risks to Realizing Innovation Value
Co-Innovation Risk
Innovation/
Product Plan
Execution Risk
Data-Based
Strategy and
Return
Adoption Chain Risk
• Co-Innovation Risk: requirement of other innovations for successful
commercialization
• Execution Risk: requirements for your company to bring forth your
product with required specifications on time/budget
• Adoption Chain Risk: requirement of partners to adopt your product
before end customers can assess the full value proposition
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Slide adapted from “The Wide Lens” by Ron Adner
Begin with the End in Mind
• Traditional Marketing training focuses on the
internal company ecosystem:
– Innovation management
– Customer definition and engagement
– Execution of advertising, sales, distribution, legal
HR and finance
• However, the broader external ecosystem is
often ignored or addressed in too little detail
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Co-Innovation Risk
Formatting Software
Component 1
Component 2
Nokia
Nokia
Handset
2G
3GPhone
Phone
Operator
Operator
Database
Features
Component 3
Digital Rights
Management
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Slide adapted from “The Wide Lens” by Ron Adner
Co-Innovation Risk
• Collaboration = Dependence
• The joint probability that all
innovations are successful will
determine when and if your
product will be!
• Alignment is required:
• Resources
• Profits
• Strategy
• Relationship
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Slide adapted from “The Wide Lens” by Ron Adner
Who Are Your Co-Innovators?
Co-Innovators
Importance to Your Product
(-3 to +3 with 0=average importance)
Each Team should use its technology/product description to identify at least
two co-innovators important to your product and rate these according to
your understanding of their importance to your success.
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Adoption Chain Risk
• Customer benefits are perceived as NOT ABSOLUTE, but
RELATIVE to:
–
–
–
–
–
–
Present products (Office 2003 vs Office 2007)
Competition
Current activities or operating procedures
Cost of change
Revenue upside
Operational streamlining offered
• Thus market uptake and price agreement is dependent on
the CUSTOMER’S PERSPECTIVE and your ability to work in
the ecosystem to get them to adopt (pay for and use) your
product
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Digital Film
Innovations: Digital film
processing and projection
What about the theaters who
show the films?
• “DVD” form, rapid distribution,
less piracy, improved picture
resolution, cheap reproduction,
3D
• Huge benefits to film industry
and film goers
• 1996 – DLP projector
• 1999 – T3 lines
• All in order – but no adoption
• $70-100,000 to purchase the
projector
• Switching costs too high
• No regulation or incentive of
increased customer value could
create adoption
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IC2
Institute at the University of Texas at Austin
Slide adapted from “The Wide Lens” by Ron Adner
New Adoption Chain
• Enter the Virtual Print
Fee (VPF) program in
2005
• Rent-to-Own program
for theaters to obtain
digital projectors
• VPF offered first
through film industry,
then theater coalitions
Digital Projector
++
Studio
+++++
Theater
---
X
Viewer
++
Bank +
Digital
Projector
++
(VPF)
Digital Theater
Integrator +
Studio
+++++
Theater
+
Viewer
++
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Institute at the University of Texas at Austin
Slide adapted from “The Wide Lens” by Ron Adner
What Are Your Adoption Chain
Risks?
Suppliers, Intermediaries and
Facilitating Factors
Importance to Your Product
(-3 to +3 with 0=average importance)
Each Team should use its technology/product description to identify at least
three suppliers, intermediaries and facilitating factors important to your
product and rate these according to your understanding of their importance
to your success.
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Commercialization Roadmap
•
•
•
•
•
Identify your customer’s need(s)
Identify your part, your product, what you will deliver
Identify your financial and executional risks
Identify your suppliers and negotiate deal structures
Identify intermediaries and channels, those who stand between you
and your customer
• Identify the facilitating factors (what aligns the suppliers and
intermediaries to collaborate)
• Identify external ecosystem risks
– Co-invention risks
– Adoption chain risks
• Use “Green Light,” “Yellow Light,” and “Red Light” to identify
alignment, agreement and incentive to participate with you
• All Yellow and Red Lights – work to find an alternative, viable solution
WITH them
• Update Roadmap quarterly
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Institute at the University of Texas at Austin
Slide adapted from “The Wide Lens” by Ron Adner
What Do the Colors Mean?
• Green
–
–
–
–
Alignment of interests and goals
Incentive plan with acceptable mutual benefit
Plan defined, with responsibilities, consequences and timeline
Agreement signed
• Yellow
–
–
–
–
Alignment partial
Incentive not pleasing to both parties
Plan and responsibilities or timeline unclear
Term Sheet or less
• Red
– Lack of alignment, incentives, plan and agreement
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Navigating a Changing Road
Relocate
Are there elements that are
currently bundled in one location
that could be more productively
bundled in a different location?
Separate
Are there elements that
are currently combined
that could be
productively separated?
New
Commercialization
Old Commercialization
Roadmap
WITHOUT
Roadmap
With
Roadblocks
Combine
Are there elements that
are currently separated
that could be
productively combined?
Subtract
Are there elements whose
elimination would add more viability,
or ultimate ease of operation, than
would be taken away from value
creation?
Add
Are there elements that are
currently absent whose addition
would facilitate productive new
connections or increased
efficiency?
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Slide adapted from “The Wide Lens” by Ron Adner
Sony Reader vs Amazon Kindle
E Ink Screen
Other
Components
Sony
Reader
Retailers
End Customer
Sony DRM
Authors
Publishers
Sony Connect.com
Wireless
Connectivity
Amazon DRM
And Other
Components
Authors
Amazon
Kindle
Amazon.com
End Customer
Publishers
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Slide adapted from “The Wide Lens” by Ron Adner
To Move First, Or Not To Move
First? – That is the Question
Complementor Co-Innovation Challenge
Lower
Higher
Lower
Quadrant 1: First in
Gets the Win:
Baseline level of
early-mover
advantage
Quadrant 3: Hurry
Up and Wait:
Reduced level of
early-mover
advantage
Higher
Quadrant 2: Winner
Takes More:
Increased level of
early-mover
advantage
Quadrant 4:
Depends: Level of
early-mover
advantage depends
on which challenge
is resolved first
Innovator
Execution
Challenge
First-mover matrix for determining relative advantage from early entry as a function of the level
of innovator execution challenge and complementor co-innovation contribution and challenge.
(Adapted from Adner and Kapoor, 2010).
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The iPhone Example
iPhone
Single Network
Operator
iOS
Carryover:
iTunes
(Carryover):
End Customer
Carryover:
iTunes Software
Expansion Stage 1
Developers
Expansion Stage 1
App Store
Expansion Stage 2
Multi-Carriers
Expansion Stage 2
Wireless Synch
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Institute at the University of Texas at Austin
Slide adapted from “The Wide Lens” by Ron Adner
Now it is Pure Competition
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Developing Your Own
Commercialization Roadmap
Develop an Outline of the following as it addresses YOUR
PRODUCT:
•
•
•
•
•
•
Chief customer’s need(s)
What part will you will deliver?
Your key financial and executional risks
Your key suppliers, intermediaries and channels
The key facilitating factors for each
Identify external ecosystem risks
– Co-invention risks
– Adoption chain risks
• Use “Green Light,” “Yellow Light,” and “Red Light” to identify alignment,
agreement and incentive to participate with you
• All Yellow and Red Lights – know that you must work to find an
alternative, viable solution WITH them
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Map It!!!!
Co-innovation Partner
Co-Innovation Partner
Supplier 1
Supplier 2
Your
Product
Market Ready
Product
User
Delivery Intermediary
Supplier 3
Delivery Intermediary
Co-Adoption Partner
Co-Adoption Partner
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Conclusions
• What are the key executional risks facing your
technology?
• What are the key co-innovation risks for your
technology? Who can supply these innovations –
partnerships, product development partners,
others?
• What are the key adoption chain risks? Who must
you partner with to allow rapid and deep adoption
of your technology/product?
• What is your most important NEXT STEP?
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Contact
Gregory P. Pogue, Ph.D.
IC2 Institute
The University of Texas at Austin
gpogue@ic2.utexas.edu
(512) 560-3717 (cell)
(512) 475-8961 (office)
Skype ID: pogo5708
www.ic2.utexas.edu
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