1
Finding & Learning From Waldo
Caltech E102 Guest Lecture
Chris Halliwell
January 2010
Halliwell@technologymarketingcenter.com
2
The Diffusion Model Describes
& Orders Market Targets
Rate of Adoption
Early Majority
Late Majority
Early Adopters
Innovators
Laggards
Time
A measure of the rate of adoption of a cluster of new technologies within ordered
communities over time — not a sales curve or a product life cycle curve
Dynamics: Leader and Follower Reference & 3
Community Characteristics Are Very Different
Early Market
Leaders
The
Chasm
Mainstream Market
Followers
Innovators, Early Adopters vs.
Early/Late Majority, Laggards
• Listen to and evaluate vendor claims
• Rely on others to validate vendor claims
• Reference community is visionary
customers across segments, typically
through professional association
• Reference community is specific: industry,
application, geography
Innovation Adoption Communities:
4
Late 1960’s State Adoption of New Laws
South
Dakota
• Stage 3:
– Rapid regional
deployment (indirect
communication only)
Iowa
North
Dakota
Minnesota
Nebraska
• Stage 2:
– Regional opinion leader
adoption (direct and indirect
communication)
Wisconsin
Michigan
• Gap of several years
• Stage 1:
– Early adoption (rely on direct
communication with suppliers)
• Large
• Urban
• Industrial resource-rich
Massachusetts
New York
New Jersey
California
Source: Analysis of J. Walker 1971 Research
Michigan
5
Opinion Leadership
• Opinion leaders are viewed as “just like me, only better”
(e.g. share leaders) by others in the community
• Early adopters are opinion leaders when the entire
segment is early adopting, but are different than opinion
leaders within mainstream segments
• Supplier market development and leadership requires
opinion leader market insight and market access
Early Market Adoption Characteristics
6
MAINSTREAM
MARKET
The “L-Shaped” Early Market
EARLY
MARKET
“I see the
possibilities!”
“I see the
competitive
advantage!”
Vertical Market:
Early Adopting Segment
“ I see the
ROI!”
• Heavy sales concentration in both horizontal and
vertical early adopter dimensions
• Predominance of early market opportunity in
“corner” account – the early adopting opinion leader
• Innovator accounts point to the future, but do not
generally lead to broad market opportunity
• As standards solidify over time, horizontal market
opinion leaders will adopt and will spawn further
vertical market opportunities
Horizontal Market:
Early Adopter Account
From Each Segment
…
Innovators
Early Adopting
Opinion Leader
7
Example: Early L-Shaped Networking Markets
Vertical Market:
Early Adopting Segment,
i.e., Financial Services/New York
E.g. 00’s Early RFID Market
ACCOUNT NAMES
ACCOUNT NAMES
Vertical Market:
Early Adopting Segment,
i.e., Retail
Horizontal Market: Early Adopter
Account in Each Industry
Segment/ Arpanet Node Location, e.g.
ACCOUNT NAMES
Ford Boeing Gov’t
Fidelity
Banks
Horizontal Market:
Early Adopter Account in Each
Manufacturing Industry Segment, e.g.
…
Media Transport CPG Electronics
ACCOUNT NAMES
E.g. 90’s Early IP Router Market
Ford Boeing DOD
Wal-Mart
FMCG HLC
…
Electronics Food Apparel
Example: Large Part Surface Mount
Manufacturing Equipment Adoption Map
Rapid
Segment
Adoption
Opinion
Leader
Adoption
Ericsson Nokia
US
Robotics
Motorola 2
Avex
Compaq
3COM
SCI
8
Second Tier
Contract &
Asian Mfrs.
Solectron
Gap of Several Years
Early
Adoption
Motorola 1
Mobile Communications
Devices
Motorola 3
IBM
Computer Modems
Lucent
Texas
Instruments
Computer Motherboards
9
Exercise: Camera Component
•
Situation
– The intellectual property leader is living comfortably off research projects and
angel investors
– Many potential applications, geographies, customers
– Two-year effort to recruit, train and provide demos to worldwide rep network has
not resulted in even one volume order
– Early adopters initially enthralled with this supplier, but as supplier diverts
resources to research projects and wide distribution, they lose early production
orders and perceived leadership in the new technology
•
Process
– Management team visits to early adopting and/or opinion leading accounts
•
Results
– Team agrees on application priorities and limited customer focus, so that
development and sales resources can be realigned
– Receive first volume order in early adopting segment
10
Camera Component Customers By Segment
Security (1996)
Biometrics/Fingerprint
Market Share
1998
Panasonic
Burle / Philips
Sony
Ikegami
JVC
Source: Strategies Unlimited
PC Cameras Market Share
1998
Logitech
Intel
Xirlink
Kodak
Creative Labs
US Robotics
Others
Total
DSC Market Share
375,000
145,000
130,000
98,000
59,000
54,500
438,740
1,300,240
% Mkt
29%
11%
10%
8%
5%
4%
33%
100%
Source: In-stat
Plus…
Cell phones & portables?
Omron
Mitsubishi
Sony
Techno Image
Fujitsu
NEC
Others
Total
1998
% Mkt
20,000
4,000
3,600
2,000
1,000
1,000
110,600
142,000
14.1%
2.8%
2.5%
1.4%
.7%
.7%
77.8%
100%
Source: TSR
Olympus
Kodak
Sony
Fuji Film
Casio
Epson
Ricoh
Panasonic
Canon
Sanyo
Others
Total
700,000
450,000
440,000
350,000
300,000
290,000
120,000
85,000
80,000
65,000
320,000
3,200,000
% Mkt
21.7%
14.1%
13.8%
10.9%
9.4%
9.1%
3.8%
2.7%
2.5%
2.0%
10.0%
100%
Source: TSR
PC Cameras Market Share
1998
Logitech
Phillips
NEC
Konica
Others
Total
Source: TSR
180,000
150,000
80,000
80,000
510,000
1,000,000
Endoscope Market Share
% Mkt
18%
15%
8%
8%
51%
100%
Olympus
Fuji Film
Asahi Optical
Toshiba Medical
Others
Total
Source: TSR
1998
% Mkt
17,200
2,400
1,900
300
200
22,000
78.2%
10.9%
8.6%
1.4%
0.9%
100%
Camera Component:
Who’s Waldo & Why?
11
New Technology
+ Integration / lower
function cost
+ Lower power
+ Address random
pixels (sub-sampling)
- Noise / sensitivity
Existing Technology
+ Known / familiar /
“simple”
+ Recent price
reductions (almost a
wash)
+ Resolution
Note Top 5: Sony, Matsushita,
Toshiba, Sharp, Phillips
New Technology 1998 Penetration
DSC
90 KU
of
3 MU
=
3%
PC Camera
120 KU
of
1 MU
=
12%
Security
220 KU
of
5 MU
=
4.4%
Customer’s Point of View : The Source
of Sustainable Competitive Advantage
• You Sell
• They Buy
– Core technology
– Your reputation, track record
– Ancillary hardware/software
– Relationships
– Pre-sales services
– Technical expertise
– Post-sales services
– Their reputation, growth
12
Never Ask a Customer
What They Want
Isle de Technology
You live here
13
Problem Island
They live here
14
Getting to “Why?”
• Creative, effective whole
product strategy
– Get ahead
– Get across
– Get around
• Barriers to “why”
– Proprietary design or
manufacturing process
information
– Relationship/culture
– Lack of asking!
Recruiting Issues: Get to the Right
Customers
• Common Obstacles
–
–
–
–
–
Supplier not “strategic” to target customer
NDA issues
New segment, so supplier doesn’t have direct contacts
Sales “timing not right”
Getting to competitor’s customers
• Discussion
– What are your obstacles?
– What is your pitch?
– What is the single best way to get to your targets?
15
16
Recruiting Issues: Get to the Right
Customer Titles
Buying Influence
Organizational Role, e.g.
•
System View
(Market & Technology Trends & Metrics)
•
•
•
Chief Technology/Information Officer
General Management
Marketing Management
•
Process View
(Time, Cost & Skills Trends)
•
•
•
Engineering Management
Project Management
Component Engineering Management
•
Application View
(Performance, Integration and Partitioning
Trends)
•
•
•
Project Management
Sr. Engineer (Hdwr/Swr)
Application/Systems Engineer
•
Purchasing View (Cost of Use)
•
•
•
Component Engineering Management
Purchasing Management
Manufacturing Management
17
Write A Discussion Guide
• Looking to Understand Their Processes & Problems
– Select 4 or 5 key topics very general questions
– Always follow-up with “why?” (or some form of that query)
– Dig: for each topic ask for definitions, measurements, trends,
priorities/tradeoffs, then summarize back, asking for “correction”
– Be prepared with specific open-ended probes, but never lead with them
– What insight allows you to validate tech, market, business assumptions?
• Does Not Use Closed Questions (or seek reaction to our ideas)
– Don’t you think if…? Would you like it if…? Black or white, yes or no…?
We think, what do you think? If we do this, will you do that? What do you
want? What will you pay for it? What should we do?
• This is absolutely not a presentation, asking for reaction
18
Formal Roles Facilitate Open Exchange
•
Moderator
–
–
–
–
•
Asks most of the questions (from discussion guide)
Clarifies extensively
Controls flow and timing
Leads post-visit process (feedback on moderation/discussion guide) de-brief
Note Taker
– Primary stenographer
– Leads post-visit content debrief -- The Three Main Points
– Compiles, distributes notes within 5 working days and sets up database
•
Observers
–
–
–
–
Note body language and “emotional” quotes
Time permitting, remind moderator of specific probes
Provide customer thank you email and tracks promised follow-up
Provide formal follow-up letter, summary and give back presentation