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A standardized, verifiable, metric driven analysis process
Gap analysis
Concept development and demonstration
Market assessment
Pro Forma financial analysis
Defined stage gates
Enabling technologies
Boot Strapping
IP Management Strategy
Partnering
Implementation Roadmap
Product planning
Pro forma financial estimate (discussed in detail later)
Clearly articulated market needs
◦ Using the “Tuned In” process with a quantitative assessment1
◦ Independent market assessment by carefully chosen provider
Government or partner co-funding for early stage product realization
Partner companies willing to co-invest for later stage to-market push
A solid means of protecting the position once gained (e.g. IP, specialized
facilities, trade secret processes or other barriers to entry)
1”Tuned In: Uncover Extraordinary Opportunities That Lead To Business Breakthrough”; Wiley 2008
Use internal sources to identify initial key market needs
Use selected external sources (consultants or partners) for extrapolation of perceived needs
This is not an in depth market assessment ◦ You can only do an in depth market assessment when you know for sure what you are
going to develop and/or have a concrete product concept to show potential buyers
Draft the Business Plan based on the available information
Concept Development
◦ Small R&D investments to explore technology feasibility – “make failure survivable”
Concept Demonstration
◦ Reduction to practice to secure basic IP rights
Prototype Demonstration
◦ If funds allow, the demonstration of a prototype that buyers can use is huge
◦ Capturing feedback from these early adopters is also very important, when taken in context with the market assessment
Update the Business Plan with the new data
Use internal sources to conduct initial market assessment
Use selected external sources for independent market assessment (particularly partners since they are already in the market and have ground truth experience) ◦ If using an agency, select one that specializes in the area of interest rather than
using a one-size-fits-all approach (many agencies are generalists and will not actually know your potential buyers)
Carefully ask for the right information back (qualitative and quantitative): ◦ What are the market segments?
◦ Is the problem you are fixing “urgent” and how so?
◦ Is the problem you are fixing “pervasive” (does it cross all your market segments)
◦ What is the impact of your solution versus your nearest competitors?
◦ Market volume, flow and likely dividing of the pie
◦ Markets are dynamic: How will you (& partner) effect the marketplace by your entry?
Use market assessment sources to identify potential partners ◦ Who are the smaller players that need a technology edge to get ahead?
◦ Are there any outside players that can shift the market dynamics by their entry?
Estimate costs for R&D, marketing, and overhead
Estimate income from production/service income
Determine Net Present Value (NPV) per year to determine breakeven point (time horizon)
◦ Business volume may come up slowly, but profitability needs to be there from the beginning or else there is a cost structure versus pricing mismatch
Conduct sensitivity study to determine robustness of the assumptions
Update the Business Plan
Stage gates based on progressively achieving the metrics as described: ◦ Stage 1:
Gaps and buyer pain points identified, obtain funding for possible enabling technology or prototype, articulated path to market
◦ Stage 2: Demonstrated Enabling Technology, IP or other barriers to entry in place, Partner
companies identified and being engaged on product planning and market assessment, R&D funding used to continue toward a specific product or mature the Enabling Technology, has draft Business Plan, draft Product Plan for possible up grades in the technology
◦ Stage 3: Demonstrated Product in mature prototype form (LRIP), Partner companies are co-
investing or sole-investing to bring product to the market (EMD), beta-testing of the product in the market has occurred, certifications (if required) have occurred, transition to production is occurring, Product Plan is matured
◦ Stage 4:
Product is in FRP, spiral upgrades are articulated in the Product Plan but constantly updated by market assessment and user feedback – together not separately
Don’t get disrupted by ignoring adjacent markets and small competitors (Tuned In, Innovator’s Dilemma)
These are key technologies, sub-systems or capabilities that can be used in multiple product offerings
A few examples of Enabling Technologies and their current/proposed products: ◦ Advanced materials development, testing and engineering – aircraft bodies, drug delivery
◦ Wireless data transmission protocol – implanted/other medical devices, mine safety applicances
These are key focal points that: ◦ Broaden market opportunities
◦ Increase fields of use of IP and infrastructure investments
◦ Increases your value to partners
◦ Spreads investment risk across several products
Identify the main sub-systems and components
Map the change in critical technologies across time and product upgrades’
Include in Business Plan
…or “make it work with what you’ve got”
There is only so much risk capital to go around
◦ Near term technology or capability demo to jump start a market assessment
◦ Exploratory research to study technical feasibility of enabling technologies
◦ Long term product development and commercialization effort
Few companies have the resources to routinely develop, produce, distribute, sell
and service products to full maturity on their own
Partnering can be a great way to multiply your capital and dilute risk
◦ Upside: you can get more brains, money and muscle on the problem
◦ Downside: divides the pie; relationships can be tricky
Partnering can take many forms:
◦ Co-investment (co-funding)
◦ Goods-in-kind (providing supporting materials or components)
◦ Joint efforts (self-paying team)
Partners can provide critical insight into the market assessment, as well as
development, production, distribution, sales, and service for the product
High priority partners should be sought who may be interested in teaming on
multiple products
Partner relationships must be carefully constructed, assessed and maintained
◦ Leverage: holding key IP is an important safeguard in partnering
◦ “At the end of the day, you have to do business with people you trust”
Product planning ◦ Plan for spiral upgrades and new generations of the product
◦ Each product requires a product plan and technology roadmap
◦ A company will require a roll-up product plan that shows how all their products relate to each other
Include in Business Plan
First – Figure out where you are
◦ Identify products and enabling technologies that are currently in process
◦ Establish their status in the stage gates
◦ Implement the IPT for those that are the most mature or time sensitive first
Develop pro forma
Identify key internal and external stakeholders
Establish product plan
Second – Project where you want to go
◦ Technical – Identify gaps and unmet needs in the market
◦ Business – Benefit to community, BV and profit growth
Third – Develop the Product Plan to reach these goals
◦ Needs to be a feedback loop between the Product Plan, plans for individual products, and the goals
Then start product development process to identify new candidate enabling technologies and planning
There are three categories of products in play:
◦ Enabling Technologies
Enabling technologies (or capabilities) are those that can be used in multiple products rather than just for one product
◦ New Products
Some new products may be unique in that they are derived from whole cloth
Most products will be derived from enabling technologies as opportunities are developed
◦ Existing Product Improvements
Development of spiral upgrades to existing products to maintain or improve performance and to keep them competitive
After individual plans are developed for the existing products and enabling technologies then the overall Product Plan can be constructed
The Product Plan will need to answer these questions:
◦ What product development projects will be undertaken?
◦ What mix of new products, spiral upgrades and enabling technologies should we pursue immediately and every year thereafter?
◦ How do the various products relate to each other?
◦ What will be the timing and sequence of each product?
The answers to these questions should be driven primarily from:
◦ The comparison of the respective pro forma for each product
◦ Their combined pro forma rolled together
◦ Enabling technology availability and projections
IP should be:
◦ Considered like any other property (sell, buy, rent, trade, protect, etc)
◦ Organized in an inventory that clears shows the protection status and action items of the individual IP
The income from IP needs to be worth the cost of litigation to protect it
When licensing is achieved it normally provides (at best) only 10% of the value of the product
◦ At least 90% of the value is realized by the product producer
◦ How does the 10% value realized compare to the NPV of the R&D, marketing and IP investments to achieve it?
There are many other challenges of Product Management, including:
◦ Supply chain management
◦ Product warranty
◦ Product liability
◦ Configuration management
Normally will involve nearly every part of the business
Will have demonstrated participation of market sectors to assist in identifying capability gaps, partners, customers and near term opportunities
Will have demonstrated participation of outside partners: ◦ Technical development
◦ Business development
◦ Pro forma financial forecasting
◦ Product plan
Chairs are responsible for meeting the metrics of the pipeline: managing pro forma, coordination of resources for IR&D and marketing, coordination of stage gate process, development of product roadmap and partner relationships
Product lines are responsible to manage technical execution, B&P and technical customer interface
