Innovation In High Technology (2/2)

This document may contain information which is confidential and can not be reproduced --- Guy Laliberté, 2009

Guy Laliberté, September 2009

Innovation in the High Technology IndustryOverview -- Session 2 of 2

2

Innovation in the High Technology Industry


1. Brief review of Session 1

Brief Review of Session 1

Competitive Volatility

Market Uncertainty

Technology Uncertainty

Business Development of

High Technology Innovations

Competitive Volatility

Market Uncertainty

Technology Uncertainty

Business Development of

High Technology Innovations

Maintaining InnovationCreative Destruction Corporate Imagination Expeditionary Marketing Culture of Innovation

Access to Resources

Funding Management Expertise

Being Market-OrientedAcquire Disseminate Use Information

Relationship MarketingPartnering with important stakeholders

Effective Cross-Functional Marketing / R&D Collaboration

Enhanced Odds of Success

Time

Revenue

Pragmatists Conservatives ScepticsVisionairesLead Users

The

CH

ASM

Gap #1

Gap #2

Gap #3

Time

Revenue


The

CH

ASM

Gap #1

Gap #2

Gap #3

3



Technology Adoption■ Product Life Cycle (Based on G. Moore “Crossing the Chasm”)

Time

Revenue

Early Majority Late Majority LaggardsEarly

AdoptersLead Users

■ Innovators Lead Users : Technology Enthusiasts; They want to try it just to see if it works…

■ Visionaries Early Adopters : They have the insight to match a new technology to a strategic opportunity

■ Pragmatists Early Majority : They fell that some Risk may be taken, but with a good safety nets in place

■ Conservative Late Majority : They are Conservatives that are against discontinuous innovations

■ Sceptics Laggards : They are Sceptics...

4



Technology Adoption■ Gaps in the Product Life Cycle

■ Gap #1 : The Early Adopters talk to the Innovators ■ Gap #2 : The Late Majority talks to the Early Majority

■ Gap #3 : The Laggards listen to the Late Majority

■ The CHASM : The Early Majority does not talk to the Early Adopters

Moving from one type of adopters to the next one

Time

Revenue


AdoptersLead Users

The

CH

ASM

Gap #1

Gap #2

Gap #3

5



■ Gap #1 What ?

The Early Adopters talks to the Lead Users , still Gap #1 occurs. Not easy to cross but at least they talk so the message is past...

Why ?Hot technology products cannot be quickly translated into

major new benefits Esperanto – sorry, only for the enthusiasts Desktop Video Conferencing took years to be used and only by a few people Plastic bicycles - same

Business process problems exist to cross Gap #1 Big internal fights Everybody thinks they have the answer but no budget…

How ?To cross Gap #1 You need to enable a “strategic leap forward”…The Early Adopters must have a ROI to buy They do not buy technology,

they buy a product that will give them an advantage.

Technology Adoption Before the CHASMGap #1


6



■ Gap #2 What ?

The Late Majority talks to the Early Majority, still Gap# 2 occurs.

Why ?The Early Majority is willing and able to become technically competent,

the Late Majority is not. Will 3D television make it ?

How ?To pass Gap# 2 you need to ensure user-friendliness, and an ease to

adopt Must be easy to buy and use (KISS)


Technology Adoption After the CHASMGap #2

7



■ Gap #3 What ?

The Laggards listen to the Late Majority for economic reasons big enough to make them change.

Why ?The laggards are the last to take on a new technology. They are

important for the economical success, but not for the technological development.

They finally bought their first CDs when no new LPs were available on the market.

How ?To pass Gap #3 no other choices must be available on the market and

a clear economic advantage must compensate for a “very difficult technology shift”.


Technology Adoption After the CHASMGap #3

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■ The CHASM Early Adopters VS Early Majority

They talk about the same technology but not with the same things in mind.

Technology Adoption During the CHASM

Early Adopters• Fastest product• Easiest to use• Elegant architecture• Product price• Unigue functionality

Early Majority• Largest installed customer base• Most third party supporters• De facto standard• Cost of ownership• Quality of support

They want a ROI Must provide them a CLEAR advantage

They want to buy from the market leader (but the market does not exist yet Catch 22 !!!)

Pragmatists Conservatives ScepticsVisionairesLead Users The

CH

ASM

Early MajorityEarly

AdoptersTh

e C

HAS

M

Note :The CHASM exists for disruptive innovations and not for continuous technology innovations.

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1. How to cross the CHASM ?■ Use the D-Day strategy

■ Go for a bridgehead In Normandy first (select a market niche to target)■ You will find resistance be prepared before you begin with the required “tools” to win■ The Victory Parade may be a long way but if you are successful with your penetration in your

initial niche, you will cross the CHASM and get to the Early Majority market

■ Sales-Driven or Strategy-Driven ?■ Being sales-driven instead of strategy-driven at first may be fatal and you will only help

someone else cross the CHASM Concentrate your business development efforts and use a step by step approach !!!

■ What to do ? Target the point of attack – isolate target customers and their reason to buy (FOCUS !) Assemble the invasion force – use the whole product principle and choose allies to realize

this Define the battle – create the competition (if there is none, you still need one) and position

yourself (the Early Adopters are looking for a standard so you need to be compared) Launch the invasion - select the distribution channel, set the “right price” and move fast in the

niche you have selected.

Technology Adoption

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Now, the surprise…Technology Adoption

■ In the 20th century, the time between standards was long enough that almost all members of the population would have adopted the new technology before the new standard appeared. A new audio media standard used to emerge every 10 years (with a 5 year overlap) The time between the VHS and DVD was even longer 18 years

■ Today, the time between generations of new technology is short enough and the overlap is now long enough that it is possible to skip one or more iterations. In 2006, movies were still being released on VHS and DVD as well as HD-DVD and Blu Ray.

Three years later, new releases were no longer available on VHS or HD-DVD but they were available for digital download through DVRs, IPTVs and, of course, the internet.

With several standards to choose from, there is no pressing need to adopt a new standard. Instead, it becomes a choice of what to adopt and when to adopt.

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■ “The CHASM” is changing highly industry dependent...

Technology Adoption

Classical Early market VS Mainstream Market

Early Market

Main Stream Market

The New Reality The CHASM may have moved depending on your industry !!!!

Main Market

Possible Market (?)Lead Users

Early Majority

Late Majority Laggards

Early AdoptersLead Users

Early Majority



Early Majority



The

CH

ASM


AdoptersLead Users

The

CH

ASM


AdoptersLead Users

The

CH

ASM

2.5% 13.5% 34% 34% 16% 2% 48 % 29% 16% 5%

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■ Evolution of “The CHASM” (1/3) In the last 10 years, people have become more

and more tech-savvy People are more comfortable with technology

Adoption of technology is faster today thanks to Internet, Twitter, Facebook and other social medias.

The Early Adopters area of the curve is today much larger 50% of the total market is now before the CHASM.

Technology Adoption

Main Market

Possible Market (?)

Lead Users

Early Majority



Early Majority



Early Majority



The

CH

ASM

50% of Market 50% of Market

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■ Evolution of “The CHASM” (2/3) Since new technologies is launched more often

and people adoption is faster, it is also replaced faster.

A new technology rarely has the time to become the «standard» so the leap from Early Adopters to Early Majority is more difficult.

Competition appears when you are still working the Lead Users or early for the Early Adopters the market is shared faster between the competition.

To take the market, you must prepare your penetration strategy considering a small window of opportunity. The Lead Users must be “internal” to prevent getting the word out Requires large budget…

Technology Adoption

Main Market

Possible Market (?)

Lead Users

Early Majority



Early Majority



Early Majority



The

CH

ASM


14



■ Evolution of “The CHASM” (3/3) To win the market, you must prepare your

penetration strategy considering a small window of opportunity to achieve it.

The classical strategy to target a niche and grab other niches after that may no longer be possible since adoption is so fast You may have to penetrate “the market” and not only a niche.

The Lead Users must be “internal” to prevent getting the word out Requires large budget…

Competitors will jump-in soon after you are “visible on the market”

Crossing the CHASM now represents huge investments and is riskier for a smaller portion of the market still available to be won. Competitors will fight for it and new technology will appear before the Late Majority can catch up.

Technology Adoption

Main Market

Possible Market (?)

Lead Users

Early Majority



Early Majority



Early Majority



The

CH

ASM


Is it worth it for start-ups ???A bigger partner is often required

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1. Aligning R&D & Business Development / Marketing Efforts■ The product development cycles must be accelerated because there is less time

before the complete product cycle is completed. Often, it is a good strategy to use 3rd parties technology to fasten the process as much as possible and reduce risks.

■ Synchronize your product development efforts with your market development efforts. When you develop the technology for your product, you must also develop your market in order to prepare your penetration. Actions on the market must be done before you actually have the product completed and ready to sell it.

■ “Innovation” must be represented at the executive level of a company. Innovation is more then technology developed by engineers and a CTO is a clear message for investors. This allows coordination between engineering, manufacturing, business development and marketing A key position but difficult if the “culture of innovation does not exist in the company”.

Conclusions and a Few Key Remarks (1/2)

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2. Marketing■ Branding

■ A strong branding is required to ease market penetration and allow client retention.

■ Social Medias■ Use all social medias on the web to help your market be aware of what you are

doing. The difficulty is to do its soon enough but at the same time not too soon.■ You must analyze periodically the social medias to know what is been said

about your company, group and products. Use those medias to influence perceptions and be close to your clients (customer proximity).

3. Market Understanding■ You must understand your market and this takes time and efforts. If your

“beachhead” is very niche or is only a specific program (governmental, defense), you must work on the customer intimacy to influence his decisions toward your solution.

Conclusions and a Few Key Remarks (2/2)

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■ Marketing of High-Technology Products and Innovations■ Author: Jakki J. Mohr, Sanjit Sengupta, Stanley Slater

■ Crossing the Chasm■ Author: Geoffrey A. Moore ■ Articles by : Eric von Hippel, Geoffrey Moore, James Utterback and Clayton Christensen

■ Strategic Business Planning■ Author: Geoff Linton

■ Diffusion of Innovations Authors: Everett M. Rogers

References

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