Getting to Revenue

Phyl Speser, J.D., Ph.D,, CEO
Foresight Science & Technology
www.foresightst.com
401,273.4844, ext. 35,
Phyl.Speser@ForesightST.com

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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)
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Competitive Openings and Competitive Advantage

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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. )
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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

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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?

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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

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Product Innovation
Stage
Bundle of Features
Standard User
Interface
Process Innovation
Stage
Eliminate Steps
Improve Reliability
Improve Efficiency
of Resource Use

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Bohn Knowledge Level Utility ≈ Value
Skills/Know-how UMPF
Extension

Extension

Enabling
Core Strategic
Extension

Competing Enabling

Time

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Ease‐of‐Use

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Button C lothing
Manufacturer Manufacturer

Button C lothing
Manufacturer Manufacturer

Market
Force

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HEV Batteries

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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

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Foresight Advanced Energy
Storage Portal

http://batteries.foresightst.com

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Ease of Use

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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

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Market Entry Risk
from Bacon & Bulter, Planned Innovation

new
new

Product
modified

modified
Market
existing
existing

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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)

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Distribution without Market Force
or Barrier

Distribution with
Market Force Market Force
and Barrier

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Trade-offs
and
Concerns
affecting
Metrics
Matrix

Technology’s Yields on
Metrics

Relationship
Needs Importance
Matrix
of Needs

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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

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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

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Is it in a Golden Triangle of Competitive Advantage Sustainability?
If so file a Provisional and test market.

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Is There a
Competitive
Opening?

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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

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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

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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

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Ask Experts who are the Experts
Five to Seven Experts
Same Questions
Cycle Answers to Gain Consensus
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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

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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
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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

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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

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CUMULATIVE REVENUES

0$

Idea Basic Applied Product Process Market
Research Research Development Engineering Introduction

TIME

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34% 34%

16%
14%

3%

Innovators Early Adopters Early Majority Late Majority Laggards

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Barriers to
Entry

Stability
Of Rate of
Rivalry
Dominant Change
Design

Concentra-
tion

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1) Product
2) Price
3) Promote
4) Place

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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
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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

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Most
Feasible
Customer/Target
Market Capability
Fit Fit

Product/Maturity
Fit

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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
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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
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Frost and Sullivan
Freedonia
Gartner
Foresight T2+2™
Entrepreneur

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Let’s try an expert, shall we?

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Hoovers
Foresight T2+2™ Entrepreneur
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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

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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

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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

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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

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Focus on the Significant Risks

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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

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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%

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There is always a reason
for NO
Understand it
Respond to it
Follow-up, Follow-up,
Follow-up

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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

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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
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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
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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
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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

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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

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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.”

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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
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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)

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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

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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

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Develop a straw man
Float it then try it
Adapt it to reflect
comments and
reactions
Continue to no
adaptation is needed

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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

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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

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Product Advantage

Market Orientation Launch Tactics New Product Performance Organizational Performance

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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

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ore

Ease‐of‐Use

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• 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

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