In the third post of our blog post series, ENGINE’s Brian Reuter and Linda Shea addressed “Gauging Customer Appeal and Acceptance,” based on a webinar that ENGINE Insights recently hosted, “Achieving Sustainable Growth Through Adjacent Markets.”
In our fourth post in this series, Brian & Linda will take you through the fourth part of this webinar, “Relatedness to Your Core.”
So let’s talk about leveraging your core competencies. The importance of this aspect it comes into, do you have expertise to leverage into the new opportunity. So there’s different ways that you can uncover whether you have expertise or a core competency that you can leverage in a market that you’re looking at. That becomes really important because if you don’t have enough expertise that you can bring to bear, then it becomes a lot more risky to make that move. In fact, the less expertise, the less competencies that you can bring, the less of an adjacency move, it really is and the more of a new venture it is.
So there are different areas you can look into. So one is, you can take a look at customer, right? How different or similar are the customers in the new market, compared to those in your core market? Same thing with competitors. Are the techniques that you would have to use to compete against them similar in the new application to your core market or you’re going to have to do things in a new way that you’re not familiar with? How about the distribution channels?
Can you use the same distribution channels or are the distribution channels in the new opportunity, at least similar to ones that you have strong knowledge of or are they very different and there’s going to be a big learning curve? Then same thing on pricing and margin. Are their pricing strategies similar, or are the margins similar as the, not so much the similarity, the margin but the infrastructure and the pricing strategy and everything else that goes with achieving your margin, is that similar? Is that something you know about?
Does your business have expertise or does it require you to do new things that you don’t know today. So that’s the kind of things we want to understand when we’re looking at the relatedness to your core business or the expertise and competencies that you can leverage into the new opportunity. Like I said before, the more competencies and expertise you can leverage, the better your chances of success in that adjacent move. So there is one particular type of adjacency where you leverage a singular capability that I want to highlight.
We actually have developed a framework for pursuing these kinds of opportunities because they’re pretty common, and that is when you have technology as a singular capability. So oftentimes what will happen is a company will develop a solution for a particular need they discovered with their customers. Then after they’ve developed it, they realized that the technology must have application in other areas they just don’t know about or are not familiar with.
So what they want to do then is push that out to new applications, new opportunities. So this is the process that we’ve developed that’s been highly successful that we’ve used over and over again. The first step is, define that technology benefit. What we do is develop a technology brief basically that describes the technology, its function, its benefits, its features, its performance, and what the competitive advantages in the targeted market.
Then we get that prepared because what we want to do is share that with some experts, but before we share it with the experts, we have to identify experts in a variety of different markets and applications where we think the technology would have application or where it seems logical that it would. We start by brainstorming, but then as we start brainstorming and talking to other experts, those experts we talk to will lead us to others through networking, and just by looking even at the background of an expert, oftentimes, you can see the variety of areas that they’ve worked in that triggers new ideas of where the technology could be deployed.
So then the next step is to start interviewing those people that we’ve uncovered. They might be academics, they might be consultants, they might be people actively working in a market, in a technology, in an area of interest. What we need to do is go identify them and have some interviews with them. So the first thing we’ll do is share that technology brief that’s been created to ensure that they understand the technology and what it does and what its benefit is and then go through an interview process with them, to brainstorm with them a bit, but more importantly, find out where they’re aware applications they’re aware of that they believe your technology will have not only applicability, but also a competitive advantage.
That’s the real key, as in those interviews, driving down to those areas where the experts you’re talking to believe that technology can offer a competitive advantage, and then understanding why. Then when we’ve identified all those potential applications, there might be 10, 15, 20, I’ve even uncovered 40 in projects before, but then we have to then apply that market attractiveness criteria to it, and that’s a great Way to whittle the list down.
So we take a look at those, say 20 opportunity areas we’ve discovered, and then at least do the market attractiveness filter on there and that often will narrow it down very quickly to the top three or five opportunities, and then we can do a next phase of digging into the customer angle. So that is a description of the process. Linda has an example she’s going to share where we’ve actually implemented this for a client.
Thanks, Brian. The client that we were fortunate to work with is a client who makes lab equipment. Its real time remote monitoring of test lab equipment and clearly, as we started our conversations with this client, we understood very quickly that they were faced with a time crunch. Their goal was really to identify the most attractive markets that they could pursue, and to do so before the competition really seized the opportunity.
So we turned to our expert network, we developed a technology brief with our client. We then shared that technology brief with our experts. Choosing experts that represent different industries to gain their perspective on market applications, competitive advantage, just to name a few things. Interestingly enough, we had a tremendous response back from these experts, who were able to help us identify profiles for basically what ended up to be five opportunities, five industry applications that we could take to the client and taking those to the client, this allowed us to then present them with some options to choose from, to really think about where they thought they could have their greatest opportunity in entering those spaces.
Looking at the use case, looking at things like likelihood of purchase, and the client chose one industry, the healthcare industry. They implemented or they moved forward with their adjacency move, and they’ve been quite successful in what they set out to accomplish. So much so that they came back to us about 12, maybe closer to about 18 months later, looking to see if there wasn’t yet another opportunity to continue to move forward in the same space.
So certainly, there are lots of different tools and techniques to use. Certainly leveraging experts and understanding their expertise. Using their guidance to help create a short list of scenarios, opportunities, applications, where the solution can be applied can be very, very effective in helping you not only create that shortlist, but also helping you make the decision as to the target area that you’re going to pursue.
One other point I’ll add to that too, that people might be wondering is well, how do you find all those experts to interview. There’s different ways of doing it. Similar to the hard to reach customers that we talked about earlier, where we talked about the Waldos and that sort of thing, another way too, is, I mean, we’re fortunate enough at Engine that we have built a panel of experts. We’ve got almost 6000 vetted experts. So it makes it very easy for us to tap in and identify them either through being able to do in depth interviews with them or in the case of the example that Linda cited, we did a survey with our expert panel which identified a lot of different applications.
So those are kind of a couple different ways you can tap into experts. The way we described before with the hard to reach customers or through a source that has experts like Engine that we can tap into quickly.
Keep reading to find out more about our fifth and last post in this series, where Brian and Linda address “Putting It All Together!”
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