Situation: A company has developed a disrupting technology that allows OEM manufacturers to produce high-end machines at a fraction of their current cost. The challenge is that the company does not possess the capacity to reach producers of high-end machines.  The CEO seeks advice on how to efficiently focus channel development. How do you build channel sales?

Advice from the CEOs:

• The dilemma is having a major disrupting technology in a market with a strong division between OEMs servicing the low/medium-end market and those servicing the high-end market.
  • This technology collapses the division between the low/medium and the high-end markets.
  • This shift disrupts the current business models of either group of OEMs, as well as their technology development plans. This is the source of resistance.
• Therefore, the most promising channel development partner is either:
  • A low/medium-end OEM who is also a disrupter and who has the capability to develop a high-end sales and marketing effort; or
  • A high-end OEM that knows the market but who’s current strategy is failing and needs an entirely different solution to revive their prospects.
• The near-term task is to gain market capability – both manufacturing and marketing/sales – and to use this capability to gain early market acceptance.
  • If, over the next 12 months, the company can begin to impact the market shares of the high-end OEMs, this is the surest way to gain their attention. Once the company starts to gain share, a likely outcome is that one of the high-end OEMs will buy the company to lock up their IP.
• Another company used a similar strategy several years ago.
  • They entered a new market by way of a business collaboration with a high-visibility partner.
  • In one year, they took 30% market share from the market leader through this collaboration.
  • As a result, the market leader bought them because “it was less expensive to buy you than to spend the marketing dollars that we would have had to spend to compete against you.”

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