Situation: A company’s goal is to replace an old, established market with new technology and, by owning the technology, to reinvent the industry. Given this aggressive goal, there is a temptation to go into volume production before establishing the cost advantages to make the technology profitable. The challenge is to establish disciplined, stable, qualified, scalable and profitable manufacturing. To accomplish this, the company must decide between alternatives as they cultivate new customers. How do you optimize your pipeline?

Advice from the CEOs:

• There are two sides of the market:
  • Mega-markets dominated by large corporations which have long lead-times and potentially huge payoffs; however, these markets present long payoff delays for the company.
  • Smaller, quicker markets with limited volume but which will offer rapid PO acquisition and proof of concept.
  • The question is how much effort to devote to which market.
• Look for early customers who are cast in your own light – disruptors who can help to catapult you into the marketplace
• The trade-offs are strategic vs. tactical opportunities.
  • The immediate tactical need is to generate cash to show that you can. This is the steak.
  • The strategic need is to seed a foothold in a mega opportunity – to show the potential to revolutionize the market. This is the sizzle.
  • Identify a killer app that will gain tactical advantage and cash and help prompt maturation of a strategic opportunity.
• Another CEO shared experience landing a large client.
  • They used a short, low cost pilot project to prove the concept to skeptical client staff. The client was surprised and delighted by the success of the pilot project. The pilot project was then articulated into larger projects.
  • Over time the company used incremental steps to gain a broad presence within the large company.
• Strategy recommendations:
  • Focus business development on selling killer apps.
  • Find low hanging fruit for quick proof of salability and to show a revenue ramp.
  • Small design wins exercise the machine.
• Is it possible to conserve cash to raise the impact of early wins to the bottom line?
  • Are all current staff during the next 12 months?
  • Early on, the game is business development – gaining key contracts and agreements with lead customers. Sales follows, with focus on the larger market. This may be 6 months to 2 years out. How many people are needed to focus on business development?

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