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.”