Understanding+markets+for+IP,+know-how,+and+technology.


 * Module 1: Understanding Technology Markets**

Technology markets are fast paced, competitive and knowledge intensive. They are subjected to: Rapid change towards more complex technologies; Frequent new product introductions and enhancements; Evolving industry standards; Changes in customer requirements towards more sophisticated technologies; Continued shortening of product life cycles; Shortening of technology adoption cycles;

Thus, the business will suffer if a company is not able to respond rapidly to technological and commercial changes in its industry. However it is not straightforward task. Evaluating the new technologies and the market response to the same is a process continuously exposed to the challenges like: Very high uncertainty in market forecasting; Estimating future revenues to specific technology is difficult, thus decisions have to be made with limited knowledge; Maintaining balance between risk avoidance and fostering innovation (innovation is risk intensive process); Complexity of the routes to exploitation of new technologies;

The following link offers more extensive reading about the understanding of the markets for new technology innovations.

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In this complex approach towards understanding of technology markets, identification and evaluation of possible markets for new technologies is proposed as first step.  For that purpose McKinsey’s well known nine box matrix, first developed for GE is used. Actually the matrix was originally invented for the evaluation of corporate strategy, but authors of this paper have recognized that it could be also of use in the identification and evaluation of innovation's markets. The matrix matches the most attractive market opportunities with greatest strengths of the company. Market attractiveness criteria include market size, rate of growth, the urgency of customers’ needs and competitive intensity. Strength of the company is presented by relevance of the company’s technologies and products to the market, the company’s knowledge of the market, the extent to which the company has demonstrable prior experience in market, and its access to target customers and other key contacts in the market.

The outcome of the evaluation is short list of potential markets scored highly on both sides. This is iterative, not linear process. The second step is understanding of current market status and its likely evolution. The goal is targeted market to be examined in more details, in order to get clear picture where the market is on the technology adoption cycle, market's current structure, value chain and ecosystem. The technology adoption cycle is important because the needs and demands of the market in the early stage are different than the needs and demands of the mature (saturated) market. Accordingly different strategy and different business model are required for each stage. Market structure, value chain and ecosystem are related to the participants of the market, their position and mutual interdependence.

The third step is identification of target customers and their still unmet needs. Here, it is distinguish between the core needs and buying needs. <span style="color: #000000; display: block; font-family: Arial,Helvetica,sans-serif; font-size: small; text-align: left; text-decoration: none;">The final steps are underspending of the competitors and competitors' strategy as well as understanding of other market participants like suppliers, channel partners, media contacts, industry analysts, investors and others.

<span style="color: #000000; display: block; font-family: Arial,Helvetica,sans-serif; text-align: left; text-decoration: none;">Analyzing the behavior of the consumers, or the psychology of new product adoption J. Gourville in his paper //“Eager sellers and stony buyers: Understanding the Psychology of new-product adoption”// published by Harvard Business School Publishing Corporation in 2006, implies that companies create value through product change, but they capture the value best by minimizing behavior change. In other words the consumers, or at least the majority of them, are not very eager to change their habits in favor of adoption of new technologies.

<span style="color: #000000; display: block; font-family: Arial,Helvetica,sans-serif; text-align: left; text-decoration: none;">A very nice 2 by 2 matrix visualizes the relation between product change and consumers' behavioral change. Accordingly the innovation products are categorized as: <span style="color: #000000; display: block; font-family: Arial,Helvetica,sans-serif; text-align: left; text-decoration: none;">Easy sellers – Limited product change and behavior change <span style="color: #000000; display: block; font-family: Arial,Helvetica,sans-serif; text-align: left; text-decoration: none;">Sure failures – Limited product change, significant behavior change <span style="color: #000000; display: block; font-family: Arial,Helvetica,sans-serif; text-align: left; text-decoration: none;">Smash hits – Significant product change, limited behavior change <span style="color: #000000; display: block; font-family: Arial,Helvetica,sans-serif; text-align: left; text-decoration: none;">Long hauls – Significant product and behavior change