A couple of weeks ago, shortly after I had participated in Fraunhofer’s AHEAD program (to learn more, click here) as a speaker and coach, I came across a short Linked-in article by the head of the program that read as follows:

Dr. Peter Keinz stress testing AHEAD teams with regard to their current market insights. Technology push means finding the nails (pain points / use cases) for the hammer (technology) built by Fraunhofer-Gesellschaft. We have shown a success rate of 39% in the past for this very approach.

What caught my attention wasn’t my name being mentioned in that statement ;-). Actually, it wasn’t at all the statement itself, but rather the very first comment to it:

Blue sky research excluded, what about customer/user oriented development efforts? While I am aware of the good work that Fraunhofer and many other RTOs do, this statement sounds like trying to find a problem/market need for a technology to address. For me, it should be the other way round: Problem first, then develop the tech for it. I have seen this being a big problem for instance in SMEs trying to get funding or to land a customer…even more (but that’s another point) when they mistake the technology for the solution/product. Key learning: Know your customer and their customers.

The author of the comment raised an interesting question: What should be the starting point for high-tech venture projects: the problem/market need or the technology/solution? To many of you, this question might sound trivial. Today, hardly anyone out there would doubt the necessity for entrepreneurs to get to know their customers first, and then try to develop a solution that satisfies their needs. Famous methods and concepts like the lean start-up approach, customer development, customer-driven new product development, rapid prototyping, etc. are backing up the case of the problem/market need first paradigm. And the advacates of this idea are right: One of the biggest dangers of “blue sky research” is to develop something that actually nobody needs. There’s plenty of (more or less) scientific studies out there pointing to this phenomenon as major reason for high-tech ventures to fail. Scientists – that’s the basic notion – tend to be in love with their technology, focus on its features and functionalities instead of the benefits it delivers to potential users and “mistake…{the technology}…for the solution/product”, as the author of the comment above had put it.

I agree with most of the above said. I have experienced those phenomena myself a thousand times. And still, I do not fully agree with the claim made above: It does not always have to be problem/market first. During my work as a consultant/coach to “science-preneurs” of various organizations (research facilities like CERN, technical universities, technology-driven corporations and start-ups/spin-offs), I have seen so many situations in which it made perfect sense for the venture teams to follow a tech-push/technological competence leveraging approach (blogpost on the differences of these approaches is yet to come), i.e., start with their technology.

Take CERN for example. The European Organization for Nuclear Research is a rich source of top-notch, state-of-the-art technology. The scientists there do R&D in many different fields, ranging from intermediate-temperature superconductors and radiation-hard CMOS sensors to AR devices for their maintenance staff. While they excel at R&D, CERN will usually need an industrial partner to take care of the production of the new solutions, since CERN does not have manufacturing capabilities themselves. But as an NPO that will only purchase small lots of those highly specialized solutions, CERN is not the type of customer industry is looking for. That’s why some departments at CERN have started to do Technological Competence Leveraging projects: By searching for and presenting alternative fields of application to the solutions they have developed, CERN tries to convince industrial partners to collaborate. The message is clear and the rational is simple: If you help us develop and manufacture the technology in question, you’ll not only sell it to us; there’s plenty of markets out there that call for a similar solution! And you’ll be the one to serve them!

Another typical situation that calls for a Technological Competence Leveraging approach is the following: A couple of years ago, a large, world-wide operating OEM from the automotive industry approached me with the following request: “Until 2025”, he said, “we’ll have to generate 20% of our revenues in markets other than the automotive industry”. The company’s strategy is to decrease the dependency on their current target market, the automotive industry. For the OEM, it made a lot of sense to look for alternative business opportunities they might be able to exploit, using their core technological competences.

There’s many other reason calling for Technological Competence leveraging approaches, beyond the two cases described above: Some companies simply want to increase their return on investment in R&D by leveraging their technologies into new markets; some companies are in the need to better utilize their manufacturing facilities by serving additional, new markets, allowing them to increase their production and sales volumes. Sometimes, companies simply need to attract external money and therefor want to showcase the potential of their technologies in terms of widespread business opportunities to investors.

Independent of the motives, empirical evidence shows that many companies prefer the “solution first” over the “market need first” approach. From a managerial perspective, taking an already existing technology as point of departure and doing market research to find alternative fields of application is preferred over starting from a need and trying to develop a corresponding solution from scratch. Market research is usually less risky and less costly than R&D. Consequently, most managers would opt for Technological Competence Leveraging.

Having said all this, please don’t get me wrong here: Irrespective of whether you start with the problem (the market need) or the solution (the technology): In any case, you’ll have to learn about your potential customers; you’ll have to tailor the solution to their specific needs. There’s no way around that! Identifying new markets to your technology is only the first step, to successfully enter those new markets, you’ll have to do your homework! I’ll soon blogpost on some important steps to do so.

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