Blue Star Coffee, 1071 S. DeAnza Blvd, Cupertino 408.863.0707
Dr. Janusz Bryzek
Marketing Strategy for High Technology Companies with Disruptive Technologies, or Why Smart Engineers Fail in Bringing Advanced Products to Market.
Many high technology developments qualify as discontinuous innovation, which is defined as one that requires a change of customer behavior. There are two generic types of discontinuous innovation: Paradigm shock (e.g., PC replacing a typewriter) Application breakthrough (e.g., voice recognition replacing service personnel) On the opposite end there are continuous innovations, which do not require customer behavior change, e,g., using a new toothpaste. As Silicon Valley marketing guru Regis McKenna once wrote, "Marketing is Everything" (and not the technology, engineers). It is thus marketing flow that most often defines a product (and often company) market failure. Selection of a suitable marketing strategy is thus extremely important success factor for high-tech startups. For a continuous innovation, the demand for products gradually increases and after reaching maturity, the demand gradually decreases, as customers already know what to do with the product and how to use it. For a discontinuous innovation, however, there is a gap (called "chasm") in customer demand. After attracting small groups of "techies" (buying for the sake of having the newest toys) and visionaries (having an idea for a new business based on new technology), the demand evaporates as mainstream customers shy away from the product. Classical marketing technologies failed to attract this group of buyers with deep pockets. Companies that succeeded in crossing the chasm, however, often reach an avalanche growth of sales, defined as "tornado". Some of the technologies stuck in Chasm include voice recognition, artificial intelligence, electric car, DSL, high definition TV, smart cards (in the US) and so far majority of MEMS technologies. Some of technologies that died in Chasm include gyroscopic mouse, Newton PDA, Lisa PC and PC Junior. Based on market research of large number of companies with discontinuous innovation, Geoffrey Moore (initially at Regis McKenna Inc., a leading marketing organization in Silicon Valley and later at The Chasm Group) developed a strategy for crossing the chasm (summarized in his books "Crossing the Chasm" and "Inside the Tornado", A Harper Business Book, 1999). This presentation summarizes Moore findings. It is focused on developing a strategy to cross the Chasm. This strategy requires focusing initially all the company resources on one application in one market segment ("pin") and becoming a dominant supplier (a "gorilla") in this space. After accomplishing this goal, Company should develop and dominate other pins: either the same application in different market segment or different application in the same segment. After becoming a "gorilla" in sufficient number of pins, the "tornado" starts, destroying the old technology and establishing the new one, returning the overwhelming market share to the Company. Few examples of Tornadoes include desktop publishing, word processors, spreadsheets, Windows, microprocessors, cell phones, E-mail. Tornadoes created 11 new Billionaires in recent four years! The presentation then introduces a concept of a "whole product" and its requirements for increased chance of dominating the application. It follows to define a recommended marketing strategy during the Tornado. Tornado in turn leads to Main Street, a mature market development phase that requires again adaptation of a new marketing strategy. About the Speaker Dr. Bryzek got his MSEE in 1970 and Ph.D. in 1977 from Warsaw Technical University. He completed the executive management program at Stanford University in 1987. He moved to Silicon Valley in 1979. Between 1982 and 2000 he cofounded five successful Silicon Valley high-tech companies based on MEMS technology (MicroElectroMechanical Systems), all introducing products based on disruptive technology. His newest startup founded in March 2000 focuses on optical networking market. One of his technical greatest achievements was the 1981de