Value Propositions to Encouraging Adoption

© 2015 Robert McNamee & Andrew Maxwell

Dr. Robert McNameeManaging Director,

Innovation & Entrepreneur InstituteFox School of Business, Temple University

Dr. Andrew MaxwellDirector Bergeron Entrepreneurs in

Science & Technology, Lassonde School of Engineering

Afternoon Agenda

Introduction to Innovation Science

Value Proposition to Adoption• 12:45 Stakeholder & Barriers to Adoption• 1.00 Stakeholder & Barriers to Adoption Exercise• 2.00 Business Models & Enabling Adoption• 2.15 Business Models & Enabling Adoption Exercise• 3.00 Group Presentations on Barriers & AdoptionWrap up:• 3.30 Recap &Lessons Learned• 4.00 Networking & Decompressing

Innovation science

• Technologists may believe better technology = market success • However commercial success requires understanding:

– How will customers become aware of your solution?– How will they know it works? – What will motivate them to purchase?– How can you overcome user inertia (address concerns)?– How can you identify early adopters?

• Achieving commercial success requires understanding how different factors affect people’s decisions and behaviours

Innovation science requires a better understanding of people, not just technology and is a behavioral science

Steps in Canvas #2 (Phase II of TechConnect)

1. Identify multiple market segments for each application (value proposition) 2. Identify relevant stakeholders for each market segment3. Identify barriers to adoption relevant to each stakeholder4. Identify other constraints/barriers for that option5. Synthesize new approaches/business models to overcome barriers

TechConnect is about Divergence and Convergence

During Phase 1• Challenge assumption about application for a novel technology• Identify alternate jobs and value propositions• Develop frameworks to identify most promising applications

During Phase 2• Challenge assumptions about the market segment• Focus on changing user/customers’ behavior• Recognize barriers to adoption• Synthesize alternate ways to overcome barriers• Analyze context specific approaches to adoption

TechConnect Outcomes

Outcomes from the process• Identify additional or adjacent market opportunities• Inform technology Development• Include a plan to overcoming adoption barriers into both

technology and development plan• Alternate options preferred by different participants

– University technology transfer offices,– Inventor– Entrepreneur– Corporation– Economic development agency

TechConnect outcomes vary for individuals

University Technology Transfer Offices look for: • Licensing opportunities (revenues /reputation)Inventors look for: • Interesting applications for technology (uptake/ publications)Entrepreneurs look for: • Creating a viable and sustainable business (fundable/scalable)Corporations look to: • Enhance current offering and leverage existing resources

All participants benefit from a better understanding of the technology commercialization process

8

Maxwell’s three laws of innovation inertia

1. There is a natural tendency for organizations to keep doing what they’re doing and resist changes. In the absence of a force, they will continue to do what they’ve always done.

2. Larger organizations require more force to change what they are doing than smaller organizations.

3. For every force there is a reaction force that is equal in size, but opposite in direction. When someone exerts a force on an organization, he or she gets pushed back in the opposite direction equally hard.

Motivation to adopt2

• Perceived benefits can include…– Saving money, increased utility or enjoyment– Increase reliability, safety or environmental performance– Reduces risks

• Perceived costs can include…– Acquisition costs, switching costs, – Uncertain outcomes/reputation– Increased technology, financial or operational risk

• To motivate a change in behavior you can increase benefits and reduce costs, and demonstrate this

1. Where do you add value?(Application / market segment)

Increased efficiency for internal combustion engine

After market parts

OEM parts supply

Direct deal with fleet operator

Instructions• Start with understanding the

application• Identify fundamentally different

market segments that might see the value proposition

• May include segments you need to to validate, or gather more information on

2. Who are stakeholders?

Automobile owner (individual or fleet) Distributor /

Service Centers

Manufacturer of device

After market parts

OEM parts supply

NHTSA/EPA/CARB Fuel Supplier

(comple-mentary)

Insurance Agencies

Auto media/Consumer reports

Auto-maker manufacturing

Auto-maker technical team (primary)

Auto-maker Dealers

Auto-maker management and marketing

Instructions• Start with understanding each

market segment• Identify fundamentally different

individuals in each segment who see the value proposition

• This can include: users, economic buyers, technology buyers and influencers

• Each will have different motivations and concerns when adopting technology

• There may be some common stakeholders between segments

3. What are barriers to adoption? (Benefits vs costs)

Perceptions of costs vs benefits (major)

Reliability, maintenance costs

Ease of installation/ compatibility

Technical risk

Uncertainty about long term effects on other parts of car Performance

over time

Not invented here

Liability concerns

Instructions• Start with understanding each

stakeholder• Identify how they perceive cost

and benefits• Consider five types of barriers:

– Economic– Technical/operational– Personal risk– Market/Financial risk– Reputational risk– Behavioral

After market parts

OEM parts supply

4. Other constraints? (Internal: organization, resource) (External: market, environement)(Contextual: building awareness)

Safety testing (time/cost)

Warranty issues

Product liability insurance costs

Environmental and performance regulations Competitive

environment

CAFÉ fleet regulations

Instructions• Identify internal, external and

contextual factors that might influence perception:– Internal constraints include

existing business strategy, current organization and resources

– External constraints include technology, market, competition, legislation, shareholder

– Contextual factors include challenges in building awareness and overcoming liability of newness

After market parts

OEM parts supply

5. Identify how you can modify business, revenue and innovation factors to

overcome barriersAddressing barriers to adoption, consider • Can you increase the perceived

benefits or reduce the perceived costs?

• Can you change the business model (i.e. form factor, channel partner)

• Can you change the revenue model (reduce initial cost or financial risk)

• Can you embed features in the technology or revenue model (increase observability, trialability, compatibility)

5a. Strategic options to stimulate innovation adoption

Embed capability to record fuel savings

• Relative Advantage – better than the alternatives it will replace

• Compatibility – easy for user to assimilate innovation

• Complexity – easy for user to learn to use the innovation

• Trialability –easy for a user try out the innovation

• Observability – how readily can a user see the results /

• Brainstorm alternate ways in which you can modify the technology, business model etc.

After market parts

OEM parts supply

5b. Business model options to stimulate adoption

Embed capability to record fuel savings

• Integrate into existing offering • Embed compatibility with current

practice • Integrate into existing supply chain• Reduce installation/integration

complexity• Change form factor for market niche• Focus on one performance dimension • Integrate into partners offering• Make it easy to measure performance• Brainstorm alternate ways in which

you can modify the technology, business model, etc.

Design device as a clamp on system, enabling end users to install

After market parts

OEM parts supply

5c. Revenue model options to stimulate adoption?

Embed capability to record fuel savings

• Offer for free (trial) before you have to purchase

• Turn a capital purchase into a service agreement

• Charge per use or for savings made• Steeped charges for increasing use• Offer basic service for free, with

premium options• Integrate with other product or

service offerings• Brainstorm alternate ways in which

you can modify the technology, business model, etc.

After market parts

OEM parts supply

Design device as a clamp on system, enabling end users to install Have a fuel

supplier offer for free as part of a fuel supply contract

Licensing vs. venture creation as commercilization alternates

Factors that favour new venture creation• Technology is sold as a complete solution • Market for technology is growing, lacks standards and is not

dominated by major player• Technology and business development costs are not excessive• Technology likely to disrupt the market• Required technical and management expertise and resources

available locally (and not controlled by competitors)• Inventor wishes to play critical role• Time to product launch is less than 12 months• Identified early adopters• Risk capital readily available

Closing Thoughts• TechConnect process deconstructs the technology

commercialization process into a series of divergent and convergent stages

• Highlights importance of proprietary technology• Embeds market facing questions into each process

(speeds up time to market or fails fast)• Helps inventor identify and choose options • Asks important questions to ask at each stage• Helps participants better understand technology

commercialization process (technological/behavioral)

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