In the previous part of this Q&A, Newport Board Group partner Pete Savage discussed how investors and executives should be disciplining themselves to think about long term issues. He also covered why intellectual property strategy is a key issue for emerging technology companies.
In this article Pete goes on to explain more about what high tech product companies should be focusing on based on his extensive experience with multi-disciplinary technology companies and high growth companies.
How should a company go about finding a strategic customer?
One of the main benefits of creating strong and intimate relationships with a few leading customers is to avoid getting locked into a product vision too early in your evolution. Many entrepreneurs fall into the trap of developing for today’s market—instead of tomorrow’s. Over focus on the current market can give competitors the opportunity to jump ahead of you.
Getting a proof of concept or pilot product in front of a potential strategic customer is a key early test of your product development plan. Large, demanding, sophisticated companies you want as strategic customers will rarely hesitate to explain what they want to buy from you—which may differ from what you want to sell them! This will be an early test of whether your value proposition to the market is basic and understandable. They are going to want to know what is in it for them—now and going forward. Winning them as strategic customers can open up an entire market. However, as you work closely with strategic customers you must take steps to protect your proprietary information and IP.
Just as with the importance of location in real estate, there are only three things that are important in high tech: Time to market, time to market and time to market! Finding and engaging a strategic customer is key. I’ve always encouraged my marketing and sales team to find three customers who will say "I love your product! And if you do X, Y and Q, we’ll buy a lot of it."
What are some pitfalls for entrepreneurs around product development?
Entrepreneurs can get too enamored with their technology and their current product and overlook the importance of a deep understanding of their customers’ needs and a long-term product development plan. Sticking to a well-defined product development cycle requires understanding the market and knowing where it and competitors are going.
I often see a company that has discovered what they believe is revolutionary technology. They launch into product development and lose track of what’s happening in the market. In one case, a company I was working with was creating a system that would address two market requirements-- each with unique technologies. They were so enamored with the elegance of their design that they didn’t see that it would be faster and much less expensive to build two systems that were optimized separately for each market requirement.
About the Expert
Pete has been CEO and Board Member of several innovative telecom firms. Pete’s deep background in technology has led him to entrepreneurial roles in many industries. He currently leads a company organized to commercialize technology developed at the University of South Florida to support video imaging systems for minimally invasive surgery. Contact or learn more about Pete here.
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