The Case of the Research Director Who Brought a Knife to a New Market Gunfight
Dan is frustrated by R&D’s priorities on development resources.
Dan is Mgr., Business Development for MetGroup. Mel is Dir., R&D for the firm. Both were hired 3 years ago to create innovative organometallic products.
Dan’s priority is to expand the firm’s share of the growing market for paint/coating dryers. Dryers contain cobalt and zinc organometallic formulations. MetGroup has cornered the supply of low-cost Co and Zn starting materials.
Mel’s priority is to move into a market new to the firm. precious metal organometallics. His Ph.D thesis topic was on the synthesis of this class of compounds. Mel uses his synthesis skills, and R&D’s two chemists, to sample 3 markets with his precious metal organometallics.
Dan wanted to hire me for a customer research study of opportunities for a new supplier in Mel’s 3 target markets. He needs the president’s permission to go ahead.
Dan set up a phone conference between me and the president. We talked for an hour. At the end he said my customer research system1. would get him the reliable data he needed to decide on innovation options … “go ahead!”
Tasks for the precious metal organometallics project
- My first task is to build a list of 400 knowledgeable people in the 3 markets sampled by R&D.
- Second task is to chose, at random, people on the list and cold-call them.
All respondents will hear the following phrase. “My client has created a new process for producing precious metal organometallic. On a bench scale they have been able to produce these compounds in good yields.”
- Third task is to analyze data collected during the calls. For statistical significance, I used the Central Limit Theorem2 in the analysis.
Executive Summary: Acceptance of Client’s Product Concepts in the 3 Markets Sampled by R&D
Markets sampled: Supported catalysts, Decorative colors, and Microelectronics.
110 respondents entered into in-depth interviews with me
When I analyzed the interviews, 3 key insights came into view.
- Client’s product concepts must be in commercial production.
- Respondents will only test new products that have a competitive advantage.
- Client is competing with a host of trusted suppliers of these commodity products.
“George, in the supported catalyst marked there are 4 vertically-integrated competitors. They integrate 3 steps. 1st, synthesize the organometallic. 2nd, deposit it on the support, 3rd, recover the metal from the spent catalyst.
New suppliers must duplicate the expensive recovery system.”
Technical Manager, Refinery Catalysts … Haldor Topsoe
“FDA halts use of a precious metal organometallic containing trace amounts of Cd and Pb. Leaching of these elements from drink and dinnerware can cause cancer.
An organometallic producer must start with pure metal. It’s why Engelhard, a vertical-integrated producer, dominates the decorative colors market.”
Special Projects Mgr. … Lenox China
“We make the organometallics used in the manufacture of our microelectronics components. Outside sources of organometallics move too slow for us to succeed in this fast moving market. The goal of our present development work is replacement of expensive precious metals with Cu and Ni.
Mgr., R&D … Murata Erie North America
- President shut down development work on precious metal organometallics. Moved development resources to support Dan’s priorities.
- In the following year, Dan’s work increased cash flow 18% while maintaining MetGroup’s 120% specialty product margins.
Copy the actions of Dan; bring a gun to a gunfight.
Don’t, as Mel did, bring a knife to a gunfight.
- Rule of 30 System for B2B customer research.
- Central Limit Theorem for statistically significant analysis of customer feedback.