Lessons Learned in Technology Assessment…Lesson 2…

This is the second of a series of posts to share with you six important lessons we’ve learned through our experiences working with numerous commercial clients in a variety of situations. On the path to your success in developing and commercializing technologies, they will help you avoid common pitfalls, unwarranted assumptions, and other sources of technical and commercial bias that could add up to business failures.

Lesson Two.

Avoid Single-Point Projections.

Whether you’re talking about sales, profit, or manufacturing cost projections, single point projections can be misleading.

Lesson Two Case Study:

Client:  Producer of bulk fine chemicals with new, developmental production technologies

Situation:

  • This producer believed that its family of 10-12 developmental production technologies provided a cost advantage over its established competition.
  • This “belief” was based on single-point manufacturing cost projections for each of its developmental production technologies.
  • The client had already invested almost half of the required time and financial resources needed to take the technologies to a commercial stage.

Technology Assessment Need:  The client was uncertain about possible problems in production scale-up, which could affect manufacturing cost, and wanted an outside third party to assess the technologies before further investments were made.

Our approach:

  • Utilizing an analysis tool called “technical cost modeling”, we developed manufacturing cost probability curves for each of the production technologies.
  • We also developed cost probability curves for the production technologies already in use by our clients’ competition.

Here is what our cost modeling analysis revealed:

  • Even though there were differences between the average cost of our client’s production technologies and the technologies of its competition, there was significant overlap in the cost probability curves, i.e., the likely production costs for both our client and its competition were much closer than our client’s single-point cost projection led them to believe.
  • Among our client’s 10-12 developmental production technologies, only 3 or 4 possessed manufacturing cost differences distinct enough to be a basis for competition in the marketplace, although the client had invested in scale-up for all.

Outcome: Our client chose to commercialize only those few technologies that showed significant and sustainable cost advantage.

For more on best practices in moving from lab-to-market, see http://www.prakteka.com/category/technology-assessment/

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Are you about to make decisions regarding investments in R&D scale-up? In manufacturing?

Are you basing those investment decisions on cost projections? Sales projections? Profit margin projections?

We’re ready and able to help you make your decisions with confidence. Contact us at http://www.prakteka.com/contact-us/

or via direct email at mah@prakteka.com

Lessons Learned in Technology Assessment…Lesson 1…

Treat Your Technology Assessment Conclusion as a Hypothesis – and Proof-Test It!!!

This is the first of a series of posts to share with you six important lessons we’ve learned through our experiences working with numerous commercial clients in a variety of situations. On the path to your success in developing and commercializing technologies, they will help you avoid common pitfalls, unwarranted assumptions, and other sources of technical and commercial bias that could add up to business failures.

No matter who does your technology assessment, whether you perform it internally or externally, whatever conclusion you come to, treat that conclusion as a hypothesis. Here is a case example:

Client:  Industrial, Automotive, and Aerospace Manufacturer and Marketer

Situation: Client was about to make a significant investment in a potential target acquisition. The target company owned a unique thermal barrier coating technology for aircraft turbine blades which the client judged to be a significant and attractive market differentiator for them.

Technology Assessment Need: Client was concerned about their internal ability to assess the new, cutting-edge coatings technology, and wanted additional “vetting” of this technology.

Our approach: We took our client’s conclusion, that this coatings technology was worth their investment, and treated it as a hypothesis by asking the following questions:

What could go wrong? Could we find aspects of the technology that would invalidate this hypothesis?

Here is what our research uncovered:

  • One of the coatings facilities our client would acquire was actually a joint venture: someone other than the target company owned the intellectual property!

 

  • A competitor of our client had recently bought access to a non-U.S. 300-man facility with a technology that threatened to upstage the target technology

These two findings alone were sufficient “red flags” that our client put a “caution” light on the acquisition plans and directed additional due diligence on these two investment hypothesis-busters.

In this case, treating the conclusion of the client’s technology assessment hypothesis led to the discovery of new, highly relevant aspects of the potential technology acquisition. These new findings prevented a premature investment – an investment that likely would not have produced the financial and commercial results that motivated it in the first place.

Are you facing a technology investment decision?

We’re ready and able to help you with your due diligence. Contact us at http://www.prakteka.com/contact-us/

or via direct email at mah@prakteka.com