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Avoid the Valley of Death

Add value to your partners and avoid the “Valley of Death”

Commercialising a new product is no easy task and many technologies and businesses fail to bridge the so called ‘valley of death ’. The Valley of Death represents the ongoing investment or negative cash flow and energy, effort and time you need to commit before you can achieve commercial success.

While every product and technology requires some level of investment before the first commercial sales are achieved, the time it takes to achieve commercial success is primarily dependent on one key factor: the products ‘Value Proposition’.  Basically, if a product fails to emerge from the “Valley of Death”, its failed to proves its value in the “market”. Ok this may sound obvious.

Know your product’s path

A key factor that can help you avoid the ‘value of death’ is to know your product’s path to market and the value proposition of your product in each segment of that market. Again this may sound obvious. However, defining the market in which your product will be developed and sold is often misunderstood. The first step is to define and map your product’s journey to the end customer. I like to think of a product’s market not just the end customer who will buy and use your product. It should also include the supply chain and every business that is involved in the production, supply, delivery and servicing of your product to the final end customer.

By mapping your path to market in this way you are able to clearly define the partnerships that need to be developed across the value chain. Once you have identified key partners you can consider your product’s value proposition to those partners.  In doing so it will soon become clear that collecting data and demonstrating your product’s value and benefits to final end customers is only but one aspect of a proving your product’s value in the market. You must strive to create value to your partners that are connected to your product and not just to its end consumers.

What is your business model?

Understanding the value of your product in the market requires mapping your product and your business model and that of your partners so that there is clear and unique value created across each element of the supply chain. Your business model and competitive advantage need to be evaluated regularly. What is your competitive advantage and offering to all those that will be connect to your product? How will (predict) and does (actual) your competitive advantage and value proposition change over time.

Creating value for your partners is not just about financial value. Understanding the goals and pain points of each business that will be associated with your product will allow you to provide an offering that matches their needs. You need to know where your products fit within the business goals of your partners. Does your product add value to their business. If not, why not? If yes , by how much?  An an example, if you use a toll manufacturer, will your product allow help them to fill a gap in production thereby to enable their business to grow over the longer term; will the product allow your distributors to capture a new set of customers that they’ve previously had little connection with.

As a simple example, if you have a new food technology product that has higher nutritional properties which consumers want, but at your planned price point your major distributor can not obtain their required 40% to 50% gross margin. Think how you can add unique value to the distributor, so they value your business and not just the price of your products. This may include developing joint marketing campaigns and providing evidence of a pipeline of new products and consumer data about the demand for such products. They can then see how you will bring more customers to their store over the longer term.

All businesses are looking for valued partners whether they be at the start of your product’s journey to the end consumer (e.g a food processor) or at the customer end (e.g the retailer). Value adding to your market partners will drive success.

We’re here to help

The team at IP Active has extensive experience in working with research teams and commercial managers in public research organisations, universities and the private sector to reduce the time to commercial success. Working as part of the organisations commercial and research team, we are able to quickly identify and understand key market opportunities that may or may not exist for a technology. We support the team by first ensuring that a technology is ready to begin the commercial journey.  We map the market for your product and your unique value proposition within the identified markets so you avoid the “Valley of Death”.

To help avoid the value of death we are happy to offer a free 40 min consultation to map out the key factors to consider when approaching commercialisation.  Contact us to make a time.