Developing science for the art of commercialization
Commercialization is tough in the road infrastructure industry. It is a low bid business with specifications, agencies, engineers, suppliers, and contractors all doing their best to serve their customer and make some money. This can often place the primary focus of the business on low price versus value to the customer. Here is a secret, agencies want to buy value; they just need some help with developing innovative practices that works for them. This blog will redefine the following:
- Commercialization process into one organizing body,
- The classification of product development
- The interplay between technical and marketing
(Later blogs will expand on more of the components within the commercialization body.)
The reason why the mindset of Science to Art is the fundamental subject of this blog is quite simply few can do art while a scientific process allows for a methodical approach to a problem.
Art is a gift that others can appreciate, but few can truly duplicate, and art is often associated with a peculiar “geniusesque” personality. Individuals such as Steve Jobs or Howard Hughes come to mind as business artists, and when we think of the greats in science Albert Einstein or Sir Issac Newton come to mind.
The embodiment of the artist-genius falls to Michelangelo. His tireless study of anatomy to help with painting and sculpting developed into a strong desire to understand science and engineering. Upon stripping away the artist genius moniker from Michelangelo’s approach to advance his understanding of the body for sculpture, we have a means to develop a way to study commercialization. Consider the six steps below as our means to become the world class sculptors of commercialization in infrastructure. Specifically, we will use the following steps in our study:
- Awareness – observing something different or in greater detail within business.
- Classification – Naming the separate components within the overall commercialization model
- Defining – Job responsibilities and expectations of the various constituents.
- Communication – Determining the appropriate means of aligning and updating teammates.
- Measuring – Clarifying and agreeing to leading and lagging metrics.
- Application – Implementing the various components into a harmonious business. This area will be discussed later.
Awareness to the Body of Commercialization
Business analysis is a cornerstone of success in most great companies, but let’s consider synthesis for a moment. Briefly, Merriam-Webster define the following As:
- Analysis: A careful study of something to learn about its parts, what they do, and how they are related to each other.
- Synthesis: Something that is made by combining different things (Such as ideas, styles, etc.)
Let’s do a quick organizational synthesis for commercialization of products in infrastructure. We shall combine only four of many teams. These groups are: Technical, Marketing, Sales, and Leadership.
The first basic synthesis questions for your organization:
- Does your business have each of these capabilities?
- Do you or your customers label some of the groups as quality assurance or estimators?
Let’s spend some time looking at the overall commercialization body and discern what is the overarching purpose of this body is to the business. Also, please understand this is a simplified model and the complexities with introducing operations, supply, and accounting would render the model somewhat useless (But, in future blogs the integration of the larger organization will be addressed – especially operations!). The purpose of commercialization in business is to effectively create additional revenue and profit streams for the business ~ grow the business with new and/or improved offerings.
The commercialization body has four principle activities: Product Development, Marketing Strategies, Sales, and Leadership. Additionally there are four capabilities that play leading roles in the commercialization body: Technical, Marketing, Sales, Management. Diagram 1 represents the four systems in commercialization.
Besides being a pretty graphic, diagram 1 is important simply because the number one source of commercialization confusion and pain is that few companies have a formal marketing team. The standard approach is to grab the best sales guy, and management says, “Get Joe to sell that new variety of Flubber, it is great and he is a cracker jack of a commercial guy.” The next dilemma is that the technical team is often tasked (unknowingly) with conducting the market research.
Misalignment of resources is scary and frustrating for everyone on the team – no one wants to disappoint the leadership of the business, and now conflict between sales and technical begins to happen. The firm has spent significantly on the product development in terms of money and time, and the capability that can significantly improve the odds is marketing, this is a bad cost savings measure.
The remainder of this blog will cover the science of commercialization from a technology or product perspectives.
The Classification within Product Development
Your companies product is the focal point of a customer transaction. Regardless of how strong your marketing is or your sales efforts are, the customer ultimately is trading their money for the benefit of the product. Everything else being conveyed is either communication or service provision.
As Peter Drucker stated, “Business has two functions: marketing and innovation.”
The product or technology is the embodiment of innovation. Without the product (or service if you are a service provider) no transaction can take place.
What business discipline leads product development? And, does this include innovation, acquisition, product line extension, or re-release of the product (let’s broadly call all of these components, product development)?
Successful product development needs to have insights regarding customers current and future needs. These insights are captured in: understanding the cost-benefit for the product, gaining understanding on the keys to a compelling value proposition, and finally developing an elegant solution to the customer need. Additionally, technical viability, ease of use, and costing most be understood. These issues are beyond the scope of just one capability. Who can handle these complex issues?
Marketing & Technical are the two groups that must exist in some manner. And, these capabilities must form a partnership in order to have an impactful product development process. By the way, all of the various components of product development (innovation, acquisition, product line extension, or re-release of the products) should be led by this partnership.
All four capabilities of the commercialization team (Sales, Marketing, Technical, & Leadership) play vital roles in the process of innovation. But, by declaring the partnership of marketing and the technical to the organization, the entire commercialization body has clarity of leadership. Executive management is supporting and holding the overall unit accountable, and sales is supporting, giving insight, and preparing.
The Interplay between Technical & Marketing (Define, Communicate, & Measure)
Marketing is a companywide mindset, and needs to be internalized in many to all facets of the business. As Kotler & Keller describe it in their book Marketing Management, the marketing system has responsibilities in the following areas:
- Defining who is the customer [and, defining who do we want as the customer in the future.]
- Which needs of the customer do we satisfy?
- What products & services to offer?
- What is the pricing strategy?
- What method of communication to send and receive? [Dialogue and knowledge sharing]
- What distribution channel approach? [direct, franchise, distributorship, multi-level]
- What partnerships to develop?
(Interestingly, many businesses have begun to outsource the marketing capability – leverage experts at key junctures to assist during business strategy development or product development.)
An issue in industrial marketing, and specifically within the construction industry, is clarifying the difference between sales and marketing.
- Sales is the team that actually engages the customers directly, and are the ones that make deals that create revenue for the business. Another key distinction is that sales is the “reality testers” of the firm; they are the ones that get customer feedback on price, performance, quality, and service. And, they are one of the most valued roles in industry.
- Marketing is the seeker of the future opportunity. We have heard the practical insight: “A well defined problem is half solved.” Marketing is defining the problems of the future while also building the tools to gain demand creation.
The Technical team is a group of professionals that handle many aspects of the product. The roles of technical often includes:
- Product formulation based on raw material streams and quality
- Quality assurance development for in-house terminals and plants
- Project support for placement applications
- Plant support & training
- Technical sales
- Innovation/Product development
- Specification development
Two of the last three components (the bolded items listed above) within technical are strongly associated with sales or marketing. At the agency level, the specification is the product. And, technical sales is the currency of the engineer and thoughtful contractor. Finally, innovation or product development is one of the lowest cost growth strategies when done correctly in business
Two leaders, no way!
No business system can be managed by two leaders. How does this partnership get established in a mutually beneficial way for impact?
Consider a couple of additional truisms, “industrial technologists do not want to work on technical curiosities” (Thanks John Cosgrove), and “the easiest product to sell is the one that does not exist.” This means that each capability does not want to be working on the wrong things.
Technical wants a worthy target to dedicate time and effort to, and marketing desires to advance products that are within the realm of scientific law. This need for alignment and fear of the unknown can be solved with a respect based development approach. Additionally, the various teams work at higher levels during different times. Specifically, an old Harvard Business Review article articulated that the waves of marketing effort versus technical was similar to intersecting cosine and sine waves.
Understanding who is your partner clarifies many aspect of communication. Defining needs for the technical group and the marketing group is extremely important. There are three tools that clarify project and align Technical and Marketing. Once this team is aligned, then there can be a division of resources to facilitate communicating to each team. The three are:
- Venture. This is a couple page document that furnishes the background for why this innovation should be pursued with economics, and alternatives. The venture should answer four questions (Thanks Rob Witte):
+ What is the magnitude to the business?
+ What is the profitability to the business?
+ What is the likelihood of success?
+ What is the timing to commercial success?
- Attributes. These are the articulated and unarticulated needs of the customers. Specifically the attributes need to be ranked in order of importance, and some measurement approach needs to be used in this process. Additionally, there are most often two level of attributes: lab attributes and field attributes. getting marketing, technical, sales, and leadership aligned with attributes is key for alignment in the process.
- Plan with Measures. Development of a timeline with milestones, division of labor, and an update process where the key needs are mapped out allows for accountability and logical times for communicating to a larger team. Due dates help all of us.
Measuring “What gets measured gets managed.”
The race is about speed and low cost failures in pursuit of the first market. There are a few time dependent goals that must be measured, they are:
- Completion of a problem statement with key goals and needs of the product
- Development of Attributes
- Completion of Plan
The next series of measures should be associated with marketing and technical activities examples include:
- Persona development
- Identification of first market
- Cost/benefit analysis
- Initial pricing model
- Means of distribution
- Specification development
- Specification socialization
- Test section location
- Target customer feedback
- Collateral materials
- Lab attribute measurement
- Field attribute measurement
- Prototype development and performance
- Raw material costs and operational costs
- Support determination
- First market plant support
- Specification development
Focusing on the initial proof of concept in the lab can be crude but a deadline that is met with results is key, and then the successive prototypes that are established to test various sub-assemblies are key.
The science to art for commercialization of pavement technology has two key considerations: first, consider the entire body and the roles of each capability, and the second, step is to look at the role of industrial marketing for empowering commercial success in partnership with technical.
Next week will be the an introduction to the marketing strategy approach for commercialization. This is an area where some of the biggest opportunities for business reside in the construction space.
Please provide us with feedback and perspectives in the comments section on how this blog is applicable to some of the issues that you are facing.