The last blog in our series of go-to-market challenges for advanced materials.
In previous blogs we described the prerequisites and hurdles of getting new material technologies to market. As if prerequisites and hurdles were not enough, the biggest challenges are actually the ones that are out of your control, the counterforces. Not everyone is waiting for innovations to come into the market and having a unique technology is not always as appealing as you might think…
#1: Preferred utilization of installed base
- Is your technology a drop-in solution? And even if you can use the installed base but your material negatively impacts the production speed it can still be a NO GO. For example a plastic film that can be used in Form Fill Seal machines but requires longer sealing times as compared to current solutions will be difficult to find acceptance because it negatively affects output of an entire factory.
- A technology that requires a user to significantly change their production processes will have a hard time entering the market.
#2: Lack of appropriate standards
- Many industries are driven by standards for reasons of security, ease of interchangeability and doing business with other parties, especially in a context of open economies and globalization. One of the main reasons that have e.g. prevented the broad utilization of fiber composites in civil engineering has been the lack of relevant design standards. The cost and liabilities associated with the use of new and “unproven” technology are difficult to justify, especially in a sector where system lifetimes are regularly exceeding 100 years.
#3: Reaction of incumbent players
- Incumbents can have a lot of power to prevent or at least significantly slow down the adoption of a new technology. For example, patent infringement claims can drain your resources with lawsuits. Other examples are the use of temporarily lowering prices or offering promotions to suffocate the challenger, or the use of lobbying power to influence laws to their advantage, despite the existence of a more advanced or sustainable technology. These actions buy time for the incumbents to continue to earn steady profits from their cash cows, and at the same time close some of the technological gaps.
#4: Customer loyalty
- Good and long-lived supplier relations are not easy to break, even when the purely technological arguments are clear.
#5: Risk averseness
- Risk aversion is inherent to human nature and will always be a stopper in new technology adoption in certain markets. It is not uncommon for managers to have short term targets that make them choose for easier and known solutions that work, and not necessarily potentially better long term solutions.
#6: Impact on supply chain
- If the adoption of your technology implies that certain supply chain players are negatively impacted or even become obsolete and they are able to exploit their powerful position, it can cause major challenges in market entry.
- In established markets, many suppliers require exclusivity from their distributors
- Distributors that are already satisfied with the profitability they get with their current product offering often prefer not to take a risk on bringing new competing advanced material technologies into their portfolio.