The next blog in our series of go-to-market challenges for advanced materials – The hurdles.
In a previous blog we described the prerequisites of getting new material technologies to market.
While you might think you have a winning technology outperforming the incumbent technologies you actually just bought yourself an entry ticket to go out and learn from the market. From these learnings, it is key to distill the market opportunities to focus on first (where the hurdles are most realistic to overcome).
We have had discussions with a lot of startup companies who were directly aiming for the biggest markets like automotive, aerospace. While this may seem appealing to your investors because it allows you to build business cases with huge numbers when it comes to market potential, it is a very tricky thing to do. Your potential customers will lead you and determine when, where and how they want to adopt your technology and not the other way around. It is often preferable to start in a niche market where companies are keen to co-develop your technology towards a product.
Now, we will focus on the hurdles on your journey to enter the market. Hurdles are the type of challenges that are difficult to overcome on your own. However, building the right partnerships and eco-system around you on one hand and choosing the right beachhead market on the other hand can help you get a long way.
#1: Supply security
- Often sourcing departments want to build in security into their supply. As such, companies want to have at least 2 suppliers for the same raw material or component. Public projects sometimes even require at least 3 quotations from independent sources. This may be a stopper when you come in with something new.
#2: Lack of global presence
- Global companies often prefer to work with global players which allows for an easier global roll-out of the technology
#3: Lack of scale
- What if the market is interested in your technology but you cannot deliver at the required scale? Or your production process is difficult to scale up?
#4: Lack of legacy
- How can you prove your technology will be able to have a lifetime span of e.g. 10 years if you have only a track record of 2 years technology in operation, or even worse you are a startup?
#5: Cost disadvantage
- Typically, new technologies will initially be more expensive than incumbent technologies e.g. due to lack of economies of scale
#6: Dependency on other technologies for adoption
- The adoption of a new technology may require adaptation of other elements in its environment
#7: Compliance to industry specific standards
- In quite some industries companies require their suppliers to comply with standards that are pushing requirements on your organization e.g. ISO22000 for food supply chain, ISO/TS16949 for the automotive supply chain which applies to design, development, production, installation and servicing. Some companies even push their own standards towards their suppliers e.g. Toyota, Nestlé… This can be a major hurdle for a startup to overcome.
In 2014, it looked like Apple was poised to do for sapphire what it had done for aluminum — turn an exceptionally useful but difficult-to-machine raw material into a selling point for its flagship consumer gadgets. Apple announced a new factory in Arizona where its supplier, GT Advanced Technologies, would be loaned $578 million to produce huge synthetic sapphire crystals — known as boules — to be chopped up into incredibly scratch-resistant covers for the screens of the iPhone 6. That iPhone never arrived. GT Advanced quickly imploded under the strain of trying to mass-produce sapphire glass, filing for bankruptcy mere months after beginning work at the Arizona plant.