NST2 – Case Studies in Biomedical Science
Project: Crossing the Chasm
Why did the company called Transenterix failed to ”cross the chasm”
For this project, you (and your partner*) will be investigating the technology and marketing of a biomedical company (must be a biomedical device, drug, therapy etc.) that failed to “cross the chasm”.
***Google and Apple related topics are not approved***
- If the selected company has more than one major product, you should choose the product with the largest annual sales for technology assessment. If your group believes that more than one product should be analyzed, confirm this need with me.
- This project will require several weeks to complete. Do not attempt to complete this project within one week.
Upon completion of this project, you will acquire additional experience in:
- Understanding how both technology and marketing are necessary for a start-up company’s success.
- Conducting a preliminary technology analysis.
- Conducting a preliminary marketing analysis.
*Maximum team size is two students – no exceptions. Teams must include an authorship page. Individual effort is approved.
Project Proposal : Due on February 26
Briefly describe the biomed product you have selected and why it meets the project criteria as described on Blackboard (1 page).
The following book is required for this project:
Crossing the Chasm (3rd ed.), by Geoffrey Moore, Harper Business, ISBN: 978-0-06-229298-8 (paperback)
In October, 1981, start-up Nellcor was founded as a manufacturer of pulse oximeters. Nellcor did not originate the key technology for this device; another company called Biox did. However, because one of the Nellcor founders was an anesthesiologist, Nellcor realized that pulse oximetry should be targeted toward operating rooms, not pulmonary function labs for research which was the target market for Biox. Nellcor introduced its pulse oximeter and quickly wins market share from Biox.
Less than 6 years later, Nellcor achieved $46.2 million in revenue with annual growth of 250%, Nellcor’s initial public offering raised $38.4 million, at $16 per share. To medical device venture capitalists, Nellcor is an example of the ideal medical device start-up (Nellcor was purchased: http://www.covidien.com/rms/brands/nellcor).
Most start-ups are not so fortunate. According to research based on interviews with 200 individuals in 150 companies, 60% of high-tech companies that succeed in obtaining venture capital end up bankrupt. Only 10% of VC-funded start-ups succeed. These successful start-ups compensate for the other 90% of poorer performing companies in a VC’s investment portfolio.
When companies achieve initial success by selling their first product, they are directing their marketing efforts toward two initial groups of customers. Innovators purchase new technology products first, followed by early adopters. Though similar groups of customers, early adopters are not technologists. As shown in the technology adoption life cycle (Fig.1), the majority of customers are the early majority and late majority. The early majority likes new technology and purchases established technology. The late majority purchases standardized technology. The laggards purchase a technology without awareness of its existence when it is incorporated into a larger product (Moore, 2014).
Geoffrey Moore added a chasm between the purchase habits of the early adopters and early majority to signify a change in purchasing behavior. The two groups are dissociated, with the early majority not accepting a new product if it is marketed with the same methods used for marketing to the early adopters. This dissociation requires that a company change its marketing and sales strategies when different groups purchase the same product. This strategy change is critical for a company that wants to cross the chasm from $5 million in annual sales to $25+ million (Moore, 2014).
Your group will conduct a technology and marketing assessment to understand why a company failed to cross the chasm. The majority of companies in this category are start-up companies. However, some established companies have also tried to “cross the chasm” unsuccessfully when attempting to enter new markets. You can select a company from either group.
For technology assessment, you should access patents, journal articles, textbooks, white papers, and internet sources. For marketing assessment, you should read annual reports, marketing blogs, and press releases. Remember that any material may be presented in an overly positive manner, if it has been written by the company itself. Allocate your time so that each section of your report is adequately researched, with consideration of potential points.
Report Structure and Grading:
This assignment will be graded on a 25 point scale:
- Twenty-five percent (25%) of the grade will be based on your technology assessment:
- Needs assessment
- Previous solutions
- Sensor description (if electrical device)/biocompatibility (if mechanical device)
- System diagram
- Human factors analysis
- System limitations
- Twenty-five percent (25%) of the grade will be based on your marketing and sales assessment:
- Market definition/size
- Direct/indirect sales force
- Annual sales revenue
- Regulation (FDA approval or Medicare reimbursement)
- Market strategy
- Assessment summary
- Twenty-five percent (25%) of the grade will be based on your crossing the chasm analysis:
- High-tech parable similarities: Construct a parable in two paragraphs of your company’s growth, in a style similar to pages 28-31 of Moore’s book (3rd ed).
- Alternative crossing strategies
- Twenty-five percent (25%) of the grade will be based on the Executive Summary, Introduction, and Conclusion.
- Authorship Page
Your report, excluding title page and reference pages, is limited to this standard:
- 15 pages (not including authorship page), single-spaced, 1- inch margins.
- All figures are to be directly incorporated into the text, with a figure legend below each figure. Each figure must be legible on a paper copy of your report.