Company Situation

Power-X Limited is a networking chip startup located in Manchester, England. Their unique technology is a low-latency switching fabric chip, which has the potential to dramatically speed the performance of networking equipment, mainframes, multiprocessor servers and other equipment with high data rates.

One of the most common dilemmas faced by high-tech startups is choosing which battle to fight first. If you’ve identified a long list of potentially profitable opportunities, how do you choose which one(s) to pursue first?

Key Problem

The company’s challenge was to identify which market to pursue first. In the words of company founder and director Russell Johnson:

“We knew from initial customer contacts that we had something novel, something that was in demand. We could easily envision six or more market segments that might need our technology, in both the data processing business and the networking business.”

“But a product optimized for use in a Gigabit Ethernet switch may not appeal to supercomputer vendors, and so on. Our first big decision was to identify where to focus our efforts. We wanted to pick the right customers, really those who would help us get to our first $10 Million”

Tactics Solution

If you are in this situation, you’re probably looking for your company’s “sweet spot,” the market segment where your technology most profitably matches customer requirements.

To identify your sweet spot, you’ll need to:

  1. Identify a list of target market segments
  2. Dig deeply to understand the requirements of each
  3. Test your benefit proposition against each segment
  4. Rate each segment to identify where you can succeed NOW!

Power-X retained Tactics to achieve three objectives within a 60-day period:

  1. Build a market model defining potential opportunities for Power-X technology
  2. Identify leading companies in each market segment
  3. Interview senior technical management to learn their plans, requirements, and reaction to Power-X’s value proposition

You’ll need fast, detailed feedback from decision makers in each segment to make a confident decision. One challenge you’ll face is identifying the right ranking criteria-sometimes the right criteria aren’t obvious until you’ve engaged with customers.

In this case study, we’ll see how a company started with one set of decision criteria, then evolved a different set once they engaged with their target markets.

Business Results

Of the six segments examined, two had little interest and two failed the market window or NIH tests. But two segments rated a ‘Pursue Aggressively!’ recommendation from the TACTICS peer research team. Six months later, Power-X later retained TACTICS to penetrate strategic accounts in these two segments (click here to learn about Strategic Sales Development).

According to Russell Johnson,

“The major benefit to Power X was being able to have an independent qualitative and quantitative view of the market that we could present to our investors to indicate that the market that we had set out to conquer was real. It’s an emerging opportunity that we’ve anticipated for some time and we are now starting to see it come to maturity.

“We’re a technology driven company and we have to go from being technology driven to market driven. TACTICS has been instrumental in helping us identify that market and provide us with actionable recommendations on how to penetrate it.”

“I would recommend using TACTICS for this level of work and if I had to go through this again, in the time that I’ve been looking, I haven’t found anybody that I think could do a better job.”