Company Situation

In times of economic uncertainty, customers simply do no purchase products that are “nice to have.” Either your product or service is “Must have”, or customers will find other uses for their funds.

How can you ensure your plans are on target? This case study examines how you can:

  • Validate your development plan
  • Anticipate future customer requirements
  • Create a successful strategy

Now that budgets are under microscopic scrutiny, two other factors become important:

  • Confirming that customer plans have not changed
  • Ensuring that your product passes the “need to have” test.

Key Problem

Ellis Smith was recruited as CEO of TransEDA in June 1999. The board of directors believed the company could achieve dramatic growth if it chose the right strategy, and looked to their new CEO to create that strategy.

“This time right now is a time when we certainly don’t want to guess at what customers are feeling. It’s not time we want to guess at what customers right now, in times of economic uncertainty, what are products they will truly pay money for and what products are ‘nice to have.’

I felt that at times, the company had had a tendency, as I have seen other companies have had a tendency, to actually guess at product introduction. ‘We think that this is going to be a successful product.’ or ‘We think that we are going to be successful in these areas and this is why.’ But that doesn’t always mean that you have the most up to date information from customers and from people who potentially will become customers of a product, that that is what they think and that is what they feel.”

Ellis immediately retained Tactics to validate current product plans and assumptions about the market. His objectives were to:

  1. Identify where the company’s current products delivered the most value
  2. Uncover pain being felt by customers in the target markets
  3. Identify specific opportunities to create dramatic sales AND profitability growth

Tactics conducted detailed interviews with 50 senior decision makers in TransEDA’s target market. During each interview, which ranged from 10 to 30 minutes in length, the Tactics Peer Researcher tested TransEDA’s value proposition against the reality of shrinking budgets. Tactics quickly identified three issues which TransEDA would have to deal with to achieve its growth objectives:

The company’s current products were “nice to have” point tools, but needed to solve a larger problem in order to become “need to have” solutions.

Interviewees told tactics they wanted a single vendor solution to the entire problem, rather than multiple point tools.

Offering more solutions and eliminating barriers between tools was key to becoming a “Must Have” solution provider.

Tactics Solution

Tactics recommended that TransEDA broaden it’s product line through alliance or acquisition. TransEDA chose the latter course, and chose to make an initial public offering to finance its acquisition strategy. Tactics developed a growth by acquisition strategy. Key to this was mapping unsolved “PAIN” in integrated circuit development close to TransEDA’s product set, i.e. areas where TransEDA could acquire companies or technologies to grow. Several images illustrate this strategy and their success.

Business Results

According to Ellis Smith, CEO of TransEDA:

“One year ago, in September of 2000, we went public on the London stock exchange and some of the information we used to not only explain the company but to explain how we positioned our products came from the market research that was done by Tactics.

Over the past year, as a public company we have acquired two companies. These companies fit into the product roadmap we developed in conjunction with Tactics. And going forward, we are continuing to use the information gained from market research. It also really allowed us to focus our efforts in certain areas, because through the research we had done by Tactics, it allowed us to see very clearly where the customer pain was, where weak spots were potentially in competition, so it’s really allowed us to focus our efforts where we felt we could be successful.

In the past two years we have grown at a compound rate of about 65% a year, and again we feel this is due in a large part to the information we have gotten through commissioning Tactics to do market research.”