Investment in incremental innovation

This is Jacques Noels of Nemoptic and Andrew Lloyd signing in for the last of our series of blogs for the Technology Marketing Center. There have been many general books written on how to manage start ups from the germ of the idea to ultimate success. As we are sure all our readers know, a high technology start-up requires very specific strategies especially if the technology itself is very innovative. Investors, customers and other may have to be educated into what the market actually is. This is typically the case for start ups in the biotech or in an entire new domain like e-paper technology and its related applications. And it is something we have had to contend with at Nemoptic.
    
How could we sustain investor interest while both the technology and the market develop concurrently? One of the powerful motivations  is the potential market size. If one accepts the definition of Nicolas Negroponte, head of the MIT Media-Lab, who says that wherever you look at paper you look at a potential application of e-paper, the potential market for e-paper is huge, measured in trillions of dollars. This has two major implications: one is that the financial return for the leaders will be commensurably huge and a second one is that with such a large market there will be room for multiple market segmentations, and multiple winners.
    
Another motivation is obviously the probability of success of the technology itself. Typically two different paths are possible. Either inventing a complete new revolutionary technology concept from ground zero or to leverage on what has already been developed but take the existing state of technology to a complete new level by adding some selected incremental innovation. The first one may look more attractive at first but it requires a complete new industry infrastructure, new material, new suppliers, new infrastructure investment. This is the most expensive and the longest road to travel. In the meantime, not only the fundamental technology may prove to be wrong but new developments may happen, complete new technologies may surface, and the external economic environment may change drastically. The investors are in a high risk situation for a very long time. The other path consist of building on what has already been learned - and invested - and then insert the critical innovation that will take it to a complete new level of performance. Of course, there is also risk here but at a lower level. This is how the semiconductor industry has grown and become the technology arguably underpinning the entire material progress of our society. Maybe its role will be less in the future but the last 70 years incremental innovations in that industry have  brought us the television, the cell phone, personal and scientific computers and with them for example more accurate weather forecasts, progress in aerospace technologies, and many, many more things we would find it difficult to do without.

We chose to follow this incremental path, rather as the Europe Ariane satellite launcher was developed as a reliable and less risky competitor to US space technologies. It has proved more acceptable to financial investors although this path obviously doesn’t guarantee success. It does allow you however to measure progress and to monitor the development of the company by comparing it with a slightly more conventional business model. What we did was first to make sure we could implement a complete industrial process, then identify and secure our first market application opportunity. Our first financial results followed and we have moved into new development activities, moving from black and white display to colour display then from rigid substrates to flexible substrates, then from flexible to rollable substrates, reducing costs at each step not only through higher volume but by innovative engineering solutions. Building the ultimate by the continuous addition of incremental successes, step by step.
    
Attempting to revolutionize a huge market such as the world of paper is certainly an exciting challenge. Taking up this challenge and succeeding as a company is even more exciting.