We are at an interesting intersection of market growth, innovation, and sustainability. For the chemical industry, this means seeing a number of companies entering the markets in relatively new waters. In this episode, Victoria Meyer shares insights in market development and new market entry, using lessons from many of the industry leaders of green or renewable chemistry companies that have graced the show. She recalls their wisdom about market entry and the key points to succeed. From partnerships to the three phases of market development, Victoria captures them all. So join this brief but insightful conversation and gain the wisdom of some of this industry’s innovators into one!
Watch the episode here
Listen to the podcast here
Lessons On Market Development From Leaders And Innovators In Renewable Chemistry
In this episode, I am talking solo because I wanted to share with you some of the lessons learned from renewable chemistry innovators that we can apply to other facets of the chemical industry. I’ve had the opportunity to interview several CEOs and leaders of green or renewable chemistry companies. These include Tom van Aken of Avantium, who’s on episode 66, and Jennifer Holmgren of LanzaTech, who is on episode 60. Episode 51 featured Neil Burns of P2 Science and James Gibson of VOID Technologies, along with Jon Timbers of Epsilyte. Episode 40 had Tim Staub of Locus PI, and episode 44 had Michael Suver and Cameron Whaley.
When I started reading this out, I was like, “There have been a lot of green, renewable, and sustainable chemistry companies. Why?” It’s fascinating. We are in interesting times. We are working at the intersection of market growth, innovation, and sustainability. I believe we are at the tipping point of commitment and innovation as it relates to green and renewable, and sustainable chemistry.
We may not be at the tipping point of the solutions that we need to meet some of our objectives, but certainly, when you look across chemical companies, consumer products companies, other companies, and industries that the chemical industry is serving, sustainability, green, renewable chemistry is all interesting. These are new products going into either new or existing markets. One is this fascination and the fact that we’re at this tipping point.
The second thing is that I love market development and new business development. It is an area I’ve worked in significantly across my career. It’s an area that I work in as I help clients who are trying to enter new markets with new products, new services, or reposition existing products and services to fulfill customer needs. It’s fascinating, and I enjoy it. Frankly, it is not for the faint of heart. Introducing a new product into a new market, introducing either a new product or service into an existing market, and repositioning existing products and services can be risky.
The outcomes are less certain because the roads have not been walked before. It takes a certain amount of finesse. It takes an understanding of markets and customers and a real interest in understanding what those markets and customers find valuable. It’s a lot of fun. It’s rewarding. If you’ve read these episodes, and I’m sure you’ve read some of them, maybe all of them, one of the things that come through loud and clear from these innovators and executives is that they think this is fun, that they thrive on the success, the challenge, and the opportunity to make a difference.
We are not fully going to be talking about these green and renewable spaces because what is interesting is that we can take a lot of the path, the principles, and the premises that they’re following and apply them to other markets, traditional chemical markets, and services. That’s what we’re going to be talking about. When I reflect on these interviews that I’ve had with some of these leaders, developing new markets for green or renewable chemistries and plastics, it is not for the risk-averse or for those who need instant success.
Both LanzaTech and Avantium have been at this for 20 years. Jennifer Holmgren’s been at the helm of LanzaTech since the early 2000s. Tom van Aken is considered one of the longest-tenured CEOs in the Netherlands. He has been leading Avantium since the early 2000s. You need perseverance. This is not about instant success. When we talk about P2 Science, Neil Burns and that team have been at it for a decade. It takes time to develop new products and new markets.
I find this to be true. When we’re talking about existing products in existing markets, while some of the paths are similar and we’re going to be talking about that, it usually does go much faster, although honestly, not necessarily. I’m sure you guys have some stories to tell. I have a few stories to tell about that that I may not share on the show, but I’d be happy to share them elsewhere.
The other thing that’s interesting, and it’s a great parallel when we start talking more broadly, is that it requires partners’ collaboration and openness. You don’t know what you don’t know. When you’re developing a new product, you don’t know if it’s going to be accepted. You don’t know how it’s going to apply and be used. You don’t know what the market’s going to evaluate. It requires your partners and collaboration to help run the processes, test the products, test the markets, and figure out who owns them.
How do you get there? You figure out who owns what component of the value chain, then figure out where you maximize your impact. The other thing is that when you think about a partnership, it requires a lot of trust, transparency, and a clear path forward. Both Jennifer Holmgren and Tom van Aken had said, one of the things that made their partnerships and collaborations work was a clear understanding of intellectual property and of the path forward, who does what, and who owns what.Partnerships really require a lot of trust, transparency, and a clear path forward. Click To Tweet
That’s one of those lessons to keep in your hip pocket and pull out when you start going forward and thinking about partnerships. The good news is it doesn’t take 20 years for most businesses, especially if you’re an existing business with an existing or a similar product entering a market. That’s good news. When we talked to these leaders, what stood out for me is they seemed to share a common story. It goes a little bit like this.
Someone, a business person, a chemist working the bench, an engineer at the plant has a great idea for a product or an application, and then they develop the technology. They add a few people and add some money and develop it some more. They bring in some partners to adapt and test it out. They either sell it off, sell off parts of it, shut down parts of it, or pivot it. We’ve seen this happen. Both LanzaTech and Avantium have exited partnerships, shut down parts of businesses, and pivoted over this 20-year gene new business development cycle to get to where they are to be able to create commercial success.
You do that, and then you bring in bigger investors. In the case of Avantium, they’re publicly listed. That’s the way they brought in some of their investment capital. LanzaTech is part of a SPAC, a Special Purpose Asset Company with hopes to IPO. They find ways to bring in capital to grow, commercialize, and develop. They form partnerships with brands and end users. In the case of LanzaTech, they’ve partnered with Zara, Danone, and several other end users.
In the case of Avantium, they’ve partnered with Carlsberg, LVMH, and AmBev. They’re in a lot of beverages, a lot of consumer products, you’ll note. Part of that is because their product is a replacement for PET, which is going into beverage containers. That’s where some of that fits in. We certainly see it. When I look at, for instance, what P2 Science is doing, they have a number of great partnerships that they’ve developed to help get their products to market and into the consumer’s hands.
Eventually, you get the opportunity to build a commercial unit either through your partners or directly yourself and sell products, commercialize, et cetera. What’s interesting as well with this is that both LanzaTech and Avantium are licensed. We’ve seen this through the years with chemical process innovations. They go to license the technology.
If you think about some of the products that we use, certainly look across the polyethylene value chain. All those polyethylene technologies have been licensed, and they’ve grown and monetized for the business in different ways. That’s certainly a direction that LanzaTech and Avantium are heading. As they do that, they reward their shareholders. They have a significant impact on the industry.
What does this mean for the rest of the chemical industry, for you who may not be developing an innovative new green technology? Is there a lesson? There is, because the path that they’re following is a path that I find to be pretty typical when we think about market development and market development in the sense of entering a new market with a new product or service or a repositioned product or service. You’ve got a variety of permutations, new products, new markets, existing products, and new market repositioning.
The pieces that I want to talk about, the lessons that we can talk about, and the parallels are in some of the three early phases of market development. This is a model that I’ve used with companies I’ve worked at, Shell and Clariant. I’ve worked with client companies, and that works well.
3 Phases of Market Development
Phase 1: Awareness and Relationship-Building
Phase one is about awareness and relationship building. It is critical to start building those relationships and build that awareness in the industry and the market.
This is after you’re past that negative idea and start sensitizing yourself to it and that you think this is a path to go forward on. We can go enter this new market. This product is a winner in our existing markets. The awareness and relationship-building phase are critical in terms of starting to plant the seeds in the market to let them know who you are, especially if you’re a new entrant, and what you’re bringing to the table. Is it a product, a service, or a technology? It’s critical to understand the market and customer needs, both met and unmet.
What is important? You maybe have heard me say this before. Product is easy to replicate. It is easy to get a new widget, but some aspects aren’t easy to replicate. What’s in it? What’s important? What can you create and craft a value proposition with? One of the examples I have here is with Shell Pennsylvania, Shell Polymers, when Shell was reentering the polyethylene market.
Maybe some people don’t know that it was a reentry because it has been more than a decade-plus since they exited polyethylene. When Shell decided to enter the polyethylene market, I was leading that business and leading that effort. Part of the exercise of the first days and months of building was building awareness and relationships with potentially key customers and business partners to say, “We’re here,” and to ask questions, “What’s important to you? How does your business run? What’s working well? If we could do something differently, what would it be?”
You test your hypotheses. You understand what it is. In this case, what became clear with Shell Pennsylvania was that there was an opportunity to be a logistics play. We recognize that up front, and Shell is following the course. We’re going to see it starting up here shortly in the next few months. Shorten the supply chain while still meeting the product requirements. You’re not going to beat everything. What are you going to meet? What are you going to beat? How do you craft your unique value proposition? That’s critical in that awareness and relationship-building phase.
Generate your external insights and validation. Validate that this is a good product to market, or this is a market that we can enter. Get your external insights and validate them and then adjust your path, whether it’s your product or service or your target market. Maybe it’s your customer experience. Think about the type of customer experience you want to bring to the table that will make a difference that will differentiate you as you go to market. That’s phase one.
Phase 2 – Brand and Product Establishment
Phase two, I categorize it as brand and product establishment. This is where you start introducing your brand to the market. In the case of IBC, Integrity Biochem, when we talked to Michael Suver, they figured out what they were going to do, and then they started introducing their brand to the market, TegraSurf, and EdenSurf, in conjunction with their business partner, SCT.
Figuring out what your brand is, starting to plant the seeds, bringing your brand to market, and establishing your presence becomes critical. It is a critical next phase. With that comes finding the right strategic partners. This may be a manufacturing partner. It may be a marketing partner. It may be an end user. It depends on what’s needed to get into that market. Who has the influencers and capabilities that you need?
We’ve had some different examples here. Locus PI and Tim Staub have formed a partnership with Dow to help bring it to market. They’ve got the technology and the manufacturing. What they needed help with was bringing the product to market and accessing a broader array. Understanding that is critical. That’s part of this earlier phase, and then you’re executing it.
In the case of Avantium, they are building manufacturing, and they’ve gone all the way to the end-user to partner and make sure that their products get into the market and have some pull through as they seek to build their plant and ensure that if they build it, will they come? Yes. When you sign an agreement to say, “Yes, we’re going to take products.” That’s one way to build a partnership.
As you go to market, that phase two of establishing your brand and your product, it’s critical to find the right strategic partners. It’s critical to lay the groundwork for future commercialization. What is it going to be when it’s real? When your product is in the market, when you start seeding with samples, if you have samples, you start testing it with people and making sure that your brand and your value proposition are clear.
Phase 3: Pre-Marketing and Sales
Phase three applies when you’re thinking about especially new products, new services, or maybe a new investment that has to come into the market and is pre-marketing in sales. That’s where this whole array of customers and businesses that I’ve talked about is at. It’s testing the product, figuring out who is going to start buying that product and doing early sales to start drawing and pulling through.
We certainly see that with Avantium. We see that with LanzaTech. We see that with the whole host of people that I’ve spoken with here that are in this green and renewable space. It’s true with traditional businesses and products. This is not new and novel to green chemistry. This is fundamental that you can be applying as you think about entering new markets, growing new markets, or bringing a new product to market.
It’s around awareness. Phase one is awareness and relationship building, planting the seeds, getting the platform, and testing the market. Phase two is the brand and product establishment and securing the partnerships that you want. Phase three is the early days of commercialization. It’s getting some early sales, getting some early test products or test services out there, and starting to build validation, a base case, and your base load. When you think about it, you have to build an asset and go from there.
After that, we’re not going to cover that on this show because I’m stopping where some of my interviewees have stopped. After that is when you start getting ready for marketing commercialization, start growing, start expanding your business, and start truly commercializing your business. Commercialization is a place that, as business leaders and business people, we’re more comfortable with, like, “I know how to buy and sell, develop, and do that.”
Establishing presence and growth
It’s that development that gets trickier, and it takes time. You have to understand the steps and how you want to execute and go to market. If you’re interested in seeing how companies are doing it and how they’ve done it, go back and read some of these earlier episodes with Jennifer Holmgren from LanzaTech, Tom van Aken, Neil Burns, Tim Staub, and the other guys. There are nuggets in each one of them that tells you how they are approaching this and how you can approach that as well.
If you’re working on tackling a new business opportunity, trying to figure out, “How do I enter that new market? How do I reposition to make my product, my business, or my service more effective in my existing markets?” Give me a call. Shoot me an email. Let’s set up some time to talk, and I’d be happy to share with you some of the insights that I’ve learned through my own career and that I bring to clients. Anyway, that’s it for this episode. Thank you for reading. Keep reading, liking, and sharing it with your friends and colleagues. It matters. I’m excited that people continue to read and that the show continues to grow and that we will keep moving forward and moving on. Thanks, everyone. Have a great day.
- episode 66 – past episode
- episode 60 – past episode
- episode 51 – past episode
- Episode 40 – past episode
- episode 44 – past episode
- P2 Science
- VOID Technologies
- Locus PI
Love the show? Subscribe, rate, review, and share! https://thechemicalshow.com/