Harman creates a new market and business model

Our team helped Harman International find a new market to apply their new loudspeaker technology and design a new business model. We also guided them through the market creation process.

CHALLENGE

Harman needed to find a new and profitable target market for its innovation.

The electrodynamic linear motor has been the core technology in loudspeakers since the late 1800’s. Harman’s Applied Technologies Group wanted to explore the potential of applying loudspeaker technology in new markets.

Their mission was to evaluate the potential of likely near- and long-term applications for Harman’s core technology. The automotive industry had shown the most near-term interest in using Harman technology for vibration control. However automotive is also a segment with very long product adoption cycles, potentially requiring significant continuing investment. Other segments might have better or at least faster potential for generating substantial returns.

Market segment characteristics

Harman also needed to learn the best way to build awareness to attract the interest of potential customers in the early market for vibration control. Their goal was to do so in a way that has relatively low cost, and did not commit the company to a dead-end path.

As the potential for the technology was being determined, management also wanted to discover the best way to structure their effort. Here, the issues revolve around resource allocation decisions, funding levels and expected levels of both product and development contract revenues. With different ways to structure the business, Harman wanted to remain responsive to customers and is able to produce results.

Business model alternatives

Part of this initiative included identifying the kinds of “business models” that are available, and under which conditions should they be considered. A range of alternative ways to build a business was available, ranging from continued internal funding to the potential of attracting risk capital to support the development of the business.

Management wanted to know how the true potential of the technology could be determined. This question included finding the ability to protect the key attributes of these new applications from aggressive competition. While patent and legal protection is the conventional approach, it is never as powerful as the protection that comes from building a position of market leadership.

Harman was able to demonstrate a number of technical advantages in active vibration control, including speed, linearity (consistent response with variations in voltage), durability, and efficiency. But these advantages did not answer the question of which vertical industry or application to pursue first.

solution

We identified a new market for vibration control and taught Harman's executives how to capitalize the opportunity with a new Business Model.

Harman turned to Predictable Innovation for help selecting the industry with the fastest adoption rate and shortest path to commercialization and financial return.

Predictable Innovation conducted a go to market strategy assessment that included interviewing a relatively limited number of innovators and technology enthusiasts. This assessment provided objective information about the early market’s understanding of vibration control, their perspectives and biases, their needs for information, and their sense of the potential for the technology.

By gaining this thorough understanding, we evaluated the value propositions and market alternatives, understood the implications of each, and moved toward an approach that Harman could capitalize on by creating a new business model and operating plan for the next phase.

During the engagement, we delivered a technology introduction process that built an effective word-of-mouth understanding of the potential for the technology and product derivatives. It also acted as a market test by proving a continuing source of objective feedback and buying intent from potential markets. During this process, our team acted as Harman’s strategic go to market executive team to help assess the potential of different market segments, understand the requirements of each, begin to build the marketing and sales assets and programs that target such segments, and then provide support in reaching those segments until it became appropriate to assign or hire full-time people.

In essence, our team taught Harman executives how to identify the early market for vibration control, then build a value proposition, test it in the market with an introduction and attract early adopters in the industries, applications and segments with the highest potential for adoption and financial return.

impact

Harman targeted road noise cancellation in auto industry and closed clients like Hyundai.

Representing the first of its kind in the automotive industry, Harman’s Road Noise Cancellation (RNC) technology minimizes unwanted noise generated when the vehicle tires roll across the road surface. RNC, which is presently ready for market implementation, enables automakers to use lighter-weight materials and improve fuel economy without compromising on vehicle noise levels.

For example, the Genesis GV80 by Hyundai uses active noise canceling developed by Harman. Hyundai says their Genesis GV80 luxury SUV features the same noise-canceling technology as used in premium headphones. As any frequent flyer will likely know, headphones with active noise canceling (ANC) use microphones on the outside to hear ambient sounds – like the drone of an airplane cabin – then work out the opposite waveforms, and play that into your ears.

The result is a dramatic reduction in background noise, and this is exactly what Hyundai's premium US brand Genesis achieves with the new GV80.

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