Repurposing is a form of innovation
It necessitates that leaders and managers find ways to step “out of the box” and look across markets for ideas and opportunities. While this may be great fun for some, it is also likely to be painfully difficult for others. But in all cases, though repurposing can be very effective, risks include getting distracted by trying to do this work “in the margins” or getting defocused by becoming prematurely fixated on pursuing some great new idea.
Success Factors for Repurposing
Based on our experience, we recommend six “rules” for successfully pursuing repurposing:
- Get market research help. Whenever a firm is not familiar with markets, buyers and users who might find their offerings attractive, there is work to be done. To avoid the defocus problem, get help from professionals who know how to research and evaluate markets. The opportunity costs of not doing the necessary research or of trying to do it in the margins, in most cases, will be higher than the costs of hiring professionals who can do this work expediently.
- Seek to complement, not just to compete. When firms start thinking about how they can make partners successful (not just themselves or their clients), they become better able to envision and find repurposing opportunities. We have found that once they can get a client to stop thinking about “competing” (I win, you lose) and start thinking about complementing (you win, we win), that client is more likely to be successful, especially with repurposing initiatives.
- Recognize that the value of an asset varies from market to market. Managers must understand why and how the value of their technology, product, or service will vary in different markets. Just as the iPhone® will likely be of greater value to a tech-savvy 30-something living in San Francisco than it will to an 80-year-old retired farmer living in rural America, so will other technologies vary in value depending on application and market.
- Examine the marginal costs of each opportunity thoughtfully. Firms considering selling their products for new uses – whether directly or through third parties – should carefully examine the marginal cost of pursuing an opportunity. If a firm’s goal is to take market share and dominate in established markets, then higher costs may be justified. Whenever a company enters into a repurposing deal with a third party, the marginal costs to the firm should be very low. In fact, though there will always be some sort of cost to pursuing any new initiative, however, zero cost should be the goal!
- Get negotiation help if you do not have deep experience negotiating third party deals. Given the deplorable track record and lack of productivity from most partnering relationships, managers owe it to their companies to either get help or get training because finding, attracting, and closing third party deals requires knowledge, talent, and experience that a majority of managers and sales people simply do not have.
- Build third party relationships that are collaborative, not adversarial. Whether negotiating a deal yourself or through a consultant, broker or lawyer, successful partnerships must be collaborative, focused on the best interests of all involved, and structured around clearly defined business objectives and success metrics. Although lawyers tend to be excellent negotiators, managers should use lawyers to assist with partnering deals only if they are willing to invest in negotiating for the long term success of each deal, not just getting the deal structured and closed.
Recycling and reuse have long been seen as “good things”. Repurposing is simply one more form of reuse – but one that can create significant value and new revenues and bottom line results. Still, given the inevitable risks, repurposing is not for everyone. Startups, companies that are not strongly focused on their core competencies, and firms that do not have assets that may be considered sufficiently “advanced” for other markets should not consider repurposing.
On the other hand, companies that have invested heavily in the creation of technologies or technology-based products or services, and whose offerings are seen as advanced in at least one other market or industry vertical, should consider repurposing. And established firms that have large technology portfolios should make investigations into possible repurposing opportunities a regular part of their strategic planning activities.