Seven stages of chemical technology from creativity to industrialization (Issue 13/Total 100)--Business Concept Demonstration

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This post was last edited by xiouxingzhe on 2026-6-23 15:24 The seven stages of chemical technology from creativity to industrialization (Issue 13/Total 100 issues) Innovation Breeding: Business Concept Demonstration Dear Friends: Hello everyone! In the last issue, we talked about scientific concept demonstration - how to deduce on paper whether a technical idea is true or not. This issue talks about the second sieve: Business concept proof. If a technical idea is scientifically established, is it worth pursuing? uncertain. It also has to withstand commercial scrutiny: Is there anyone in the market paying the price? What is the competitive landscape like? Can the account be settled? Scientific argumentation and business argumentation are both indispensable. If you can't pass a line, you should give up decisively. 1. How big is the market? To do market analysis, you don’t need to spend several months making hundreds of pages of reports like professional consulting agencies do. But you must be able to answer three core questions. First, how big the market is. Approximately how many thousands of tons is the domestic demand for the target product? What about globally? Where does this number come from? Industry reports, customs data, public company prospectuses—there has to be a source. If data from multiple sources corroborate each other within an order of magnitude, the data is basically usable. If the data from two sources differ by an order of magnitude, you have to ask why and figure out which one is more trustworthy. Second, whether the market is growing or shrinking. Look at the trends over the past three to five years. What is the reason for the growth? Is downstream demand expanding? Is import substitution space being released? What is the cause of shrinkage? Replaced by new materials? Have downstream industries been transferred? Building a cost advantage in a shrinking market is far inferior to building mediocre technology in a growing market. Third, what is the price? What is the historical price trend of the product? Are there any cyclical patterns? In what range does it fluctuate? What price do you base your calculation on? Should we take the average price of the past three years, or should we be more conservative and take the low price range? Here is something that is easily overlooked: The source and method of demand data should be seen. What is the prediction of an industry report based on? Is it a simple linear extrapolation, or is it based on detailed estimates of downstream capacity expansion? Data obtained by different methods have completely different credibility. If you are using someone else's data, know what their methods are. If you make your own estimate, you should clearly write down the logic of your estimate - not to prove that your calculation is correct, but so that when you review the calculation in the future, you can clearly see which assumption was wrong. My own experience is that the conclusion of market analysis does not need to pursue high accuracy, but the data source must be clear. ±An error of 20% is acceptable at this stage. 2. How strong are your competitors? Your new technology does not compete in a vacuum. The existing technical route is the opponent you must face. Make a list of all major existing routes. For each route, figure out a few things: How high is its yield? How much energy does it consume? How big is the investment? How much are the three wastes? Which companies are represented? What is the core barrier—the advantage of raw materials? Scale effect? Or a technical secret? Here is a place that many people tend to overlook: Don’t just look at the current level of your competitors, but predict how far they can improve. If your new technology takes three years to be industrialized and you evaluate your competitors using data from three years ago, your conclusion is optimistic. You have to ask yourself: In these three years, in what aspects may the existing mature routes continue to improve? How much more can its energy consumption be reduced? How much room does it have for scale effect? If there is room for continuous improvement of a few percentage points per year on the existing route, then your technical advantage needs to be greater than what you see now to still hold up three years from now. After doing the comparison, ask yourself a key question:: If your new technology is made, what are the advantages over these existing routes? Is the cost lower? Better quality? Safer and more environmentally friendly? Or does it not occupy anything and is just "relatively novel"? If you can't find at least one clear differentiating advantage, you have to put a question mark on this direction. Advantages do not necessarily need to be crushed in all aspects. Sometimes a breakthrough in one key dimension is enough to move the market. For example, in the p-phenylenediamine project, the biggest advantage of the continuous flow process is its intrinsic safety. As long as this advantage is critical enough, it may become the key to opening the market. 3. Whether the accounts can be settled. There are people in the market to buy and there is an advantage in competition. The next step is to settle the accounts. Investment estimates. Assuming that a set of large-scale equipment is to be built, use the scale index method or the analogy method of similar equipment to roughly estimate the total investment. The accuracy does not need to be high, ±50% is enough. If you can't even pass this rough calculation, no matter how precise the calculation is, it won't mean much. The core of the scale index method is that investment is proportional to the power of 0.6 to 0.7 of production capacity, but this index is not omnipotent - if there is a single extra-large piece of equipment in your process, the index may be too small. ； If there are a large number of small devices connected in parallel, the index may be on the high side. If you are not sure, use 0.6 and 0.7 to calculate once to get an interval. Investment data for similar devices must also take into account price changes and differences in construction locations. The budget for a device built on the eastern coast five years ago may be quite different from one built in the western interior today in terms of labor costs, transportation costs, and supporting conditions. Cost estimation. How much does the main raw material cost per ton? How much are the utilities? How much is the labor, depreciation, and repairs approximately? Add it all together and you get the full cost per ton of product. What is easier to miss in cost calculations is the cost of treating three wastes and transportation costs - these two items sometimes account for a large proportion of the cost for fine chemical equipment. Payback period. If the investment is divided by the annual net profit, how many years will it take to recover the capital? The depreciation period of a chemical plant is usually more than ten years. If the payback period is too long, it means that it does not make sense economically. Let me emphasize here: All calculations at this stage only require an accuracy of ±50%, or even ±100%. The actuarial calculation will be done after the pilot test is completed and the complete data package is available. What we are doing now is to determine the direction - not to calculate accurately, but to exclude those directions that "are not profitable no matter what the calculation". 4. What to do if the conclusions of science and business are inconsistent? This is the most testing situation. Scientifically feasible but of insufficient commercial value. Your desktop reasoning and preliminary data show that this path is scientifically feasible, but the business case tells you: The market size is not large, or the product selling price is not high, or the payback period is too long based on the cost structure. Faced with this situation, the most common mistake is to have the mentality that "if the technology is good, someone will want it". Good technology and market willingness to pay are two different things. You can ask yourself three questions first: What is the reason for insufficient commercial value (is the market size itself small, or is it because of current low prices)? What is the core reason for the high cost? Can this technology become a platform technology? (Although this product has insufficient commercial value at the moment, can the technical route it opens up be applied to other more valuable products)? If you can't find a feasible way to break the situation after asking three questions, give up decisively. If found, set a clear verification time and re-evaluate after verification. The commercial value is considerable but there are scientific obstacles. The market is there, demand is strong and prices are attractive. But you face a key scientific obstacle—for example, the life of the catalyst is too short and a certain side reaction cannot be effectively suppressed. The most common mistake to make in this situation is to underestimate the difficulty of solving scientific obstacles. The optimistic prospects brought by the market sometimes make people unconsciously underestimate the uncertainty of technological research. The correct approach is to “tack on key problems within a limited time”—concrete scientific obstacles into a quantifiable indicator, and set clear time nodes and verification plans. If the expected progress is not achieved within the specified time, a decisive halt must be made, and the expectation that "the market is too good" cannot continue to push a technical direction that is actually impossible to break through. Double high but a strategic mismatch. The technology is feasible, the market is good, and the payback period is short—but it just doesn’t match the company’s current strategic direction. The company's existing technology accumulation and talent reserves are not in this direction, and establishing these capabilities from scratch requires a lot of time and investment. This is the most difficult decision-making situation, because the reason for giving up is not "not valid", but "not suitable for us". In this case, you can conduct a strategic fit assessment and list the dimensions of "technology accumulation, talent reserves, equipment versatility, market channels, and financial affordability" one by one to see how big the gap is and how much it will cost to make up for it. After the evaluation, if you feel that the cost and time are unbearable, you can consider technology transfer or cooperation with resourceful companies by taking technology shares. For children who cannot raise themselves, finding a good family is also a way out. 5. The business case can also be iterated. Finally, the business case is not finished once it is completed. It is iterable. Today you made a preliminary calculation with an accuracy of ±50%, and concluded that it is "worth continuing to advance." As pilot test data comes out, market research deepens, and design plans are refined, your investment estimates and cost calculations will become more and more accurate. From ±50% to ±30% to ±10%, every time the accuracy increases by one level, the credibility of the decision-making increases by one level. This iterative logic runs throughout the seven-stage model. Each stage provides a more accurate data basis for the business case. In turn, the results of the business case are also reviewing the direction of technology research and development at any time - if the economics begin to become unacceptable, it is time to stop and re-evaluate. Next Issue Preview Issue 14: Comprehensive decision-making - Go or No-Go. The scientific argument and business argument have been completed. How to judge the conclusions of the two lines together? In the next issue, we will talk about the four-quadrant decision-making model and why decision records must be written down - you will accumulate confidence if you do it right, and you will accumulate wisdom if you do it wrong. General directory link: Seven-stage model of chemical technology from creativity to industrialization (100 issues)--General catalog (updated in real time)