DataMining: Making decisions in highly uncertain emerging industries

During the mid nineteen-nineties, three Belgian doctoral students, Harry Flores, Stephen Douglas and Ian Moore, became interested in industrial applications for neural network technology. In 1999, encouraged by the prevailing positive financial technological climate, and supported by the spin-off policy of their mother university and with the backing of a faculty member, the students decided to commercialize their research in a brand new spin-off: DataMining.

The founders began by serving three different market segments, Customer Relations Management (CRM) bioinformatics and sports analysis, providing customized software based on neural network technology. However, soon decisions had to be made with regard to narrowing the market segment focus and the acquisition of additional capital for the company’s further development. Given the high level of uncertainty surrounding market size and needs characteristic of such emerging industries, these proved to be complex issues.

Written by Petra Andries and Yvonne Kirkels from the University of Leuven and Fontys University of Applied Science. Download case and teaching note at www.thecasecentre.org or request them from Petra.Andries@econ.kuleuven.be.

Petosan: Helping dogs to a longer life

There is an estimated 1 billion dogs in the world today. Every day, about one million dogs are born. The US has the largest number of dogs. Dog owners around the world spend enormous amounts annually on dog food, as well on accessories and visits to veterinarians. Strangely enough, dogs’ oral hygiene has not been much in focus, while studies show that poor oral hygiene might shorten a dog’s life with many years. Based on these studies, veterinarians strongly recommend that dogs have their teeth cleaned regularly. Until a few years ago, this was normally done by veterinarians only, involving costly visits to veterinarian clinics, and often dogs had to have anaesthetics in order to have the job done. Some years ago, Ole Barman, son of the inventor of the famous three-headed tooth brush for human beings, developed this idea, and the result was a tooth brush for dogs. The brush is so simple to use, that the owners now can perform adequate cleaning of the dogs’ teeth at home. Could he repeat his father’s formula? And would investors give funds to grow in the pet market?

Written by Tor Aase Johannessen from Norwegian School of Economics and Business Administration. Download case and teaching note at www.thecasecentre.org or request them from Tor.Johannessen@nhh.no.

Fruitful prospects: A European apple breeding company

Since 1982, Martin Peeters, owner of an apple tree nursery and Robert Jensen, research director at the fruit breeding centre of a German university, had worked together on the development of new apple varieties. In the nineteen nineties, Peeters’ knowledge of traditional breeding and Jensen’s expertise in molecular breeding had resulted in a number of high quality breeds. They were now, in 1998, thinking of founding a company to commercially grow and sell these new breeds. In fact, they were convinced of consumers’ interest in new apple varieties. They based their opinion on a successful experiment of Peeters’ company had conducted with the German-based supermarket chain, Home.

However, there were important hurdles Peeters and Jensen needed to tackle. The apple market in Northern Europe offered ever diminishing margins for both apple breeders and growers. The absence of quality differentiation, an over-supply of fruit and declining consumption had led to low prices for the producer. Traditional breeding techniques were barely profitable, but the market was still unwilling to embrace Genetically Modified Organisms (GMO’s). If they wanted their company to succeed, they had to think very carefully about the commercialization of their produce. This required a thorough analysis of the value chain and the relationship between the different actors involved.

Written by Petra Andries, Anneleen Bruylant and Yvonne Kirkels from the University of Leuven and Fontys University of Applied Science. Download case and teaching note at www.ecch.com or request them from Petra.Andries@econ.kuleuven.be.