The SUNY Alfred State Customer Discovery Story
Ben is a plant engineer in a manufacturing facility. Like any engineer, Ben values efficiency to save his company money. Nearly all manufacturing processes generate waste heat – this is heat required for the process, but not reclaimed or reused. Current strategies for using waste heat to improve cooling processes are very expensive.
With inexpensive membranes and water, the researchers at SUNY Alfred State have developed a low-cost HVAC system that avoids use of harmful chemicals. Now, using this Alfred State technology Ben can redirect the heat that was previously a waste byproduct and use it to improve air conditioning efficiency, save money and help the environment.
The business model for Alfred State’s technology is also proving successful to scale, presenting a novel method to turn the liability of industrial waste heat into a resource.
Industry Interactions Determine Problem-solution Fit
NEXUS-NY participants are nearing the final weeks of the clean energy seed accelerator’s Phase 1 programming. Over the last several months, scientists and entrepreneurs have worked together to develop and test various business theories through interactions with industry participants. The goal is to determine the best problem-solution fit based on the needs expressed by potential customers, and to develop a successful go-to-market strategy.
Among the 2016 teams, and participating in the NEXUS-NY accelerator for the first time, is SUNY Alfred State. Technical lead Dr. Jon Owejan and entrepreneurial lead Steven Wood are working towards commercializing a membrane heat pump technology that provides latent and sensible cooling in a single device, without hydrofluorocarbon refrigerants. According to NEXUS-NY Executive Founding Director Doug Buerkle, the team is excelling in the customer discovery process.
“Most people have a difficult time with customer discovery because they look for confirmation and don’t like to hear the word no,” said Buerkle. “The SUNY Alfred State team has really taken the process to heart by listening to customers. In just a few weeks, they’ve had several high level conversations, which have resulted in a pivot in their business opportunity.”
Customer Discovery Prompts Change, More Value Gained
SUNY Alfred State’s technology is unique because it can fit into any refrigeration or space cooling application. However, during the team’s customer discovery process they found the industry to be somewhat risk adverse. Many customers have said they are happy with the state-of-the-art vapor compression systems currently on the market, which the SUNY Alfred State team seeks to replace with their novel technology.
“From our discovery, we learned that it took many years to get refrigerant-based heat pumps to the level of reliability we see today, and the professionals that struggled with early systems are not in a hurry to start the cycle over again,” said Jon Owejan, Assistant Professor of Mechanical and Electrical Engineering Technology at SUNY Alfred State. “Eventually, we began to see the perfect angle for our solution. Unlike conventional heat pumps, the performance of our system can be enhanced with a waste heat source.”
Owejan explained how in speaking with potential customers, the team has been able to uncover a problem area for facilities that generate process heat and require space cooling. This includes manufacturing plants, data centers, supermarkets and dairy farms, as well as any facility that uses combined heat and power installations.
“These potential customers use their heat to keep the facility warm in the winter, but have no choice but to dump heat outside in the summer,” said Owejan.
Absorption chillers have been the only thermally activated options for many years, but the complexity and poor ROI have deterred many facilities to make a change, especially in the northern latitudes where summer cooling hours are short.
Discovering this pain point has helped the team at SUNY Alfred State discover the untapped value in their novel membrane heat pump technology. They now know customers will benefit from lower costs along with simplified architecture and maintenance when integrating their system with a waste heat source.
“The end user, typically a building occupant, will value the quiet operation and precise control of temperature and humidity realized with our technology,” said Matthew Lawrence, SUNY Alfred State Professor of Mechanical and Electrical Engineering Technology, and a Development Advisor on the team. “Our company will derive additional value through a fully scalable design that can be sized for almost any application. Since our product is fully recyclable and void of chemical refrigerants, the environment won’t be negatively impacted during its lifecycle.”
Uncovering Big Business Opportunity
According to Research and Markets’ Global Heating, Ventilation and Air Conditioning (HVAC) Market – Forecast & Analysis, 2016-2022, the global HVAC market is projected to be worth over $151 billion in 2022. “In the U.S. alone, air conditioning is a $10 billion industry that uses over 4.3 quads (4.54 billion GJ) of primary energy, almost all of which comes from non-renewable sources,” said Lawrence.
In an effort to capture a portion of this significant opportunity, the team at SUNY Alfred State is building a business model, which targets a small segment of this market (2%) that handles cooling with absorption chillers.
Through customer discovery, the team found that all participants in the value chain agree that an alternative to absorption chillers is needed for several reasons. “We’re confident our technology can solve these issues,” said Steven Wood, an intellectual property attorney and Assistant Director of Innovative Services at The Research Foundation for The State University of New York.
Understanding the combined heat and power industry universally shares the pain of convincing their potential customers to adopt absorption chillers for cooling during the summer, and knowing that this industry is currently expected to grow at a rate of 15% over the next 10 years, Wood says catering to these installations represents a significant business opportunity.
Asking Questions Leads to Answers, Helping Define a Technology Roadmap
As Assistant Director of Innovation Services with SUNY RF, Wood is continually faced with new, advanced technologies. Similar to the membrane heat pump developed by Dr. Owejan at Alfred State, most of these technologies are very early stage. Often there is a bench scale or working prototype in place, and as elaborated by Wood “the primary challenge is not in figuring out the general applications, but more so the specific market niches that will really help the technology establish a commercial foothold.”
“Many of the questions that we are forced to ask ourselves as participants in NEXUS-NY are the same types of questions that I am helping other SUNY technologies to address. And, to be totally honest, NEXUS-NY is helping me to look at other opportunities in my portfolio with the same type of lens,” said Wood. “It’s a great program that really engages participants to perform introspection and self-assessment based on a strategy of aggressive customer discovery.”
Wood suggests inventors ask themselves these questions:
- What might be some wrong assumptions you have made?
- What have you learned through customer discovery that has caused you to change those assumptions?
- What do the potential customers have to say about the purported advantages offered by the technology?
- Do the potential customers view the advantages identified by the inventor and the entrepreneur as actual advantages or do they view other aspects of the technology as more advantageous?
Full Spectrum Perspectives Give SUNY Alfred State an Edge
Steven Wood’s background as an intellectual property attorney and startup consultant has proven invaluable to the success of the SUNY Alfred State team throughout the NEXUS-NY seed accelerator.
This real-world experience also applies to the team’s technical lead, Dr. Jon Owejan. In addition to being a mechanical engineering professor, he’s also a former employee of the GM Electrochemical Energy Research Laboratory. Having served as principal investigator for several high-profile energy research projects, Owejan has seen R&D from the corporate side, which he says has made him skeptical about new energy technologies.
“Companies like GM are very careful about how ideas are vetted; considering not just a first principle evaluation, but also safety, material availability, comprehensive cost modeling, manufacturability, etc. The first-hand experience with successful technology development through this process has allowed me to avoid many of the common roadblocks that some academics don’t foresee,” said Owejan.
Coupling this career experience is an energetic point of view. The SUNY Alfred State team also includes the youngest NEXUS-NY participant to date. Nathan DeMario is an undergraduate in the Mechanical Engineering Technology program. He is also an intern at Oxbo International Corporation. He says even though he may lack experience in dealing with some of the NEXUS-NY objectives and working with customers, he recognizes the fundamental concept of the customer discovery process as being extremely important and valuable. Specifically, to make sure there is a market for the technology as to not waste money and time, and be able to apply the technology to multiple markets.
“The process makes sense. It is a more of a reality check. Nobody will buy your product if they have no need for it, or if something else already exists that works more efficiently,” said DeMario. “The customer discovery process has also allowed us to iterate on our designs.”
DeMario focuses on modeling and assisting in customer discovery behind the scenes. Since many of the potential customers the Alfred State team has connected with during the customer discovery process are intrigued by their technology, Nate helps them understand more about the product.
“Explanations are great, however a model that can be viewed goes further. We have especially found that a model that gives scale to how small our unit would be compared to current products has been beneficial,” said DeMario.
SUNY Alfred State Team Leads by Example
With a viable and scalable business model in place, the team at SUNY Alfred State is preparing to compete for a spot in NEXUS-NY Phase 2. This part of the program includes de-risking the technology by building early prototypes and seeking third party validation. The combination of these efforts seeks to define the technology’s commercialization objectives. A private demo day will be held mid-April. A panel of seasoned entrepreneurs and clean energy experts will assess each team’s progress and select who will be moving forward.
Representing a school that is known for making things and getting things done, the team is proud of their research and technology, and hopes to put SUNY Alfred State on the map for big innovation thinking.
“SUNY Alfred State focuses on the applied aspects of engineering that enable innovation. Real change can only happen by testing how the customer reacts, and iterating toward the best solution,” said Owejan. “The NEXUS-NY curriculum and mentorship has been invaluable in guiding us through this process, and these insights will certainly impact our students for many years to come. We hope the project and technology that results will serve as a prime example of how effective technology transfer is executed.”