Four step commercialisation planning for early stage innovations

Earlier we spoke about finding added value for certain customer segments. We also found out the applicability potential. The next logical steps are of course the early stage “go-to-market” aspects.

1. The market, competitive advantage

You have already been thinking of the added value you can provide to certain players. Can you position yourself in the value chain, so that you can get a substantial share of the revenues? Is the market big? Is it growing double digits? What are the driving forces behind this market? How do you actually compete? What are the competitors doing? Are the customers ready for adopting your solution? 

It is hard to know on the basis of desktop research. However, select only one domain / value chain, name the customer you are selling to, and try to figure out what is the current business climate there. The best would be, if this potential customer can assist you in finding the key points. That would save a lot of everyone's time and effort.

2. Business model and market potential

How much the competing solution costs? How much money are the customers spending for purchasing similar applications? Can you sell with the same price, higher or lower? Do you think they would purchase it for this price? Is it necessary to innovate also the business model, so that you will gain many clients quickly, while most of the revenues come from somewhere else – from whom? How much money a market share of 1%-10%-50% would bring to you? Is this enough (See 4. below)? Again, should you already have the link to the potential customer, now it would be brilliant time to contact them again.

3. Concrete commercialisation steps, the first 1-5 years

From the commercialisation perspective, the typical steps with early TRL innovations are

• You will attain technology and production feasibility and have the first indications on how much it will cost to produce. How much the production costs when the process is improved?
• Carry out market research and more in-depth business planning using market-testing measures where you will ask the market, strengthen your network and contact the first pilot clients. 
• Start thinking about your “end game” within 5-7 years time. Can you create a lucrative exit by selling all you just created to someone? Who? In five years’ time, are you operating ten million-euro business and you are happy to keep developing the business further? One needs goals. Established them here for creating a business strategy and a story for the investors. This will differentiate you from your researcher colleagues.
• You will pick the shortest route to an application and will test the technology with a pilot client. Often this will be found in your contact network, or whom you can get rather easy access to. Do not mind, if this client is not the best from the business potential perspective. The purpose is to learn about your innovation’s applicability to the identified challenge/need, and speed up revenue creation in further steps.
• Study the business ecosystems and regulations in various countries. Identify more funding sources and create financial compensation agreement with the first pilot customers.
• Select your commercialisation vehicle to match your business strategy.
• Raise more funding and develop the technology to match the first customer needs and earn the first revenues. You will start learning about the business model. Use the pilot cases in your marketing, and branding as well. Remember, you should aim raising not less than 500ke in order to have some piece of mind for the application/business development.
• You’ll identify the next customer segment on your way to accessing the market with best business potential. Develop the application that sells. Strengthen the business.

These steps serve well in funding application (e.g. ERCPoC), where commercialisation plan needs to be addressed.

4. Commercialisation vehicle

How close the innovation or application is of the end customer? How much of resources (development, testing, marketing, sales, delivery etc.) it will take in order for you to start gaining market share for an application? Given your value chain analysis, with reasonable resources, can you reach many potential customers? Is your initial business model scalable? How strong is the IP protection? Are there many customers who could purchase the IP? Does your University’s technology transfer section have what it takes to out license the IP? What are your personal aspirations? Would you be willing to lead such operations, or can you at least provide technology development support later on? Could your organization keep you in the payroll until the business flies and you can earn living from the business? What are the conditions for IP transfer within your organization?

These are relevant questions, when thinking about the commercialisation vehicle. Naturally, when the idea/technology is still young, you do not need to take harsh personal measures before obtaining the market proof. It is enough that you'll build potential scenarios in case your innovation has strong market pull. 

You will establish the commercialisation mechanism typically at a point where you need to apply for additional funding, or you find your first paying customer. The typical commercialisation vehicle options range from University out licensing deal to establishing a start-up, a development -, or a holding company owning the IP.