Steps to Commercialising Innovation Explained
Steps to commercialising innovation should be strategic and purposefully thought out if they are to be successful. A good idea isn’t enough to be successful in a modern market where new innovative products, services, and solutions are constantly introduced. Committing to an idea as a viable business venture deserves due diligence to be taken in many aspects of its launch, from kernel to corn. A good commercialisation plan includes market research, development pipeline, required or desirable collaborations or partnerships, eventual product launch and continuous progression on traction and growth.
We’ve broken down some key aspects to keep in mind when commercialising an innovation. Learn how to make the process easier with Innovation Liberation Front.
Ways to Commercialise Innovation
Commercialising innovation isn’t a paint-by-number operation, and largely depends on the sector, potential collaborators, and overall appetite in the market. A good start is to amalgamate the business’ goals, its hard potential, and the possibilities surrounding it in the market.
Once there is a clear understanding of where the business sits within the market (and what strengths it can capitalise on), decisions around how to commercialise it can commence.
Deploy Yourself
Businesses rely on people, their experience, and their relationships. One of the most obvious ways to commercialise innovation is to deploy yourself and utilise your skills and relationships to get ideas off the ground and onto a solid business trajectory.
License One or More Third Parties
Licensing means holding the rights over IP, and then granting other businesses rights to make, manufacture, and/or sell the innovation, in return for royalties or other remuneration.
Licensing is a smart way to go if your business lacks any of the core competencies or connections required to deploy the innovation directly. It can be a great way to enter new geographic or field of use markets, because if you choose your licensee well, you can leverage their existing market knowledge, competencies, capital and networks (supply, manufacturing and/or distribution).
There is nothing stopping you from deploying in your core or home markets, and licensing out in other markets.
Licensing is a very flexible business model, and with the right partners can lead to rapid traction and growth.
Joint Venture With a Third Party
A Joint Venture can widen the potential commercial scope of intellectual property or intangible assets. Joint Ventures capitalise on the respective strengths of each business, which can include financial position, Research and Development pipelines, skilled workers, market power or relationships. Understanding and formally agreeing upon the respective contributions of each JV partner is critical.
Joint ventures are often a good idea for parties entering markets like China, where it is more difficult to operate directly, or where local presence and understanding are critical to success. A strong joint venture reduces the risks involved in the business for each of the joint venture partners.
A Joint Venture will often require a new brand to be designed, trademarked, and operated under. This gives the new venture a sense of independence by creating space between the two (or more) companies and spreads reputational risk.
A Combination of Commercialisation Modes
There is no one size fits all for commercialising even the same innovation within different markets. It is not uncommon for an IP owner to deploy the innovation directly within some markets, enter joint ventures in others, and grant licenses in other markets or horizontal fields of use. Examine each market prior to entry and determine the appropriate approach, having regard to competencies, capital requirements and access, and time to market and time to scale.
Choose to Sell Outright
Another way to commercialise innovation is to sell the IP outright. This is potentially the most straightforward way assuming you can attract buyers for your good ideas. If your wheelhouse lies in invention rather than implementation, selling outright is a great option for you.
Outright sale might also make sense if your innovation lies outside of the future core business of your organisation, or if you require non-dilutive cash to drive other business lines.
You earn money without all the hassle or risk of executing business plans, and there is still potential to see your idea thrive. You could even licence back some applications or geographic markets from the new owner, if you both had interest in that.
Have a Way Forward – Choose Your Commercialisation Pathway
Successful commercialisation of innovations needs a clear plan of action and ruthless execution. A business needs to plan the trajectory of the new product, it must ensure it is cohesive with wider business goals and your IP strategy, all while planning production, channels of distribution, and required partnerships.
A commercialisation strategy is all about ensuring the maximisation of capital and management of risk.
What to Take Into Account
There are several things to consider when choosing a path for commercialisation. This includes:
Your company’s existing competencies/capabilities, or potential access to others through JVs and third-party licensing.
What are the capital requirements for each commercialisation mode in each market, and how easy is it to gain access to that capital?
Consider the risk profile of the company and the investors within it – deploying yourself involves significant risk and often a longer timeframe before you see higher returns.
What is your desired timeframe – for market entry, for achieving breakeven, and for achieving scale and the desired rate of return? Do you have the scope and funding runway to be patient with patents, R&D, finding and/or growing distribution?
Your IP position plays a part. Determine whether you have or can acquire formal IP rights that are actually licensable or saleable.
Make Sure the Pathway Aligns With Commercial and IA Strategy
As always, a good IP strategy must align with wider business goals, including commercial and IA strategies. Understand how this innovation and the chosen commercialisation pathway will integrate with and support the existing commercial strategy. Or does this innovation call for a comprehensive review of the current strategies?
Steps in Commercialisation and IA Risks
Once a pathway has been set, there are steps to get the wheels in motion. This includes doing due diligence on all legal and formal rights, scrutinising the IA risks, and going to market.
Ideation and Proof of Concept
When an idea is formed, there needs to be formal steps around it to ensure your business owns the resulting innovation and no other business has prior IP rights that will stop you commercialising it. Conduct freedom to operate searching, ensure those involved in creation have agreed the IP will vest in your business, and keep the innovation confidential until you have made decisions on whether and where to seek patent protection.
Early Prototyping, Validation, Pilots and Scale Up
Early prototypes are the first mock up or maybe minimum viable product which can be put forward for market validation. Validation can include focus group sessions, confidential trials, pilots, soft releases which target only a small portion of the population, and more. However, if you haven’t yet decided whether to seek patents, be aware that some of these validation actions might be considered publication or disclosure of your innovation, which can impact your ability to obtain patent protection in some jurisdictions (eg Europe). If you do go ahead with public trials or experiments, or launch, then be aware that some markets, like USA, Australia, and New Zealand, offer a “grace period” of up to 12 months from first public disclosure within which you can still validly file for patent protection.
Feedback from the prototype and market validation should be acted upon to refine the product/service, and then an early customer pilot project can be started. The pilot could be rolled-out to a wider market section. Taking product launches in stages is a good idea as it provides valuable customer or user feedback, improving the likelihood of finding product-market fit, and mitigating the risk of a product not living up to performance expectations.
Go-to-market
Once the innovation has been tweaked to find product-market fit, it is ready to be released onto the market in full. Ensure a solid go-to-market strategy is in place for the launch, and plan ahead for further growth oriented marketing strategies.
Risks
Be aware of circulating too much information about an innovation. While deploying yourself to gain funding is a good idea, the disclosure of your innovation before patenting destroys patentability in markets that don’t operate a grace period (most notably all of Europe). Thus, the timing of patents is important.
Licenses often take a year or two to negotiate and conclude and patents take years to be finally granted. Understand these timelines and ensure you minimise the risk of running out of time or budget to complete your commercialisation strategy.
Have a solid understanding of freedom to operate issues. Searches on these issues should be ongoing throughout the entire commercialisation process.
Be aware of collaboration risks with third parties. This includes the contributors to the R&D, manufacturing partners, JV, distribution or licence partners, and continuity of supply. Any time a third party is involved new failure points are introduced and risk is potentially increased, including risk of IP slippage.
Innovation Liberation Front Can Help Commercialise for Success
Commercialising innovation doesn’t have to be intimidating. At Innovation Liberation Front, we can help in your commercialisation efforts.
We offer commercialisation assessments and help in writing commercialisation plans to support IA strategy and implementation. We have extensive experience in hashing out agreements with collaborators. We can also help you with patent and other IP landscape mapping, so you understand the relative strengths and weaknesses of players in your market space, and potential barriers to freedom to operate.
If you want to take your commercialisation plan to the next level, Innovation Liberation Front is a great step up. Get in touch to talk to us about your innovation and commercialisation plans and discover how we can help get them off the ground.