Skip navigation
Perspectives on building technology businesses and AcceleratorIndia from Cartezia

Commercialising Innovation: A Radical New Approach

Sunday, May 20, 2018


Commercialising Innovation: A Radical New Approach

 

1. Introduction

Innovation holds the key to sustainable commercial growth on a global scale. Unfortunately, there is no clear understanding of how such innovation is transformed into commercial and social value. Success depends on the ability of the enterprise to integrate a wide range of economic, technological, commercial, social and cultural factors in the commercialisation process.

The fact is that the early stages of growth take a lot longer than most conventional wisdom reported in business literature. Typically, half-way through the product journey, cumulative customer penetration will only have reached about 10% of the maximum number of customers. Traditional views on innovation claim about 50%, which leaves companies in limbo of how to motivate teams, attract investments and lead the prolonged journey of scale up and return on investment.

Phadke & Vyakarnam 1,2 set out a new structured approach to this challenge. They demonstrate that the commercialisation journey is interrupted by three discontinuities or chasms where cumulative customer growth stalls. Their Triple Chasm Model illustrates that the early part of this journey takes much longer than previously thought, which confirms why scaling up is so hard to do. They combine the Triple Chasm Model with a modified technology readiness level and a corresponding commercialisation readiness level to obtain a robust measure of the maturity of any product or service. This plays a critical role in addressing any commercialisation challenge. The third critical element of their approach are the twelve drivers – the meso-economic vectors – which they define as ‘shaping’ the commercialisation trajectory.

All these elements are brought together in the commercialisation canvas, which supports decision-making and time allocation during the commercialisation journey.

This white paper is a brief overview of how start-ups, scale-ups and established corporations can commercialise innovation using this approach.

2. The commercialisation journey and the triple chasm model

The 3 Chasms on this journey describe the following key transitions;

·       Chasm I: From product or service concept to working prototype

·       Chasm II: From an early product or service to a fully functional product or service with a commercially sustainable business model

·       Chasm III: From early customers to the main body of customers as the firm scales significantly

Figure 1: The Triple Chasm Model

3. modified Technology Readiness Level and Commercialisation Readiness Level

Through their research, Phadke & Vyakarnam have defined a modified technology readiness level (mTRL) and a corresponding commercialisation readiness level (CRL). Combining this with the Triple Chasm Model provides a robust measure of the maturity of any product or service. This maturity assessment, shown in figure 2, plays a critical role in addressing any commercialisation challenge, in terms of the starting point, the desired end-point and the gap which needs to be addressed.

Figure 2: Maturity Assessment based on Triple Chasm Model & Technology/Commercialisation Readiness Levels

4. meso-economic Vectors

Twelve drivers – the meso-economic vectors – ‘shape’ the commercialisation trajectory

Figure 3: The three overall vector groups and the 12 Vectors

Four ‘external’ vectors are defined as shaping the environment. Six ‘internal’ vectors describe the drivers under the control of firms and individuals, which can be used to shape the commercialisation trajectory. Two ‘composite’ vectors describe the trade-offs between the internal and external vectors, judgements typically made by leaders and managers. All the vectors are aggregations of sub-vectors which are described in detail in

5. Commercialisation Canvas

We integrate the maturity descriptors of the commercialisation journey with the meso-economic vectors to create the commercialisation canvas onto which we can map the trajectory of any product or single-product firm, as illustrated for an example firm, in Figure 4. The Scale-up Manual provides tools which enable the relative importance of the vectors to be profiled at different points in the commercialisation journey. These insights can provide a powerful basis for leaders and managers to make decisions about the allocation of key resources in a time-critical manner.

Figure 4: Typical Commercialisation Canvas


6. Actors on the commercialisation journey and their needs

Different actors can use this commercialisation canvas to understand their own priorities and needs

·       Policy makers and agencies need to understand how to provide the right environment and resources to enable this sustainable growth.

·       Established major firms need to understand and profile existing products and services, evaluate potential new products and services, and develop or acquire new products and services in a structured way.

·       Mature firms need to understand when and how to replenish their product and service portfolios and maintain their competitiveness.

·       Growth firms need to understand and tackle the three different chasms as they grow

·       Early stage firms need to understand the drivers appropriate for their stage of growth and how to tackle them.

·       Early stage entrepreneurs need to understand the journey they are embarking on and the key challenges they face, including when to formally establish a firm as a vehicle for the journey.

·       Research-centric innovators need to understand the range and potential impact of their innovations, the complexity of the commercialisation journey and the need for commercial expertise.

Figure 5: Actors impacted by chasms on the journey

7. Shaping the commercialisation journey

A number of approaches have been proposed over the last three decades to guide the commercialisation process, based on the application of specific resources (for example core competences) or optimising the application of resources (for example ‘lean’ methods) but our new approach is based on understanding the full set of drivers and their relevance based on the maturity of the proposition.

Our approach can be illustrated by demonstrating how progression along the commercialisation journey depends on successfully crossing the three chasms, as shown in Figure 6.  Leaders and managers need to understand the vector profiles around these chasms, in particular at Chasm II.

Figure 6: Changes in strategic priorities across the Chasms

8. Delivering Commercial Impact

The approach set out in the Scale-up Manual can be used to design and deliver significantly enhanced commercial impact for three different types of players:

·       Established corporations can use it to tackle their innovation challenges in a structured way, rather than embracing generalised approaches exhorting them to harness entrepreneurial thinking, more innovative leadership and increasing R&D spend

·       Scale-up firms can use it understand their commercialisation journeys and allocate the right resources at the right time to increase the chances of success

·       Public innovation agencies, technology transfer firms, incubators and accelerators can use it to design and execute the best intervention strategies

References

1. Camels, Tigers & Unicorns: Rethinking science and technology enabled innovation, Phadke & Vyakarnam, WSP, London, February 2017

2. The Scale-up Manual: Handbook for Innovators, Entrepreneurs, Teams, and Firms, Phadke & Vyakarnam, WSP, London, June 2018