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Evaluating an Innovation's Commercialisation Prospects

Not every innovation is commercialisable.

It is not just technical or scientific success or failure that will affect an innovation’s commercialisation prospects. So many other factors will as well.

The commercialisation pathway can be lengthy. It can take years. It can be time consuming. It can be expensive.

If we had a crystal ball and could see the future we could determine whether our innovation would reach the market, and know that our commercialisation efforts would be rewarded and justified. If our crystal ball showed commercialisation failure, we would know not to waste our time trying to commercialise and instead we would move on to another project with greater commercialisation merit.

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But without a crystal ball, or a time machine, the next best thing to predict commercialisation success or failure, and therefore to decide whether to invest commercialisation effort and resources, is to make a robust assessment of commercialisation prospects.

Note that we are not assessing a project's scientific merit. A project may have scientific merit, and in that case it should proceed for that reason alone.

Instead, we are assessing commercialisation merit, to help us decide whether we should apply commercialisation effort and resources to a project.

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What we are seeking is to determine if a technology project:

1. should be commercialised, with commercialisation effort and resources being applied

2. does not yet merit commercialisation, and in this case identify what further work should be undertaken before the technology project is reassessed

3. does not merit commercialisation, and should be culled.

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The assessment needs to be objective, and evidence based.

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So, what is the best practice in assessing commercialisation prospects? There is a long list of things to do.

Without attempting to cover them all, here are some of the most important.

A patent search is fundamental. There is little point seeking to patent an innovation if it has already been patented by someone else. A patent search result however may not necessarily be fatal to an innovation’s commercialisation prospects. A patent search may identify the current patent landscape, but it may also help identify gaps in the patent landscape. Those gaps may suggest worthwhile new research directions. Does a patent search show that your innovation, while patentable, may infringe another person’s patent? This is often fatal. But not always. Infringing another person’s patent may identify a likely licensee for your innovation.

A literature search is also fundamental. If an innovation has been disclosed in scientific literature it is in the public domain. An innovation that is disclosed in a publication lacks novelty and is ineligible for a patent. There is no worse feeling that applying for a patent only to find out, years later, that the invention was published in scientific literature by another person earlier than your patent application date (your priority date). All new innovations rest on the shoulders of the innovations that came before, so it is not unusual to find scientists around the world working on the same thing and publishing their research. But, not all of them can get in first with a patent application.

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Has the innovation entered the public domain in some manner? Has it been published by the inventor? Has it been demonstrated in an exhibition? Has it been disclosed without obligations of confidentiality? Any of these can similarly result in the innovation lacking novelty, and dooming a patent application to fail.

Can your innovation be patented? Will it meet the requirements for a patent of novelty, utility, non-obviousness, with no prior use? A patented invention is more easily protected, and more desirable, which makes it easier to commercialise. But not meeting these requirements may not necessarily be fatal. The assessment may identify new research directions that will make the innovation patentable. Software may or not be patentable but can be successfully commercialised without a patent. But, if a patent can be sought, it provides a greater level of protection which may make commercialisation more desirable.

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Do you own the innovation? Was the innovation developed wholly within your own organisation? Was any part of it conceived or developed at an inventor's previous employer? Did a collaborator contribute to the innovation. Was a contractor engaged for any part of the development of the innovation? Did a student participate in the development of the innovation? Each of these can result in the ownership of the intellectual property being fragmented, which can impede commercialisation. None of these will preclude commercialisation, but they will make it necessary to tidy up the ownership and title to the innovation before there are any commercialisation efforts.

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Has a market analysis been undertaken? What is the size of the market. Is it a sizeable one so that there is room for another product? Is the market too small to justify commercialisation effort? Is the market size a growing one, or a shrinking one?

Has a competitor analysis been undertaken? Are there competing products? What is already available in the market with which the innovation needs to compete? What differentiates the innovation from what is already available? Is it superior? Is it cheaper to produce? Is it more desirable? Is it faster? Is it more attractive? Will it save more time? Is it cheaper to run? Is it more compact? Is it more efficacious? What attributes (these and others) does your innovation have that will make it desirable, and to be preferred over its competitors? What market share does the analysis suggest that the technology might achieve?

Do you have a prototype? This may not be essential, but having a working prototype that can demonstrate your innovation will make the commercialisation pathway easier.

How much more research and development is required? Are there funding sources for that further research and development. Will there be reliance on a licensee’s development resources, skills, equipment, or funding? 

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What is the Technology's Readiness Level? Is it at an infant stage of development, or a more mature stage of development. A technology with a low a Technology Readiness Level may be too infant to warrant commercialisation effort and resources. More research and development may be required before the technology can warrant commercialisation effort and resources. A technology with a higher Technology Readiness Level will be easier to commercialise because a prospective licensee can see its market readiness in the not too distant future. A technology with a higher Technology Readiness Level will also have greater value, and will secure more attractive license financial terms.

Perhaps the single biggest factor to evaluate is market need. Does the market need your innovation? In a survey of the CEOs of failed startup companies numerous factors for startup failure are listed. Number one on the list, with 42% of CEOs attributing this factor to their startup’s failure, was absence of market need. The reported list of factors and the absence of market need apply equally to technologies that follow a start-up pathway, and technologies that follow a licensing pathway. So, how can market need be assessed? One of the best ways to assess market need is to seek the advice of someone in the industry. Which companies may have interest in your innovation? Call them and say “I am from the University of [name]. I have an innovation and was hoping you could assist me with your insights about how it will fit in your industry.” Most times, the company will be flattered that a university is seeking its advice and will freely give it. Sometimes, a potential R&D collaborator or potential licensee might also be identified.

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