Innovation – Commercialisation of innovation
In the previous article I discussed the diffusion of innovation. I mentioned that diffusion is only one part of the commercialisation concept and that commercialisation is a more holistic concept and includes many other aspects such as pricing, logistics, marketing and advertising, after sales service etc. In the environment of corporate innovation, commercialisation of products and services and making a profit from it, are in most cases the main reason why innovation is pursued.
After the “Eureka!” moment, it’s essential to have a disciplined framework that puts a spotlight on the things that will determine the commercial potential of your idea. Without going into the detail, the seven questions that should be asked are: 1. Is the market attractive? 2. What customer needs does the innovation meet? 3. What’s the value proposition? 4. How can we lock out competitors?
5. Is it do-able? 6. Can it be profitable? 7. Is it strategic? The first three questions require a thorough understanding of the organisation’s customers, their need for the product or service, and how the product or service will match the customer’s need. The other questions are focused on the competition, the organisation’s capability to produce and deliver the product or service, all the financial aspects and if the innovation is aligned with the organisation’s strategy.
Once these questions have been analysed and answered and the idea has been fully developed, a new product or service is ready to be released to the market. Launch requirements vary widely by type of idea and by industry. Within the pharmaceutical market for example, a new medication launch program can take over 18 months, requiring the efforts of many business functions and teams. Launching a new product in any industry requires careful planning, coordination across a wide number of business functions and a significant marketing spend. Many new products and services fail due to poor launch execution and planning.
A successful launch entails coordinating the tasks, projects and timeframes of a wide array of business functions within the organisation, and often includes contractors or third party business partners as well. Powerful project management and workflow software are available that can assist an organisation to ensure that product launches are accomplished on time and on budget.
Once a product has been built or a service configured, the buying audience must be made aware of the new product. Launching a new product or service requires integrating the sales teams, sales channels, marketing and manufacturing or service delivery. A program management application that includes workflow, task management and scheduling will help ensure all the teams involved execute their tasks and responsibilities so the launch is completed on-time and on-budget. It is also good practice, if it is possible, to do a simulated version of a new launch, before actually taking it to market. This will usually highlight process flaws and issues you did not think of.
Also remember that commercialisation reaches farther than just getting the product to market. Commercialisation inherently includes building and sustaining the new product or service in the market. This means that after sales service and dealing with comebacks and defective products should also be planned for.
I have now discussed commercialisation of innovation and it was evident that customer interaction is a major part of this process. So where would the best ideas for improving the organisation’s products or services come from, the customer off course. This is a well-known concept in innovation, where the organisation taps into the customers’ creative potential to get ideas for new products and services and improvements on existing ones. This is referred to as “open innovation” and I will discuss it in the next column. I conclude with a quote from David Ogilvy: “In the modern world of business, it is useless to be a creative original thinker unless you can also sell what you create. Management cannot be expected to recognise a good idea unless it is presented to them by a good salesman”.