Commercializing New Technologies

Successful technology management is all about bringing a new concept to the market in the most efficient way. To commercialize an idea successfully, a number of different stages must be completed, each more difficult than its predecessor. Not only must each of these stages be completed successfully, but adequate resources
mobilized to facilitate transition from one stage to the next.

• Imagining: Developing the initial insight about the market opportunity for a particular technical development.
• Incubating: Nurturing the technology sufficiently to gauge whether it can be commercialized.
• Demonstrating: Building prototypes and getting feedback from potential investors and customers.
• Promoting: Persuading the market to adopt the innovation.
• Sustaining: Ensuring that the product or process has as long a life as possible in the market.
The first three stages obviously cannot be managed like an ordinary business with tight controls. So they have to be fostered and nurtured in an environment which is culturally quite different from normal corporate settings.

Chan Kim and Renee Mauborgne (Harvard Business Review, September-October 2000) offer a useful framework for commercializing technological innovations. They feel that organizations must address three important issues. What is the likelihood that customers will be attracted to the new technology? What is the price that will attract the largest number of customers? Will the new technology evolve into or help in building a profitable business? Successful innovators focus on how the new product or service will affect customers. They look at the various stages of customer experience like purchase, delivery, use, maintenance and disposal. They also consider the utility of the product in terms of environmental friendliness, convenience, simplicity and customer productivity. In other words, they orient product development activities towards the customer rather than the technology. The price chosen by the innovator has to attract and retain a sufficiently large number of customers. Innovations very often compete with other products which may look quite dissimilar but perform the same function. What is important here is how people will compare the new product with other very different-looking products and services. The price level will also depend on the ease of imitation. If the product is difficult to imitate or well protected by patents, a high price is possible. On the other hand, if imitation is easy, a low price becomes essential.

Successful innovators understand the importance of generating positive cash flows as quickly as possible. They generate profits not by raising price but by keeping costs tightly under control, consistent with the chosen price level. They improve materials selection, simplify design processes and improve manufacturing efficiencies to cut costs. They may also consider strategic outsourcing of non core activities. Moreover, innovators compensate for their lack of technological capabilities in some areas by partnering and forming alliances. In spite of all these moves, if the price is still high and beyond the reach of target customers, they look at options such as leasing or renting the product on a time share basis, which are more appealing to customers.