Monthly Archives: October 2013

Seven Steps to Commercializing Products and Services

In most venues outside of academia, R&D is undertaken for the purpose of commercial benefit.  Topics on which research is engaged are typically central to the either the current space of the company’s focus, or an adjacent market (new or existing) where the company anticipates making a mark.

R&D is launched towards solving specific problems, hunting for commercial advantage, discovering new features or capabilities or reducing costs for existing product or service offerings.

Assuming success on the R&D front, there is a challenging bridge to cross, when the outcomes from the research work are to be moved into a commercially viable position.  Most modern $50 devices were once only possible as multi-million dollar prototypes at some point.  The path from then to now can be quick or slow depending on many factors.

Certainly, R&D that proves in the viability of a new product using non-existent or very early-stage components will have a long road ahead.   But many R&D projects today seek to exploit existing commercial-off-the-shelf (COTS) components, or perhaps represent a small increment to an existing product embodiment.

These seven steps are an effective path to a commercial product or service:

  1. Definition of problem, opportunity or goal.
  2. Establishing a viable path to goal
  3. Demonstration of elemental capability(ies)
  4. Proof of concept implementation
  5. Evaluation of Commercial viability
  6. Product prototype
  7. Commercially viable implementation

Definition of goal

Framing the goal in terms of the problem(s) to be solved for the end-user or customer is key.  An open ended research project that seeks to understand wireless communications will not take a cost-effective, or likely productive path to commercial success.  Specific R&D goals should quote measurable criteria in in terms of functionality.  Examples may be to deliver a 5Mbps data link with a certain bit error rate, or perhaps reduce the cost of a product by 50%, or maybe to develop a pizza delivery service that can route drivers to calls in a certain area within 30minutes or less.

There should always be another part to any goal – a financial element.  Goals that are comprised of the benefit to the end user/customer, and a commercial constraint are ones that remember the ultimate reason for R&D. There is not just a functional goal, but the cost of commercial deployment must be viable as well.

Path to goal

R&D proceeds through a structured exploration to achieve certain goals, as previously discussed.  We’ll leave the means of conducting effective R&D to other discussions, but towards the goal of this article, attention should be paid to:
a) tracking costs associated with the work
b) capturing learning during the process
c) retaining the skills and techniques within the company
d) protecting intellectual property where viable (e.g patents)

The reason for these steps is that the commercial development of a product or service from the R&D must not only benefit the company in unit revenue-versus-cost, there must also be a means to recover the amortized cost of the associated R&D.  As well, retaining the learning and rights that went into development of the product is necessary to retain competitive advantage, and to build on success in future product cycles.

Demonstration of Capabilities

Before an investment in a prototype product, system or approach, the elements that make up the solution must be evaluated for practical viability.  Can these elements potentially function effectively enough to justify combing them into a final product or service?  Is each a stable and potentially economical contributor to the whole?  Are there stable and viable sources for, or a means to produce, the pieces that make up the final product?

Proof of Concept Implementation

Towards the eventual commercial outcome, the assemblage of the elements or components into a system needs to be successful.   For a electronic consumer product, the buttons and display need to work with the control processor and that in turn with the networking.   For a retail service the dispatch procedures need to be transmittable to the drivers and the product-racks need to fit in a real-world truck.

Commercial Evaluation.

With conceptual system viability proven, the next concrete result needs to be a prototype matching the final configuration.  This will be intended for pre-manufacturing or pre-deployment testing, field testing, or maybe investor or reseller engagement.  It will test the practicality to assemble a final working, commercial assemblage of the validated components.  Before embarking on that crucial stage, the commercial evaluation needs to happen based on the previous proof-of-concept implementation and learning.

This analysis determines if there can truly be a profitable market for the product or service as defined.  What are reasonable expectations of cost?  Will the end-user experience goals truly be met?  Can the components, materials and associated labour be acquired and employed successfully?   Can the resulting product or service scale up to numbers that define success in the market?

Product Prototype

With successful outcomes from the evaluation, a product prototype that is indicative of the final model is needed before commercial deployment.  This will highlight any problems with manufacturing or full-operational deployment.  If it’s a business process or service, the prototype is trialled to work through the devised steps, with the tools required, and ensure the outcomes are successful.  If we’re working on an electronic product, a viable circuit, enclosure and basic software functionality is needed to work through the volume production and testing plans.

Revisiting the Commercial Evaluation is appropriate upon completion of the prototype, as much learning will occur during the process.

Commercial Implementation

With confidence the final product production can commence. Ideally a trial period is declared with close monitoring.  Manufactured product is scrutinized to ensure production is tuned to high quality.  Costs are re-evaluated to ensure they are within parameters.  Service examples begin to engage customers, and feedback is openly sought.     With success and responsiveness in the trial period, production is ramped to meet the anticipated market demand and revisited based on uptake and success.

Our work isn’t finished here.  Monitoring of customer satisfaction and returns, repairs and failures is valuable data for the next iteration of the product cycle. Ongoing learning enhances margins through cost-reduction and/or improves competitiveness.

There are challenges along way beyond product-specific ones.  Cultural and organizational challenges around interfacing research staff with operational design and support staff required attention to ensure products make it through the cycle.  Development and dissemination of skills and know-how are important to being able to support the product or service that is ultimately delivered.

(What next?  Beyond this high-level framework the detailed steps to make your product or service a success include marketing, channel development, competitive analysis, budgeting/finance and people management. Watch the blog for more help, or contact us to discuss.)