Commercialization gap, part 2: planning

The primary source of ground-breaking ideas are the many high calibre public and private research institutions in Canada. However, only when technology is linked with a value-generating business concept, does a real cash-flow positive company become possible. Think of Google: if not for the ingenious advertising driven revenue model, the world of search engines might’ve been very different.

The choices made during the crucial steps of commercialization will be amplified over time, making change of course difficult and often costly. So early planning and ongoing flexibility are needed.

Here are some industry specific concerns that should be considered in your early planning:

Life Sciences: The technical risks of commercialization are enormous, especially in life sciences. A lack of reliable early predictors for the efficacy and safety of compounds highlights the importance of choices made at the early stages of development. To go from benchtop to bedside takes hundreds of millions of dollars, many years of development and clinical trials, and has an incredibly low success rate.

With such dizzying numbers, the efficient use of capital to reach value-added milestones must always be top of mind. Company valuations take off once proof of principle is in place. Depending on the disease target, proof of principle for a drug can take many forms, but human trials would catch the attention of any pharmaceutical buyer. Know what the established proof of principle is for your target indication and work to that as expeditiously as possible.

ICT: While somewhat less costly, product development in ICT industries is under huge time pressure to get to market because rarely will a company have more than a 24-month technology lead. So getting out of the gate and into the hands of your customer is the chief concern. In ICT, word of mouth can act as your best proof of concept. Once sales people of an established ICT firm start hearing from their customers about the new competition, your proof of concept will spread via testimonials of user experience. This is also a great way to capture the attention of the business development officers of the larger ICT firms.

Mature industries: Technologies that provide truly breakthrough solutions to mature industries like manufacturing, energy or materials require lengthy validation by the dominant players. These large companies will only incorporate an innovation into their processes once the organization is convinced that the immediate profitability benefits of the innovation will far outweigh the potential for disruption.

In trying to disrupt an established industry like manufacturing, it may be better to start small and easy. If you’re faced with a wide range of applications and opportunities, chose the ones that require less regulation and are less risky for the company to adopt (e.g. less disruptive to their current manufacturing processes). When successful, it will be much easier to move into other more lucrative business areas.

Planning for and hitting these proof of principle points goes a long way to increasing the value of a new technology. In the next installment I will discuss the funding of risk.

About this series: For a week, I’ll discuss the “Commercialization Gapâ€? in Canada. This is certainly a complex issue that results from a variety of factors. By no means is this an authoritative and all encompassing look at the issue, but I do hope to shed some light and spark some discussion on this topic. The content draws heavily from a recent article by our own Veronika Litinski in the February 2007 edition of BioBEAT. Be sure to stay tuned as we dig deeper into this issue faced by many of the great Canadian researchers doing ground-breaking work.