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Commercialization is the second phase of the Product Innovation Life Cycle, our simple but powerful framework for product development and management. The first phase, ideation, covers generating ideas, evaluating and selecting promising concepts, and planning and securing funding for the best opportunities. In commercialization, you translate the business plan you developed in ideation into reality – you build and launch your innovative new product or service.
The objectives of commercialization are to successfully develop and launch a new product or service within the minimum possible time and cost. We define the success of the commercialization phase as getting to breakeven - the point where the product is generating sufficient revenue to cover its direct operating, sales and marketing costs. At that point, it moves beyond commercialization to the final phase, Evolution.
Commercialization is best conceived of as an integrated project that consists of three tracks (product, market, process) across three core stages (develop, test, launch).
This article discusses each of these elements, and how to maximize the chances of commercialization success.
Project team
An integrated cross-functional project team is a fundamental ingredient for effective commercialization. The team requires strong project leadership, as well as reliable supporters / sponsors throughout the organization.
A useful approach to the project team in the commercialization phase is Wheelwright and Clark’s “heavyweight” team structure. In this structure, projects teams comprise cross-functional core members who are co-located and dedicated to the project, but remain part of their functional departments. These dedicated team members provide functional leadership on the project, and secure and coordinate additional functional resources as needed. The project manager, a senior-level leader with influence and experience, heads the core group and is responsible for the total development effort.
Note that for a start-up with a single development project focus, in effect the whole company is the project team, but as the venture grows it will need to evolve to balance product development and ongoing operations.
The “heavyweight” structure allows for excellent project team communication, commitment and problem solving. Also, because team members continue within their functional areas, the project team can easily leverage the resources, processes and competencies that exist within the broader organization.
Project tracks
The project team is divided into commercialization’s three primary tracks:
Product – designing and developing the product itself through engineering and technical development.
Market – designing and developing the sales and marketing processes and tools needed to take the product into the market.
Process – designing and developing the operations needed to produce, deliver and support the product.
If the ideation phase has been executed properly, much of the research and planning for each of these tracks will have been completed. The focus in commercialization is on execution – turning these plans into reality. As mentioned above, the team will focus on two primary objectives:
- Successfully building, launching and winning initial customers for the product, and
- Doing so within acceptable time and cost parameters.
This requires continual problem solving and adjustment to the plans within each of the three tracks, in order to deal with the myriad details and problems that arise once actual development begins. It also requires continual cross-functional coordination, to ensure the product or service remains technically feasible, meets customer needs and can be produced and delivered at a profit.
Stages of commercialization
Commercialization comprises three primary stages or processes:
Develop – design and build the product, operational processes, and sales and marketing launch programs using iterative prototyping and continual testing.
Test – conduct live field product, market and process testing to evaluate “close to real” conditions.
Launch – launch to early adopters then “cross the chasm” to the mainstream, monitoring closely and adjusting quickly and frequently until initial market traction is achieved.
Each of these is discussed below in more detail, illustrating how each of the project tracks is managed within each stage. Note this is a conceptual framework, not a prescriptive timeline. In practice, different tracks may be in different stages. It is unlikely to be appropriate to complete all activities for each track within a stage before moving to the next stage.
Develop
Development is the first significant commitment in the product life cycle. It is here that the planning first needs to become reality, and it has been the dearth of many product concepts that never made it through the development stage.
The foundation for development success is proper completion of the ideation phase. The deliverables from ideation should include:
- detailed final product requirements and specifications based on in-depth market understanding
- a preliminary idea of the technical approach based on an early prototype
- a clear idea of how the product will be positioned, priced, marketed and sold
- a clear idea of how the product will be produced, delivered and supported
- a high level commercialization project plan, together with the budgeted timing, resources and funding.
With these in hand, the development project team is in a good position to move forward. Without them, development is much more likely to fail.
Development basically comprises having a clear idea of the end product desired; breaking the end product into logical component parts; designing and building each component; and then integrating the components into the whole. Historically, this was a fairly linear and functional process, with a primary focus on the components, and integration only at a relatively late stage.
In recent years, development teams have made significant improvements in time, cost and success rates by adopting a more integrated process focused on building a succeeding series of prototypes using an iterative “design-build-test” sequence. This begins with the prototype created during the ideation phase. At the end of each design-build-test loop, feedback is collected and integrated into the next loop to develop the next version of the prototype. This approach allows the team to keep focused on the overall product and not get lost in detailed components. It ensures that integration issues are identified and addressed throughout the process, and are not left till a point where significant re-work is needed. Tradeoffs are made continuously, feature and scope creep is contained, and the team remains focused on delivering an end product.
Good design is the real secret to successful development. With the solid foundation of the ideation deliverables listed above, superb design should be the prime driver of the development stage. Good product design will encompass three primary dimensions: technical design, to allow the product to function as intended; design for users, to make the product appealing and easy to use for customers; and design for manufacture, ensuring the product can be produced within the right cost, quality and time parameters. More time on design saves time in building and testing, and reduces the number of iterations needed to get to a final product.
During the development stage, work progresses using prototyping and design-build-test cycles in all three tracks:
Product – designing and developing the product using rapid prototyping and testing.
Market – designing and developing sales and marketing processes, materials and launch campaigns.
Process – designing and developing the operational processes, including production, delivery and support.
By focusing on all three tracks, and constantly communicating across tracks, the project team ensures all facets required for successful product creation and launch are developed in close coordination.