 |
Test
The second major stage of commercialization is the final validation before launch. It consists of live or field testing of the product, sales and marketing approach, and operational processes in real conditions, but on a reduced scale and with appropriate caveats to the market. Based on test results, final modifications are made to the product, processes and launch plans as key information and insights are collected.
Many ventures, under market and investor pressure, omit or skimp on the test stage. Successful ventures find ways to conduct testing, but in such a way as not to slow down time-to-market. A well-known recent example has been Google’s approach, positioning products that are in production use by millions of users as beta versions. In this way, Google is in the market early, yet users do not have expectations of perfectly functioning finished products.
The following are some of the testing activities that should be performed within each track:
Product – internal (alpha) tests and external (beta) test to rigorously test the product in the native customer environment.
Market – marketing and selling to individual trial customers and to test markets to test the marketing messaging and tactics, and the sales channels and processes.
Process – pilot runs of operational processes in full production mode including sourcing from vendors and partners.
Launch
With the completion of the test stage, commercialization moves into the critical launch stage. The goals of launch are to release your product to market through a well-planned launch strategy, and get the product as quickly as possible to commercial viability. The point at which this is reached depends on your industry. We generally recommend defining the end of launch as when the product has sufficient market traction to achieve financial breakeven.
The first focus of launch is typically the “early adopters”. Early adopters are people who are either technology innovators who buy because it’s cool, or visionaries who buy to realize their vision or gain a competitive advantage. Typically comprising 5 – 10% of a market, they are easy to spot, asking questions like “What does it do?” and “How does it work?”. For a new product or service, early adopters are easiest to win as customers. In many markets, the early adopters are also key influencers in the market, with the ability to help build momentum until the “tipping point” is reached.
In the beginning, you should focus intensely on these early adopters, and do whatever it takes to secure these customers, including price breaks, extensive support and customization. By doing so you will generate your first vital revenue streams, and perhaps even more importantly, build a base of reference customers that will become important influencers and will play an key role in your success.
In parallel with your focus on early adopters, you should seek to confirm your planning and preparation to date as to your second focus – “crossing the chasm” to your mainstream target market. As Geoffrey Moore described in his well-known book, early adopters and mainstream customers have different needs and characteristic, and many ventures fail because they do not recognize or prepare for this.
The important group of mainstream customers on which to focus, comprising approximately 40 – 50% of the market, are pragmatists, who base their purchase decisions on reliable references and a clear return on investment. They are also relatively easy to spot, with questions like “Who else has bought this?” and “What’s the ROI?”.
To penetrate this group successfully, you need to focus on a very specific customer with an urgent, unmet need. Pragmatists prefer making no decision, primarily buy to solve problems, and only buy when the problem is so acute that it becomes as “top 3” item on their action lists.
Reaching them and winning them as customers, as you must to build any real revenue, requires intensive efforts, with constant agile adjustments to the details of product offering, sales and marketing approach and operational processes to find the optimal formula to unlock the market. For this reason, identifying and focusing on a specific market and need is a constant theme throughout our methodology, from the beginning of ideation.
Once you begin to get real traction with mainstream customers, your revenues begin to climb, you reach breakeven, and you transition beyond the commercialization phase of the product life cycle.
* * *
Commercialization is the beginning of serious funding and resource commitment in the product life cycle. As such, it is the crucial stage where ideas become reality. Using the framework and ideas described in this article, you can significantly enhance your probability of success and reduce costs and time-to-market. The result will be to secure the vital initial market traction and financial results you need to get through the precarious commercialization stage, and to lay the foundation for long term product value and success.
Resources
Brown, Tim. “Design Thinking: Thinking like a designer can transform the way you develop products, services, processes – and even strategy” Harvard Business Review, June 2008 (subscription required)
Tim Brown, CEO of prominent product design firm IDEO, introduces a method intended to avoid design isolation by asking designers to create ideas that meet people’s needs in a technologically feasible and strategically viable way. One of his recommendations is to undertake rapid prototyping. The goal of rapid prototyping is not to “complete” the prototype, but rather to learn about the strengths and weaknesses of a product and identify new direction for subsequent prototype versions.
Cooper, Robert G. Winning at New Products: Accelerating the Process From Idea to Launch.
One of the classic product development texts, it presents Robert Cooper’s Stage-Gate process, which has been adopted by innovative companies over the past two decades.
Jolly, Vijay K. Commercializing New Technologies: Getting from Mind to Market.
This book, focused on new technologies, lays out a end-to-end framework that differs from the strictly linear processes previously developed. The technology commercialization process presented by Professor Jolly advocates the use of five diverse sub-processes linked to each other by intermediate stages of stakeholder mobilization.
Moore, Geoffrey A. Crossing the Chasm: Marketing and Selling High-Tech Products to Mainstream Customers
Moore’s classic introduces the gulf that exists between early adopters and the mainstream customers of high-tech products. He presents strategies for how to navigate this pivotal divide and market to the mainstream.
Wheelwright, Steven C. and Kim B. Clark Revolutionizing Product Development: Quantum Leaps in Speed, Efficiency, and Quality
An excellent source for building organizational capabilities for undertaking the commercialization phase. Wheelwright and Clark have championed the “heavyweight” team structure recommended in this article.
About the author
Michael Lurie is the CEO and founder of the Agile Strategy Institute, a research, education and consulting organization, and the creator of its original core body of knowledge. He is also the founder of the Agile Strategy Alliance, a non-profit professional association for executives, board members and advisors interested in learning and practicing agile strategy.