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.
In our next entry we will discuss these stages 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.
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