2. Literature review
2.2. Commercialization
2.2.3. Commercialization process
The above discussion implies that the potential of opportunity recognition and development regarding e.g., the scope of the recognition and transferability of knowledge is largely dependent on the amount, quality, and versatility of team’s knowledge. The faster the competitive environment and the technology changes the faster specific tacit knowledge gained through experience ages. On the other hand, knowledge gained through training and formal education ages at a much slower rate (de Bruin & Ferrante 2011). This is relevant regarding the empirical research of the thesis, because one of the idiosyncrasies of high technology is rapid product life cycle as mentioned in Chapter 2.1.1. (e.g., Viardot 2004; Steenhuis & de Bruijn 2006). Furthermore, one of the challenges of commercialization nowadays is increasing pace of change in technology, digitalization, government policies and customers’ needs (Gbadegeshin 2019). Emphasis should be laid on having a team with versatile experience and knowledge from all required fields, having a strong position in a network and developing the internal process of transferring tacit knowledge to codified knowledge. This is connected to the commercialization process via its external and internal dimensions (Pellikka 2014) and the bridges between the stages of the commercialization process (e.g., Jolly 1997) which will be discussed next.
process commonly starts from an idea that originates from on-going R&D activities and it is ”regarded as a procedure in which discovery and new ideas are converted into real products and services”
(Gbadegeshin 2019, 31).
An acknowledged theory by Jolly (1997) states that commercialization process consists of five subsequent stages or ‘subprocesses’ that are connected with four ‘bridges’, that refer to activities that need to be performed in order to get to the next stage. The model is illustrated in figure 1. The first stage imagining the dual techno-market insight refers to the discovery of a technological idea that connects to a potential market opportunity. The 2nd stage and the first bridge mobilizing interest and endorsement means to introduce the idea to the right people whose opinions matter and to get their endorsement. Third comes incubating to define commercializability which means incubating the technology in order to understand if it really has potential and whether it will be enough cost-effective to proceed further. After that in the 4th phase and 2nd bridge one must mobilize adequate resources to be able to properly demonstrate the idea. The 5th stage demonstrating contextually in products and processes means demonstrating the technology successfully in the context in which it is to be used.
The 6th phase and 3rd bridge mobilizing market constituents refers to coordinating the contribution of several areas and stakeholders such as distributors, suppliers and other partners that are required for gaining market acceptance and being able to deliver the benefits of the technology. This leads to the 7th stage promoting adoption in which the final product must be actively promoted to target customer groups for them to accept the novelty. In the 8th stage and final bridge mobilizing complementary assets for delivery one must implement a pre-made collaboration with several market actors in order to disseminate the product as quickly and widely as possible. This will help optimize returns on the commercialized product. Finally, the 9th stage sustaining commercialization means activities to uphold the achieved commercialization to realize its value after it has been launched (Jolly 1997).
Figure 1. The Process of Technology Commercialization (Jolly 1997)
Due to its age and conspicuousness Jolly’s model has been subject to scrutinizing, further development, and criticism. Generally, the linearity of the commercialization process has been questioned, and a later paradigm argues that the main stages of the process are interlaced, and certain commercialization activities can be advantageous several times in different phases of the process (Pellikka & Lauronen 2007; Pellikka & Virtanen 2009). According to Gbadegeshin (2019) commercialization process mixes linear and non-linear logic and the process stages are iterative instead of fixed.
Moreover, global demand, distribution channels and potential customers should be investigated already in the beginning of the process to evaluate the potential market requirements of new products. Former studies have indicated that ignoring marketing efforts at the beginning of the process and focusing only on technical development of products has generated decreased profits and sales. Furthermore, an important contributor to the effectiveness of the process is the skill to move resources and interest of stakeholders between its different stages (Pellikka & Virtanen 2009;
Pellikka 2014).
Being over 20 years old, Jolly’s model does not encompass digitalization nor industry 4.0. Digitalization has changed commercialization process regarding e.g., sourcing and managing information, conducting analyses, and performing routine services. It has transformed commercialization into a more iterative process, created new sets of big data and fears towards possible cyber-attacks, and shortened the delays in knowledge and information networks (Gbadegeshin 2019; Pellikka &
Alivehmas 2016). Nowadays big data can be also used to gain new business insights, enable faster solutions, and improve core operating processes. Besides merely being analyzed to improve existing products big data can also be commercialized as an asset (Thomas & Leiponen 2016).
Furthermore, Jolly’s model was originally developed to describe the process in large firms and therefore it has limitations concerning its applicability regarding e.g., SME’s or small high technology firms. Activities during the process in small technology firms differ compared to large firms. In small ventures commercialization process appears to be more closely integrated with other business processes and activities than in larger companies. For example, activities are simultaneously related to product commercialization, business conceptualization and further product development (Pellikka 2014).
Gbadegeshin (2017) describes the commercialization process from the perspective of university- based spin-offs. In this example also, the process is not seen as linear but as parallel and continuous with activities that relate to each other. In some cases the process can also be circular. In this context the process has four stages: (1) Business idea creation that includes the identification and assessment of the idea, (2) New venture project finalization that consists of selection, protection and business development of the best idea and figuring out the financial execution of commercial project, (3) Spin- off launching and (4) Economic value strengthening of the company, that can be intangible or tangible, e.g., job creation, tax payment and investment returns.
In a later research Gbadegeshin (2018) proposes a model called Lean commercialization which suggests the use of lean methodology in the commercialization process. This model comprises of stages called (1) evaluation of new technology, (2) prototype development, (3) testing, (4) analyzing
test results and (5) making decisions. According to the research lean commercialization logic seems fitting for commercialization approach for high technologies that involve several risks, uncertainties, and complexities.
Gbadegeshin (2019) also noted that the commercialization processes of ICT, life sciences and cleantech companies have shared characteristics despite being from three significantly different industries. New technologies always go through certain stages: it starts with the discovery of an invention, goes through assessment and further development such as prototyping, testing, further development, and validation. The final stage is the final product development, production, and marketization. Additionally, several shared success factors were identified such as vision, parent organization’s interest, motivation of the investor, innovator and other stakeholders, the stakeholder’s industrial or legal knowledge, previous positive collaboration, and commercialization team’s work experience (Gbadegeshin 2017).
For small technology firms, commercialization process also includes two dimensions that Jolly’s (1997) model does not specify: (1) internal activities and performance and (2) external competencies and knowledge accessed via innovation-related networking. Both dimensions should be carefully considered when attempting to improve the commercialization process in small technology firms (Pellikka 2014). Internal dimension refers to the activities and performance happening within the company. Its identified phases are (1) idea generation, (2) business concept design, (3) Market launch, (4) business development, and (5) maintenance. The activities were also assumed to be iterative and interactive instead of linear. Timely and relevant internal activities were considered central contributors to effective commercialization (Pellikka & Lauronen 2007; Pellikka 2014).
External dimension refers to active innovation-related collaboration between business partners or innovation support services. Small technology firms are generally dependent on external resources and regional collaboration. Thus, various kinds of regional innovation support organizations, programs and services have been established to support product innovation. Innovation support services, universities and other research institutions can provide important input for the
commercialization process such as managerial, product-related, or internationalization-related expertise (Pellikka 2014). Moreover, for researchers the motivational support and the ‘pull effect’ from the stakeholders can be particularly significant as it mobilizes the initial commercialization phase of the researched knowledge (Kivijärvi et al. 2020).
Pellikka and Malinen (2012) suggest that a key determinant of the effectiveness of commercialization in small technology firms might be the interface between internal and external dimensions, i.e., activities and performance within the venture, and external resources accessed via networking. This leads us to the subject of networks and partnerships. According to Genua and Styles (2008) the role of networks at different phases of the commercialization process is crucial and it includes both networks of academic technology developers and professional managers. A high technology innovation that lacks critical support from adoption network will see its diffusion in the market crucially hampered, and therefore it is vital to influence the behavior of central players in the network so that they will support the product (Chakravorti 2003; ref. Chiesa & Frattini 2011). In the research by Genua and Styles (2008) internationalizing firms emphasized the importance of attending and speaking in local and international conferences and thus creating interest and awareness, establishing and maintaining networks, and gaining credibility. Considerable time and effort were devoted to attending different events throughout the commercialization process which underlines the significance of networks in international commercialization during the whole process instead of just a certain stage. Pellikka and Virtanen (2009) as well emphasize that it is essential to establish a trustworthy network of dealers and distributors because they are usually in charge of the sales activities to the end-users. The firms should strive to develop strong collaborative relationships so that the distributors can remain aware of the technology of the products and the development of the industry when selling high technology products. Collaboration with diverse stakeholders whose abilities bring complementary skills to the table bring massive potential for generating valuable external and internal resources. Therefore, partnership synergies between technology stakeholders can have significant effects on the success of commercialization activities (Manoukian et al. 2015).
However, Thursby (2016) argues that incumbent companies seldom have strong incentive to partner with market entrants, because new entrants often threaten existing leadership positions with their technological innovations. If entrants have clear rights to their intellectual property, it can help them have stronger ground in partnership negotiations. The stronger the IPR the stronger the cooperation and the more the incumbents are willing to consent to the entrant. Therefore, well-implemented IPR- strategy is also connected to networks and partnerships.
The process of commercialization varies depending on the industry and the company and therefore it should be studied in its own context, but the mentioned studies also indicate that it has common characteristics, phases, and success factors despite being scrutinized from different perspectives (Gbadegeshin 2019). The external dimension of the process is affiliated with innovation theories through open innovation as addressed in Chapter 2.1.3. Nowadays it is important to consider the process as nonlinear, involve customers and stakeholders from the first stages of the process and consider the changes that digitalization has made. The next chapter addresses some recognized problem areas of high technology commercialization.
2.2.4. Recognized challenges and suggested solutions