KUALA LUMPUR, Sept 1 — Commercialisation is the process or cycle of introducing a new product or production method into the market.

Many technologies begin in the laboratory and are not practical for commercial use in their infancy. The process of commercialisation is broken into phases, from the initial identification of a market opportunity, to conducting research to come up with an innovative product or service to create prototypes/proof-of-concept to the full development and introduction of the product or service to the market followed by its mass production and adoption.

There are also later stages being taken into account such as production, distribution, marketing, sales and customer support required to achieve commercial success.

Identification of a new idea

A product or a service is only successful in the marketplace if it involves a real world solution, that is, it should address an unmet market need. If not, the product or service will not survive and nobody would pay for it.

Something can be regarded as new or novel if it has never existed in the market as a product or as a service or it is an improvement to an existing product or services.

Research & development

R&D is conducted on the new idea to create a prototype or some other data to prove that the idea works. This could be a prototype of the product or a simulation of the proposed service provision model.

This stage is essential in order to validate that the idea works in the real world and can be consistently replicated or reproduced. If the concept cannot be repetitively replicated, then the product or the service model needs to be improved until such consistency is achieved.

Protection of Intellectual Property (IP) rights

Prior to commercialisation, most new products are subject to efforts designed to protect the creator’s rights to the product in question.

This stage involves the submission of documents to file a patent, trademark or copyright. These protections assert the rights of ownership of the product or idea as claimed by the individual or entity representing itself as the original source of the idea.

Marketing and promotion of the technology

If the IP owner is an individual, university or a research institute, the IP owner might wish to license the technology to a third party for further development and commercialisation.

Licensing is a mechanism used to grant temporary IP rights to a third party to use such intellectual property to create value and to share a part of the value created with the IP owner whether it be for monetary purpose or otherwise.

In order to attract potential licensees or buyers of one’s IP, it needs to be promoted and marketed effectively via various channels to raise awareness amongst the most likely stakeholders.

Licensing or selling IP

Licensing or selling IP requires specialist advice and support. This is because most licence deals involve complex negotiations on many important terms and in the absence of such expert’s advice and guidance, many licence deals can go sour over time.

Selling the IP (also called assignment of IP) is less problematic because once the IP is sold, the IP owner has no more rights to it.

In either case, whether it’s licensing or selling, it is strongly advised to get the IP valued so that a base is available for financial negotiation and structuring of the licence deals as well as for IP sales.

Whether it’s licensing or sale of IP, much negotiation can take place. Generally, much of the negotiation time is spent in negotiating the value of IP.

At the end of the day, most licence deals value ends up being what’s agreed between a willing buyer and a willing seller and is most often a deviation from each party’s optimal deal.

Apart from licensing and sale of IP, a few other mechanisms can also be employed to trade IP. These mechanisms will be discussed in one of our future posts.

Industry prototype development and productisation

Many research prototypes need to be further developed into industry prototypes with many features of the product being further geared towards market requirements.

Such development activity can potentially require significant investment. Once a prototype has been developed, it should be tested within the market to determine if it is in line with market requirements.

This process is called productisation. It is an act of modifying a product or a concept to make it suitable to be commercialised. Once a product has been through the stage of productisation, it will appeal more and significantly improve its market uptake.

Verification, validation and regulatory certification

Verification and validation is the process of ensuring that a product design meets requirements. Verification confirms that products properly reflect the requirements specified for them ensuring that “you built it right.”

Validation confirms that the product, as provided, will fulfil its intended use ensuring that “you built the right thing.”

Typical "inputs" are requirements and design representations such as 2D/3D mechanical CAD drawings and models, electrical schematics, and software code.

Typical "outputs" are a determination of whether the design component or system met requirements, descriptions of failure modes, summarised test results, and recommendations for design improvement.

The risk of unexpected bottlenecks can be reduced if verification and validation services can be identified and accessed early on during the product development stage.

Properly designed and executed verification and validation activities can greatly improve the chances of obtaining regulatory certification for the product, which is obligatory prior to market introduction.

Manufacturing and scale up

Once the product has gained all the certifications required prior to market introduction, it can be manufactured and sold in the market.

Some companies are unable to manufacture in-house due to various reasons. In these instances, these companies can turn to contract manufacturing or Original Equipment Manufacturers (OEMs).

The company can obtain the manufacturing services from another company that has the full capability to manufacture and deliver the product as per specified requirement. The company can then brand and sell the product under its own identity.

OEM occurs when the company gets the external manufacturers to produce and resell the product under their own name and branding. Scaling up of manufacturing capacity can be a stumbling block since it may require significant investment.

However, at this stage of commercialisation, many routes to funding can be followed. These include investors, bank loans or government grants to name a few.

Promotion and market access

Promotion and market access can be one of the most important aspects of commercialisation. Most successful products can easily fail to see the light of day if it is not sensibly promoted and marketed.

Market penetration is usually a very difficult task and therefore innovative companies should not only focus on creating innovative products but also should focus on marketing its products innovatively.

Raising stakeholder awareness can be labour intensive, time consuming and costly.

However, companies today can take many cheaper approaches due to the availability of mobile devices and social media to spread awareness of its products.

Approach PlaTCOM for commercialisation support

PlaTCOM Ventures currently supports over 100 Malaysian SMEs to commercialise their innovations through a holistic and a market-driven approach via an end-to-end innovation commercialisation platform.

The majority of Malaysian-owned SMEs can approach us for funding assistance and commercialisation facilitation through our High Impact Programme 2 (HIP2) which is a smart partnership between Agensi Inovasi Malaysia and SME Corporation Malaysia.

For further information please contact us via [email protected].