Taking a product from the concept stage to an actual product where it is manufactured and operated as a commercial product is an exciting and challenging endeavor. Developing the long-range plans for commercializing a product is quite similar to proposal development except that the time frames are generally much longer and the breadth of activities is generally much wider. However, like a proposal, the commercialization plans need to describe the methods to be employed, the team involved, the financing needed and a clear explanation regarding how money is to be made, often referred to as the business model.
Establishing the Team
Commercializing anything but the simplest of products generally requires a team effort to accomplish all the work. This is especially true when established companies strive to enter new businesses with unfamiliar business models. Team members experienced in areas such as legal matters, financial arrangements, insurance, intellectual property, various technical disciplines, manufacturing, system installation, testing and system performance certification may all be required to ultimately commercial the product of interest. Coordinating such a large group of independent businesses to work together to perform a project on schedule and within budget becomes quite a challenge. This activity can be considered a specialized form of program management.
Business acquisition is the term for establishing the business entity that raises the financing and is responsible for the commercialization effort and controls the disbursement of funds against the planned progression of work. This business entity also provides some shelter to the other team members from liabilities associated with the commercialized product unless some specific manufacturing or design flaw can be traced directly to substandard performance by one of the team members.
Obtaining financing can often be the most difficult element for commercializing a new and complex product. The product being financed must compete with other investment opportunities that may have better returns and have less risk and otherwise be more attractive investments. However, individual investors may have agendas that go beyond simply considering return on investment as their investment criteria. For instance, the tax advantages for an investment in OTEC development could be extremely attractive to some firms with large tax liabilities. Funds that are provided by individuals are termed “hard money” as opposed to “soft money” that results from projects that are funded by the Government under research grants or other mechanisms. Obviously, managing a commercialization effort funded by “hard money” is more demanding that managing an effort funded with “soft money”.
The technical challenges associated with commercializing a product are often the easiest challenges to resolve since contractors are generally selected for their ability to manufacturing products based on a particular technology. However, management experience is required to assess actual progress against planned progress and thereby determine the financial health of the project.