Commercialising industrial products: navigating the valley of death
Taking a new industrial product from the proof-of-concept phase into technology validation and demonstration changes the risk dynamic. From this point, cost of failure becomes more significant, so stakeholders and/or investors naturally want to know whether likely future returns justify the risk.
This product development phase is widely known as the ‘valley of death’. Sometimes it can be hard to know how to cross it, or whether to enter it at all.
Shreekant Mehta (SVP, Energy Sector) and Paul Williams (Principal Consultant) touched on this in a recent podcast, Technology commercialisation: developing the optimum development cycle and process. They suggest being ruthless about killing ideas that won’t make it and offer guidance on how to support those that might.
Know the danger zone
The valley of death spans stages 3-6 of the Technology Readiness Level (TRL) system. This is where a concept progresses to the lab for functional verification followed by full-scale modelling in a relevant environment. It’s also the point at which project costs begin to escalate.
To determine whether the financial risk is proportionate, it’s useful to consider market and commercial readiness alongside TRL. Paul and Shreekant’s thoughts on this are covered in a separate piece, Commercialising industrial products: look beyond technology readiness.
Decide what to kill and what to keep
Shreekant says it’s also important to understand that many ideas won’t make it to market: “That’s the nature of innovation. Part of the skill is identifying which ideas to kill off, and doing it early before too much is invested.”
This can be difficult for teams or individuals who are attached to a concept, but a robust process can take emotions out of the decision making process. It’s good practice to have lots of product ideas in the pipeline to avoid being over reliant on any one idea.
To evaluate a concept objectively, Paul suggests interrogating it at an early stage to identify the risks facing the development and commercialisation of the product – technical, commercial, and other. Consider what has to be true for the product to be successful, and what might prevent this being achieved. Potential problems should be ranked in terms of the level of risk they pose, then the biggest risks tested as cheaply and quickly as possible. Each successful test increases confidence in the concept and provides evidence to support continued investment. This should be repeated regularly at each TRL stage, so the R&D team can either kill the idea or pivot as needed.
Bridge the valley of death: planning, prototypes and people
For ideas that proceed beyond TRL stage 3 into prototype verification and testing, Paul and Shreekant say careful planning and preparation will help them go further.
Building good prototypes is one aspect of this. With industrial innovation, it can be difficult to properly test basic functionality using minimum viable products in real environments. Focussing time and energy on identifying and solving the right problems helps navigate this issue.
High risk elements should be tested in the lab first where costs are lower and the technology is easier to deploy. Learnings from this process can inform harder real-world deployments. Again, these can be structured so that test environments become progressively more challenging. In the energy sector, this might involve conducting a test deployment at an onshore facility before moving to an offshore environment.
Innovation managers or R&D leads need to ensure that all the resources are lined up, with people in place to handle different elements of prototyping and testing. It’s vital that everyone understands their individual and wider group objectives so they can work collaboratively and effectively. Otherwise, the simplest things can result in product failure, such as a lack of consistent processes to capture learnings in field trials.
No second chances
Business-to-business innovation doesn’t have the advantage of early adopter goodwill that many new consumer products enjoy. In an industrial setting, the first deployment has to work; second chances are hard to come by and that is what makes the valley of death so perilous. Maintaining a good line of sight to deployment throughout the development process gives promising concepts a better chance of success. It also enables teams to cut their losses sooner on ideas that won’t make it.
Listen to the podcast in full here.
Or check out our full library of webinars and podcasts.