8 Factors to Evaluate the Commercial Potential of an Innovative Technology
If you are or plan to be a scientific entrepreneur, you can use this 8-steps model to perform a self-diagnosis of the commercial potential of the technology you invented.
Technological viability. It consists in evaluating the inventive concept, the theoretical foundation and the technology. This evaluation should be performed by academics who understand the technology and scientific bases, or by industry experts. Additionally, a patent analysis should be performed to check for conflicting relationships between the invention and previous knowledge. The main objective is to identify technological limitations or questionable aspects of the invention, but also to demonstrate that the technology can realistically be commercialized through the development of a prototype. This will permit the identification and quantification of risk factors that could prevent the actual technical creation of the invention.
Potential applications. Imagine the largest number possible of applications and products that could be derived from the invention. First, listen to the other inventors and to other experts, and make a list of all the applications or products that can be obtained from the invention. Then discard the less viable applications and analyze each of the remaining ones in detail. Finally, organize the applications according to their relevance. This will permit to estimate if your technology is highly specialized, with few applications but an important target area, or if it has on the contrary multiple applications but little impact. At first, the second kind or “platform” technologies, are more valuable because they show reduced risks and major market penetration by giving you the opportunity to license their use separately for distinct clients. This list of applications is also very useful for identifying new potential clients and even new potential products.
Market size. Determine and quantify the actual and potential market size for each application that you defined. Try to be objective and do not use false or biased statistics. Try also to clearly separate the true market data that already exists from the estimations that can be made about potential market. Estimate also the geographically affordable market that could be included in your market size.
Development phase. It is difficult to license technology in its embryonic state and a prototype is more attractive than a concept because it involves fewer risks and less time to commercialization. Define on what stage of development your technology is for its market in terms of time of development but also financial investment. For example, the development of a pharmaceutical drug is a very long path filled with many steps and risks at each steps. The invention could be in a pre-clinical stage, in stage I, II or III or in the final step of approval by the relevant health authorities. Each step involves new risks, which explains why the value of the invention increases as the steps are successfully passed. Similarly, potential investors usually require a proof of concept for biotech products, to get a clear sense of technological advantages and reliability. In any case, scientific inventions can be transferred to companies in the very embryonic stage of development but their value is then lower and I recommend you mature the technology before you try to commercialize it.
Visibility. Estimate the quality of the expected demand for each application of your technology. Analyze how hard it is to identify clients, to access potential clients, and their purchasing power. You will then get an idea on the visibility, access and relevance in each market segment. Remember that you should consider both intermediary client and final users of the technology. A good visibility means reduced marketing costs. Check if you can find information that shows an existing demand for this technology, through articles, public statements, interviews with corporate executives, etc. Analyze your clients in terms of geographic and cultural proximity, consistency, needs, interest in innovation, technological interest in your technology, buying power, previous relationships with other companies.
Property. Analyze if your technology can be protected by a patent or any other form of protection. A technology that is protected has more value. You should thus check if your technology can be patented, if the patent can be strong and defended, if there are other ways of protecting it and if there are other mechanisms that can increase control, such as technical barriers to imitation.
Novelty. Identify and analyze the number of companies and groups that are developing parallel technology that is similar or could be considered a substitute. This will help you measure the risk of a competitor getting to the patent or market first, and blocking or reducing the competitive advantages attributed to your technology.
Reputation. When a potential technological buyer evaluates the market value of a technology, he usually does not coldly separate the inventor from the invention. Technology can be improved in the eyes of a potential client, if the researcher, team or institution behind the technology has a good reputation. The team behind the product is thus an important factor to consider for its perceived value by clients.