6
Jan
How to commercialize innovations
Innovators, whether they are individuals or organizations, tend to try producing and bringing their innovations to the market by themselves. In many situations, it may not be the best option.
There are several ways of commercializing innovations, separated in four categories in increasing order of innovator control:
- Sell design: It requires market proof but allows earning a lump sum of money. It prevents the innovator from exploiting his innovation in the future. Pure inventors often rely on this option because they focus exclusively on R&D and do not want to be involved in marketing, production and distribution.
- License: The innovator sells the right to use the technology, to an OEM form example. The innovator looses control over his innovation but can get a steady stream of income. Licensing deals vary greatly according to the negotiation power of parties. Licensing is an option only if the innovation has been tested in the market.
- Joint venture: The innovator partners with other companies to handle processes such as manufacturing and distribution. Depending on the deal, the innovator might be a minority partner or not. Brand ownership is often a determining factor of the deal.
- Produce and market: It requires a lot of skills and resources, and the costs incur long before generating revenues. Only companies with deep pockets can afford to go all the way from R&D to market. In the other hand, it is the only way to reap the full benefits and to retain control of the innovation.
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