Five steps to successful commercialization of an innovation – can the pitfalls be avoided?

Dec 16, 2016

In my work in Valmet's technology functions, I have had the opportunity to participate in several technology development projects. Fortunately, a large part of them have been completed successfully and delivered to the world, but some setbacks have also been experienced. Some projects, some of which I fondly remember, had to be abandoned to the graveyard of great ideas lacking successful implementation.

From these experiences, I have created a list of steps to success, which I believe to be useful in product development projects for both physical equipment and services.

1) Business potential and finding it
For an innovation to be turned into business, it must obviously be related to customers' needs. However, we know that customers do not always know what they need – or do not know what to request. In my opinion, the key to seeing the right opportunities can be found in monitoring the market, basic research and customer behavior. Several pieces of information need to be followed and connected to each other in the appropriate manner.

A good example of this is the introduction of Valmet's modular board machines to the market. Some 15 years ago, it was a point of honor to develop ever larger and faster paper machines. When the market rapidly changed, we also had to find new solutions. The modular, medium-sized, energy- and raw material-efficient OptiConcept M paper and board machine was developed as a breakthrough product.

2) Getting the value chain involved
In a development project, it is important to hear different opinions. The different opinions and skills can best be assembled when the whole value chain is involved in the project. In technology project, the network should include the participation of e.g. applied research, technology developers,experts on the raw material chain, customers, investors, suppliers, start-up companies, and end users.

In a development project for bio-oil to replace heavy fuel oil in power and heat production, we were able to gather the entire value chain for the project. The project, developed in cooperation between Valmet, UPM, Fortum and VTT, has been implemented in practice at Fortum's Joensuu power plant, where the production of bio-oil started in 2013.

3) Clear roles and responsibilities
As with all work, clear roles and responsibilities are the key to successful cooperation. When working together, trust and open sharing of information between the partners are required. Trust cannot be created if there is competition between the parties within a research consortium.

In R&D projects, the distribution of work, costs and intellectual property rights, in particular, must be taken into consideration. If these are not agreed at the beginning, disputes are bound to arise – regardless of how successful the project is.

4) Risk management
When developing new technologies, moving from a laboratory-scale innovation to the full-scale plant often includes too many uncertainties. Managing these risks is facilitated by pilot tests at a sufficiently large scale before full-scale implementation. At Valmet, we carry out this work in our 16 technology centers.

Public funding plays an important role in new technology projects. Investment subsidies should be used more effectively to support thefirst commercial-scale implementation to validate new emerging and breakthrough technologies at industrial scale. Of course, the innovation has to be viable at its core – and not only in the Finnish market, but in wider markets as well.

5) Commercialization
When the above steps have been executed properly, commercialization should be easy. In practice, successful commercialization is not only dependent on our own actions – the timing and the market situation must also be right. In addition, the whole company must work together. Commercialization requires seamless cooperation between sales, marketing, production, producrement and finance – and this cannot wait until the research project is in its final stage.

Can the pitfalls be avoided?

What are the pitfalls that should be avoided? In R&D work, there can be pitfalls at every step. I think the most important things are to recognize opportunities on the one hand, and the division of responsibility in shared projects on the other. Whenever things are done for the first time on an industrial scale, surprises are difficult to avoid.

In addition, making decisions at the right time is more difficult than one would think. The whole project should not be abandoned because of a relatively small challenge. At every turn, you must be prepared to react and find alternative solutions – or, if needed, to call the whole thing off. Perseverance is particularly needed in the development of large-scale plants, as introducing new technology to the market may take 10–15 years.

Based on my experience, I cannot promise that you will not have any pitfalls following these instructions. When creating new things, this simply has to be accepted – not every idea will become a commercial success. However, if you keep several irons in the fire at the same time and manage everything correctly, successes are bound to happen.

Ari Saario
Director, Research and Development, Valmet

Ari Saario is the Head of Valmet's R&D operations. He has versatile experience of more than 10 years in research and technology development, R&D team leadership, innovation networks and R&D funding.