DCAA COMPLIANCE BLOG

Your Source for DCAA News and Government Contracting Information 


 

Commercialization Rate Behchmark: Moving to the Commercial Market

Posted by Mike Anderson on Mon, Aug 04, 2014 @ 04:53 AM

With the re-authorization of the SBIR/STTR program in the 2012 Defense Authorization Bill, there are now more requirements on awardees relative to commercializing their work.  The problem of translating a good technical theory into a marketable product has long plagued business.  The old adage that “if you build a better mousetrap, the world will beat a path to your door” is simply not true.   By the same reasoning, just because you have a solid technology doesn’t mean the market will buy it.  That is where marketing comes in.  In our world today, people buy products and services not only because they need them but because they have a desire to have it.  That desire is usually built by marketing.  For instance, 40 years ago, nobody had a computer and didn’t see a need for one.  Then, thru marketing, people were convinced that they needed to have a computer in their home.  Why?  At the time, there was not an internet and the main reasons to have this computer were mostly desire to have the product.  Then, about 10 years ago, we were told we need to have a computer with us at all times.  Who would have thought, in 1985, that within 30 years everyone would have a computer in their pocket.   Yet today, there are probably more computers in pockets than there are PC’s.   

I went thru this example just to illustrate a point. We need marketing to get great new products accepted in the marketplace.  This is usually done by creating a desire on the part of the market segment to have this product.  Just a newer mousetrap doesn’t create enough of a desire to make it a market success.  So the small business is faced with the issue of how to market their idea.  This is not a simple task.  Usually this requires a different mindset than the technical mindset.  The market is not always logical and sometimes difficult to segment into pieces that can be targets for the new technology and/or product. 

As I mentioned above, there is a real push in the SBIR/STTR programs to commercialize the technologies being developed, as evidenced in the recently imposed commercialization rate benchmark system.  In some cases (I can think of the NSF and the Department of Navy as a couple of examples) the government agency will provide free advice to the award winner to help develop commercialization plans.  Companies like Dawnbreaker or Foresight are paid by these agencies to help the award winner figure out how to identify market needs, how to identify demand, how to estimate market sizes, etc. all prior to finalizing the product design.  This is important in the life of a small business to be able to identify what their end objective is.  The government funding for an SBIR/STTR is very finite and very early development stage.  If the company doesn’t plan for the next step of required funding in their business plan and the ultimate way to get to market, they will not be able to cross the chasm (as Geoffrey Moore describes this jump from technology to market). 

I personally don’t think it is too early to start thinking of market needs prior to prototype development.  I say this because if you don’t have a goal focused approach, the development could end up taking a turn down a path that has not market needs.  If this happens, commercialization will not be possible.  This is the time tested adage that you can’t push a product into the market but it must be pulled into the market.  Commercialization involves evaluating the potential market, divided into unique segments if possible, finding the need of the market and figuring out how your product or service can satisfy those needs better than the competition. 

Topics: SBIR Re-authorization, SBIR/STTR, Commercialization Rate Benchmark