Stage 4: Derisk
The Derisking stage of the Commercialization Engine develops early-stage disclosures technically (through proof of concept work, early prototyping, animal studies, or clinical trials), through market validation, and through customer validation. The goal of this stage is to advance technologies far enough to entice outside partners to license the technology.
To fully comprehend the Derisking stage, it’s necessary to first understand how a disclosure might eventually leave this stage. A disclosure has two possible exits from the Derisking stage: 1) it may be licensed to an existing business, or 2) it may be licensed to a startup. If licensed to a startup, it moves to the Enterprise Acceleration stage, the third and final stage of the Commercialization Engine. Which exit the disclosure takes is dependent upon the answer to the question: where will it have the biggest impact? Regardless of how a disclosure leaves the Derisking stage, all technology opportunities go through the following three derisking steps.
The Three Steps of the Derisking Stage
- Problem Validation
- Technology Validation
- Market Validation
Each of these steps is led by IDEA Center employees who specialize in the tasks to which they belong. However, work in this stage is always done collaboratively with inventors, mentors, industry experts, and advisors outside the IDEA Center. After each of the three steps of the Derisking stage, each disclosure will return to the Risk Assessment group (discussed in the Risk Assessment stage) which will perform a new risk assessment and define the next, most important risk that must be addressed in that disclosure’s next step.
The goal of the problem validation step of the Derisking stage is to validate that the disclosure solves real problems in the commercial market(s) to which it pertains. This means that a sufficient number of potential customers have been identified who are willing to adopt the solution the discovery offers because it solves a need they have.
While the Problem Validation team validates that the disclosure is solving real problems, the Market Validation team strives to achieve what is called product-market fit. Product-market fit is established when actual customers within a sufficiently large market react positively enough to that product by purchasing it. Key assumptions such as pricing, the business model, and product features are also considered and validated in this step.
Taken together, the goal of the Problem and Market Validation steps is to ensure that each disclosure is fixing things that matter. The objective of the Technology Validation step is to advance the technology through “technology readiness levels” to final customer product. These levels can be applied to industrial, software, medical, and life science technologies.
Upon entering the Technology Validation step, the technology will be reviewed and its current stage and product development feasibility will be assessed. The results of this initial work will inform a product development plan complete with milestones. Milestone tests and/or trials will be designed to validate key technical assumptions with a view towards a financial development strategy, which lays out the potential funding sources for follow-on stages of development and testing.
The end goal of the Technology Development team is for each technology to achieve commercially relevant technical milestones such as regulatory approvals, minimum viable products, and proofs of concepts.
Exiting the Derisking Stage
A technology can exit the Derisking stage in one of two ways as described at the beginning of this section: 1) be licensed to an existing business (a process led by Richard Cox (firstname.lastname@example.org) of the IDEA Center’s Business Development Team, or 2) be licensed to a startup and move on to the Enterprise Acceleration stage of the Engine. If the former, the technology will exit the Commercialization Engine. If the latter, it will continue to progress as a startup company as described in the Enterprise Acceleration section.