Wednesday, December 28, 2005

Commercialization is about products

Startup entrepreneurs may not spend a lot of time worrying about commercialization support policies, but governments at both the federal and provincial levels allocate tens of millions of dollars for programs they hope will support the development of small, technology-based businesses.

Within government, "commercialization" has become as hot a buzzword as "nanotechnology" or "Web 2.0" in tech circles. One quality shared by all three terms is that there's some doubt whether many of the people who use them really know what they mean.

One of the challenges for governments is that they don't want to give money directly to companies (fair enough), but they really want to support the commercialization of technological innovations.

So what can they do?

Typically, the answer has been that they give money to universities and hope that it somehow translates into commercial success. And that's unfortunate, because it's placing resources about as far as possible from the markets that are going to determine whether a commercialization effort is successful.

Successful commercialization depends on technologies being embedded into products that solve market needs. Yet you can read and listen to policymakers and academics discuss commercialization for hours without ever hearing products mentioned.

Instead, they tend to talk about "building receptor capacity" and "facilitating technology transfer" and other concepts that support an inaccurate model of commercialization, suggesting that technology is something created in a university and then "transferred" to a company that has built the capacity to "receive" it.

You might be able to make those concepts fit with a shoehorn, but they fundamentally miss the mark. Commercialization depends on creating winning products targetted at defined markets. I think "productization" would be a much more instructive term than commercialization. Companies have demonstrated nearly unbounded "receptor capacity" when it comes to technologies they believe can be incorporated into successful products.

VCs regularly bemoan "technologies in search of a market," but that's exactly what many government commercialization policies encourage.

Startup technology companies in Waterloo would benefit greatly from easier access to market research, prototype development, business plan development, mentoring, seed funding, and other factors that universities were never designed to provide (although they may be willing to say it's their role when there's money being handed out).

Right now, government policy only provides limited support for those activities.

With tens of millions of taxpayer dollars at stake -- and a technology community that could put those resources to good use -- we can only hope that the wonks will soon realize that there's a lot more to commercialization and building successful technology companies than passing research from universities to companies.