Five reasons innovative companies fail at commercialization and what to do instead

This article was originally published on Fast Company here.

It’s not an easy task to transition a company from R&D to commercialization. Leaders must change their focus, priorities, and even mission from experimentation and innovation to shipping great products on a deadline. But while change is necessary for every business that wants to grow, mature, and be ready for the future,?only 31% of organizations have a successful transition?regardless of how many transformation actions they take.

As the CEO of Fortify, and as the former CEO of Innoplexus and Chief Business Officer of SiO2, I’ve personally witnessed the challenges that come with transitioning from R&D to commercialization and seen the common pitfalls that can hinder a company’s success in bringing innovative products to market. For those founders and CEOs facing the same transitions in their own companies, here are some practical insights on how to overcome these obstacles.

FIVE COMMON PITFALLS FROM R&D TO COMMERCIALIZATION?

Moving from the R&D stage to production and commercialization is a necessary step for every company. It’s the point at which you get your product into the customer’s hands, carve your place in the market, and start to generate revenue, brand recognition, and growth.

But making that transition and leading that change can be difficult. R&D is the fun part, right? It’s when you brainstorm the possibilities of your product and get creative in planning and prototyping. But the danger is that you could dwell in R&D and never commercialize.

General Magic?is just one of many examples of companies that failed to commercialize. In the early 1990s, the General Magic team envisioned what we know today as a smartphone, complete with email capabilities, chat, emojis, and more. But they got stuck in the R&D phase, and as they tweaked and tinkered with their product, Apple beat them to the market with a similar device. When they finally scrambled to ship something, there was no demand for what they had created.

Transitioning from R&D to commercialization has its challenges, but they can be overcome in order to get you to market and get you to growth. Here are some of the common setbacks I’ve seen running companies that have gone through that transition and what approaches you can take to find success.

1. BEING TOO OBSESSED WITH THE PRODUCT, OR NOT OBSESSED ENOUGH

A common challenge during this transition is focusing too much on the dream. Companies that had a world-changing product might prioritize their creative innovations and generate hype around the promise of their product without actually creating a product that will respond to market demands.

Another challenge is focusing on your product too much. At SiO2, we were trying to refine our vials down to a precision value that customers actually didn’t need, wasting time and resources on R&D when we could have been shipping a product.

When you transition to commercialization, your priorities become your customer’s priority, your deadline their deadlines. As a leader, at some point you have to halt R&D, define the expectations around your product, and move forward.

2. BEING TONE-DEAF TO CUSTOMERS AND TRENDS

R&D may be a great time to pursue your team’s unique ideas to create a truly unique product, but too often companies create products in bubbles, unaware of what their customer needs or who their customers even are. Then, when they go to ship their product, there’s no one waiting to buy—and “no market need” is one of the top reasons why startups fail.

Avoid this pitfall by listening to your customer—not just with a survey every six months, but constantly. Paying attention to trends, pivoting in response to those trends, and incorporating feedback into your strategies can help you create products that will be in demand.

3. NOT BEING A DECISIVE LEADER

Leaders need to make decisions, especially during times of transition or pivot in their company. Yet many leaders take a wait-and-see approach, and many companies fail not because they made the wrong decision, but because they didn’t make any decision at all.

Successfully transitioning a company from R&D to commercialization requires decisive leadership. This includes making decisions around when to bring the product to market, what customer or employee feedback to incorporate, and when to pivot in response to market changes. Once a decision is made, leaders should communicate that decision, align their team, and move in the direction of the decision.

4. PROMOTING PEOPLE WITH THE WRONG SKILL SETS

Transitioning to commercialization often means transitioning culture, capabilities, and org charts. However, too often, people with the wrong skill sets are promoted. Countless organizations do it. They see a great technical person and promote them to lead the team. But managing a department takes a different skill set than what set them apart to begin with, and if they don’t also have managerial skills, they’re being set up for failure.

Avoid this pitfall by defining what roles the company needs to move forward, and then pinpoint skill sets, personalities, and mindsets that are most suitable for those roles. Look for people who can drive direction and lead change, and keep your best technical people doing what they do best.

5. NOT DEVELOPING LOYAL TALENT

Another pitfall not just in transitioning businesses but across any business is not prioritizing hiring for tomorrow. Many times organizations hire talent but never invest the time or energy in discussing how that employee wants to develop in their career or in building a plan to get them there. Don’t assume people will develop on their own. Provide that support and direction so that they can grow in their talents and skills, and help build the company of tomorrow.

SIDESTEPPING THE PITFALLS

It’s not an easy task to change focus, priorities, and even mission from R&D to commercialization. But it’s necessary for every product-centered business that wants to grow and mature. Be excited about the future growth opportunity of your company, but also be diligent in making a plan for that transition and be wary of the pitfalls that will seek to stop you.