Commercialization: Capability, Credibility, Capitalization

Commercialization:  Capability, Credibility, Capitalization

Any business that seeks to find technological and market success must be able to demonstrate capability, credibility, and capitalization.  This trifecta of business success forms the platform for moving the organization forward.

Proof of Concept – Capability Demonstrated

Capability addresses both proof of concept for technology and the business model.  It means the organization is able to do the following:

  • Develop and advance the technology/product
  • Develop and implement a business model
  • Solve a problem, address a need…
  • Produce, market, and sell the “product” at a profit
  • Generate positive cash flow
  • Compete against direct and substitute products
  • Sustain operations
  • Grow the business

It isn’t enough for a business to know it is capable through its internal view.  It must be able to demonstrate to potential stakeholders, prospects, clients, the market, and the business “community” that it is capable.  By demonstrating that the business and the technology/product are capable, the organization builds credibility.

Meaningful Milestones and Results

How does a business demonstrate capability and build credibility?  By doing!  From formulating a start-up plan and developing a strategy to putting together an experienced and skilled management team and developing a funding strategy, the business is built through achieving meaningful, specific milestones.  Here are some other significant milestones:

  • First commercial revenue
  • Break-even
  • Positive cash flow
  • Seed/angel investors
  • Venture funding
  • Manufacturing capability
  • “Professional” management systems

Both the angel and venture investor have requirements the businesses in which they invest must meet in order to demonstrate potential.  The angel investor is usually willing to investment in a company earlier in the process – accepting more risk and expecting more reward – WHEN the business has been able to demonstrate that meaningful milestones have been achieved and that the next milestone is recognized and being pursued.

Two out of Three – Not Enough

The old saying that two out of three ain’t bad really doesn’t work for business success.  It takes all three – capability, credibility, and capitalization – to achieve commercialization. These synergistic forces stem from the development of a core expertise within the organization that is about more than a particular product or technology – it is about the ability to do business which makes the sum of the parts – the people, the concept, the business model, the product/technology, the essence of the organization – more than any one element or subset of the whole can be.

The capabilities of the organization as they are built enable the organization to establish and meet milestones, thus demonstrating the ability to generate results.  Results build credibility.  With credibility comes marketability to potential stakeholders – debt and equity, vendor and customer.  Marketability translates into capitalization, which enables the organization to develop additional capabilities, which in turn further additional credibility and the ability to raise more capital.

Time, Effort, and a Plan

Getting into the cycle of capability, credibility and capitalization takes time, effort, and a plan.  It takes being able to utilize available resources for maximum results.  The more resources you have the more careful you have to be.  Why?  Because you may not be as careful with what you have and you may be being overly optimistic in your assessment of how much is needed to achieve your vision and objective.

Sound business and careful money management are tenets of capability and credibility.  The ability to maximize results achieved on each dollar of investment means that you will need less investment in the future.  Furthermore, because you need less “additional” funds to accomplish your objective, the value of the business increases and the amount you must surrender in exchange for additional capital is lower.  Higher business valuations and less need for capital makes the business more appealing to potential investors.

Getting the Cycle Started – Capability, Credibility, Capitalization

The cycle of capability, credibility, and capitalization continues so long as the business generates results which enable the acquisition and expansion of core competencies – capability – and the expanded capability translates into more return on investment (credibility).  With expansion (growth), the need to continue to capitalize the business through internal funding (profits) and external sources (equity and debt) continues the cycle.  The cycle ends only when the organization ceases to generate results – the fuel which drives the engine of success.

Success isn’t a momentary occurrence.  It is a process which requires on-going pursuit of the vision, management of resources, measurement of results, and keeping to a timeline which balances short-term goals and long-term objectives.

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