Selecting a Commercialization Approach: SWOT Analysis

SWOT Analysis  Often used in business environment to identify the best strategic approach  Examines both positive/negative attributes and current/ potential future state  For your IP, use this tool to examine various options for commercialization

SWOT ANALYSIS StrengthsWeaknesses OpportunitiesThreats Positive AttributesNegative Attributes Present State Future State

SWOT Analysis Assignment: Commercialization Options 1) Document known facts & assumptions about the technology, competition, and market entry from your research. Verify these with inventor, complete additional research as needed. 2) Brainstorm at least two different approaches to commercializing your invention- e.g. service model, different forms of product or positions in the value chain  Be creative- best performed as a “brainstorm”  Avoid pre-conceived notions of what is best  Don’t judge or eliminate possibilities until you have completed the exercise 3) Perform SWOT Analysis on at least two brainstormed commercialization approaches  Use the facts and assumptions to support your SWOT analysis  Identify the best commercialization approach from your analysis

What sort of facts are important?  Maturity of your technology: idea> proof of concept>prototype>beta test> ready to ramp idea> proof of concept>prototype>beta test> ready to ramp  Current protection of your IP  Barriers to entry- competitors, regulations, etc  Potential openings in the value chain  Timing- is the market ready?  Perceived customer value- will they buy?  Potential cost of entry: capital investment, research $ needed, marketing, distribution, staff levels  Profitability- clarity of path to make money

Sample SWOT of Commercialization Options Bio-fuel Generating System- project from two years ago  Sample Facts & Assumptions (examples only, some of these were not actually correct…)  Biofuels unit generates ethanol and “high purity” glycerin from canola seed at a rate of XX gallons per ton  Market price for “high purity” glycerin is $YY/gallon  Canola seed can be grown in Willamette valley- no regulations prohibit this  Technology is ready- a prototype could be available in 6 months  Mature cost of system would be ~$10,000  Biofuels unit could be operated by local farmers without assistance  Biofuels unit would require periodic servicing and cleaning by manufacturer  Waste product from biofuels unit is non-toxic and may be composted on site  Transport and distribution of glycerin requires a license, MSDS, and certification of purity  …

Sample Commercialization Options  Product Model- Sell biofuels unit to local canola growers. They sell glycerin to chemical distributors and service their own units  Product + Service Model- Sell biofuels unit to local growers. Set up service to collect glycerin and perform periodic maintenance on units  Service Model- Set up regional centers for biofuels conversion with larger units and have growers bring canola to the sites. Perform purity analysis at the center and sell glycerin to large chemical distributors at markup.

Sample Commercialization Option SWOT Analysis Bio-fuel Generating System: Product + Service Option  Strengths  Easily scalable for local growers  Growers can use ethanol to reduce their own fuel costs, and reduce their sensitivity to sudden increases in price of diesel fuel  Unit service and biofuels collection could occur at the same time  Glycerin collection, analysis, and distribution handled at collection centers. Less overhead for growers  Two revenue streams for business- sale/service of units, and sale of glycerin to chemical distributors  Weaknesses  Would require additional infrastructure for servicing of units  Transport of ethanol across state lines could be problematic  Requires large “up-front” capital investment to set up collection centers  Profit model is very sensitive to the market price for glycerin  Investment is required before canola growers agree to grow this crop

Sample Commercialization Option SWOT Analysis Bio-fuel Generating System: Product + Service Option (Continued)  Opportunities  Similar product + service model could potentially be expanded to include biofuels from other seed crops  Potential “seed” funding from existing agricultural cooperatives- easier to obtain for the product + service model  Threats  Tax incentives for biofuel generation may not apply to large distributors in product + service model  If current diesel fuel costs decrease, local growers will not save money by using the ethanol they generate.  Another product is in development which would allow self-service units. Local growers may be reluctant to sign up for this product + service model.

Assignment- SWOT Analysis for Commercializing your IP  Presentation: At next class meeting: Wed, Feb 6 th report on your progress- 1) Facts & Assumptions 2) Brainstorm list- all commercialization options considered 3) SWOT analysis of at least two options and chosen approach  Written Report (Due Fri, 2/8- midnight by e- mail)  Complete the exercise and provide a written summary including the 3 aspects above