This article seeks to define commercialisation, and the related concepts of entrepreneurship and innovation. It does this in the context of many disciplines, including law.
Our interest is particularly on the affect of innovation, entrepreneurship and commercialisation on intellectual assets.
Definitions are important because without them discussions can turn to mud. Preparing definitions can be very hard work. It involves putting a great weight on one’s shoulders, like Atlas in the accompanying photo taken in New York’s Rockefeller Center in the early 1980s.
A complication for developing useful definitions is that different disciplines use different terms. When referring to intellectual assets lawyers tend to use “intellectual property”, management consultants use “intellectual capital”, scientists and engineers might use “technology” and accountants use “intangible assets”.
Definitions have a big role in good contract drafting. They are used to clarify the circumstances, offerings and intent of the parties and to standardise the meaning of key words. Working out and documenting the intent of the parties is a fundamental need in good contract drafting. Accountants might see it as part of looking for cash flow streams and management consultants might call it strategic planning.
Lawyers tend to avoid putting into definitions clauses words which fall into or come from disciplines outside of law.
In the estimated 5,000 contracts I’ve reviewed over 20 years, I’ve seen the concept of commercialisation defined by other lawyers in a mere handful. In passing I note that it is poorly or at least only partially defined in Wikipedia.
In our view, to define commercialisation with clarity requires multi-disciplinary thinking. The concept overlaps parts of many disciplines including product invention, product development, management, sales and marketing, and finance. It also needs understanding of how the concept of commercialisation is related to the related concepts of innovation and entrepreneurship. There are many more relevant terms but lets restrict it to this small set here.
Fortunately there is an increasing literature seeking to define entrepreneurship and it does a credible job if you read widely. It is helpful that there has been 200 years of use of the entrepreneurship term, well recorded histories of entrepreneurs (even hero worship of Steve Jobs, Bill Gates, Richard Branson and others), many magazines with the word in the masthead or tag line, and even television shows in recent times like The Apprentice and Dragons’ Den.
In contrast, there are very few definitions of the more recent term, commercialisation. As for innovation, it is used very loosely and is applied to assets as well as concepts, processes, systems and other things.
In the above context, now consider the following definitions of entrepreneurship, commercialisation and innovation.
- Entrepreneurship is a process which treats the factors of production (ie land, labour, capital and knowledge) to produce new businesses, products and services and take them through their entire cycle or part of it. It certainly involves the processes of innovation and sometimes commercialisation. Entrepreneurs recognise opportunities and capitalise on them. According to the Oxford dictionary the word “entrepreneur” originates from the Old French word entreprendre or “undertake”. Entrepreneurship involves taking risk for reward. In a corporation entrepreneurship is balanced between the shareholders (who carry the risk), the directors (who set the policy direction of the corporation) and the executives (who manage and implement the corporation’s strategies).
- Commercialisation is a process of development which converts or adds market value to intellectual assets (including intellectual property, intangible assets and intellectual capital) to derive benefits from a tradable product, service, technology, system, franchise or other asset. Commercialisation is the realisation of an opportunity. Conversion is central to the concept of commercialisation. It takes a product, service, technology or innovation through for example in-house production or a trade sale, licensing, joint venture or other type of collaboration, merger, business sale, or initial public offering. Commercialisation is often seen in terms of what it can do for a product or a technology but it can be applied equally effectively to intellectual, artistic or entertainment assets.
- Innovation is creative activity resulting in new creations and new ways of doing things. Change is central to the concept of innovation. The spectrum of activity covered by innovation is very broad and includes creativity, discovery or invention and at the other end merchandising, repackaging, relaunching, improvements, and line extension.
Criticisms of these definitions will be gratefully accepted.
Update on 28 April 2014: Today the word disruption is used so often and so meaninglessly that it has spread like a thin layer of mud over the topic. The same can often be said in the use today of terms such as lean (as in lean start-up) or ahistorical phrases like “start-up science”. And so, for follows of fashion, the terms entrepreneurship and commercialisation are used less often.