Three rules for improving the effectiveness of the commercialization of university scientific research

Adhering to three fundamental rules will elevate the commercialization of scientific developments to a qualitatively new level.

In the previous article, we discussed how integrating a marketing approach into innovation activities positively impacts its effectiveness and outlined the steps a university should take to move in this direction. Specifically, we talked about auditing existing scientific developments at the university, selecting those with commercial potential, and intensifying efforts to bring them to market. Firstly, this is a good opportunity to attract additional funding for innovation activities, and secondly, it's a chance to get rid of accumulated "ballast" and focus on truly promising science-intensive products.

According to information and analytical materials from the monitoring of the effectiveness of higher education institutions for 2019 (the latest officially published data), the average number of small innovative enterprises in universities that are winners of the basic part of the "Priority 2030" program (excluding medical universities, as well as those in culture and arts) is 16, and in some, it reaches 100. Furthermore, almost every second university has other units of innovation infrastructure - business incubators, technoparks, etc. However, the share of income from the implementation of intellectual activity results (IAR) in the total income of a university on average does not exceed 0.1%, and only in some institutions approaches 1%.

Thus, issues of improving the efficiency of commercializing scientific developments remain relevant. In this regard, we would like to draw attention to three important rules, the implementation of which, in our opinion, will significantly advance success in this direction.

Rule No. 1 - Personnel Decide Everything

According to established practice, the authors of scientific developments are primarily involved in their commercialization. Typically, these are talented scientists with degrees, titles, and authority in the academic community but lacking skills in marketing and sales. In this regard, their understanding of the commercial potential of the development, the existence of a market and its parameters, consumer demands, competitor analysis, existing analogues, etc., turns out to be, to put it mildly, not entirely correct. And given their tender attitude towards their "brainchild," it is also highly idealized.

Besides developers, various innovation units within the university's administrative apparatus participate in commercialization (e.g., commercialization department, marketing department, project office, etc.). The goal of such services is to attract extra-budgetary funds by implementing scientific developments into practical use. Their staff actively interact with scientist-authors, provide methodological, organizational, informational, and other types of support, and generally perform a large volume of work.

However, despite all the efforts from both developers and the university administration, the results often do not meet expectations at all. Why does this happen?! The answer is quite obvious – commercialization, like any business, should be handled by professionals with relevant education in marketing and sales and experience in business (including in corporate (B2B) and government (B2G) sales segments). However, the most obvious solution – hiring specialists – is far from always effective. Firstly, the university cannot afford to maintain a large staff (separately a marketer, brand manager, analyst, content manager, copywriter, etc.), meaning generalists are needed, of whom there are not many on the market. Secondly, such a highly qualified specialist requires an appropriate salary level, which is not always possible with a limited budget. Thirdly, even if a competent specialist is found and financial terms are agreed upon, it is known that not everyone can work in the specific academic environment and adapt their existing knowledge, skills, and abilities to its peculiarities.

Understanding these realities, university management often prefers to form the staff of innovation services from their own personnel, attracting active employees with broad horizons and the necessary set of soft skills. However, issues of organizing their professional development in the subject area often do not receive due attention. Undoubtedly, retraining and advanced training, internships in external companies require time and financial resources, but the long-term effect of such investments is evident – the university gains a specialist who, on the one hand, is well-versed in the academic environment and its specifics, and on the other hand, possesses the necessary set of professional competencies to launch and implement the process of bringing developments to market.

As for scientists, they should act solely as experts on the technical side of the product and not extend their influence to other aspects of commercialization, for example, discussing commercial terms of a deal, assessing market parameters, developing a business plan, etc. Actually, this approach is absolutely logical and corresponds to the normal course of business processes in any production company.

Rule No. 2 – Commercialization Requires Resources

It is no secret that the main funds in universities come from educational, scientific, or scientific-technical activities, so universities understandably do not spare resources for developing these areas. For example, large-scale programs to attract talented applicants are implemented, entire departments are created to handle applications for competitions and grants with budget funding, scientific and technical services for state and private enterprises are actively promoted, etc. All this requires significant financial and labor resources but is justified in terms of the return received.

Innovation activity and commercialization, as one of its main components, in many universities are seen more as an image attribute that a modern higher education organization must have, rather than an important source of income. Hence, actually, the trend of distributing resources on a residual principle arises.

However, it must be clearly understood that commercialization is, in essence, building a business with the participation of the university. It doesn't matter which organizational model is at its core – in-house production at the university with subsequent sales, creating a small innovative enterprise and receiving profit from sales, concluding license agreements for the use of IARs, etc. In any case, it is necessary to create not just a good product, but a product demanded by the market. And for this, resources are needed, primarily financial ones. Certainly, there are enticing concepts of so-called "marketing without a budget," which describe specific tools requiring minimal investment but not allowing for the systematic building of effective marketing activities.

Therefore, innovation services should have, at a minimum, necessary, and preferably sufficient, resources to professionally carry out their activities. Market marketing research (structure, trends, barriers), competitive intelligence, studying potential consumers and their preferences, working in distribution channels, advertising campaigns using various promotion tools, participation in targeted congress and exhibition events are just some examples of specific cost items within the framework of commercializing developments.

Moreover, besides financial resources, effective work of innovation services also requires a number of organizational resources, in particular, a sufficient level of authority and a correctly structured management hierarchy for their activities.

Rule No. 3 – One Cannot Limit Oneself to Traditional Markets

The practice of some universities, where competent specialists work in innovation services and possess the necessary resources, shows that another fundamental problem arises on the path to effective commercialization – the absence of sales markets.

Universities typically have dozens, if not hundreds, of IARs on their balance sheets, arising from the implementation of scientific grants and programs funded by the budget. They all have different content (tangible product, software, technology, etc.), readiness levels, industry affiliations, but are united by the fact that they were created to solve a specific scientific or scientific-technical problem, targeting, at best, a narrow consumer segment, and often for some special task. The described picture is especially vivid for specialized universities, whose entire scientific activity is oriented toward specific industrial sectors. As a result, a situation arises where the developments simply have no consumers, or their number is so small that regular work with them is impractical.

In response, searching for new markets seems logical, but even prepared specialists may face difficulties in this matter, so we consider it important to describe a possible approach to solving it.

First of all, one should understand how markets for a product are formed in principle. Traditionally, this process is based on the concept of vertical marketing. It is based on identifying a need as a starting point, followed by the formation of a market, defined as a set of consumers who may purchase a product/service in a given situation to satisfy a given need. By choosing a market, we essentially set fixed boundaries within which competitive struggle for the target consumer group will be conducted using the strategic marketing mix (4Ps – product, price, place, promotion). At the same time, we leave out of our field of view so-called "non-target" consumers, their needs, and situations/ways of using our product.

Within the framework of vertical marketing, new markets are formed inside the fixed boundaries of the initial one, by выделения new segments. This is achieved by applying several techniques – modulation (changing one or several basic product characteristics), changing quantity/packaging/design, adding supplements/add-ons, reducing usage costs. As a result, one can expand the boundaries of the target market, improve coverage of specific segments, increase the number of possible situations/ways of use, but it is not possible to form qualitatively new markets or even product categories.

To solve this task, an alternative concept is used – lateral marketing. It represents a working process that takes existing objects (goods or services) as input and produces innovations – goods or services aimed at needs, customer groups, or usage methods/situations not currently covered. Lateral marketing is used where vertical marketing becomes ineffective and allows for the creation of qualitatively new product groups and entire markets.

Lateral marketing is based on the logic of creativity and consists of three steps:

- choosing a focus (market level, product level, marketing tools level);

- shifting the focus (breaking the logical connection) using six techniques (substitution, inversion, combination, exaggeration, removal, reordering);

- establishing a new connection that resolves the logical contradiction.

As an example of a positive case of applying this approach, one can note the simulator for unmanned aerial vehicle operators developed at Samara University, combining virtual reality (flight simulator) and a real drone. The key feature of the development is that the real drone repeats all maneuvers of its digital twin during the virtual flight on the simulator, allowing trainees to master the intricacies of real piloting of a particular device in a safe mode, without fear of damaging or crashing it. The use of lateral marketing is associated with focusing on situations where drones are used, then applying the substitution technique (using indoors instead of open air) and subsequently modifying the product to resolve the logical contradiction.

You can learn more about this concept in F. Kotler's book "Lateral Marketing: A New Approach to Finding Revolutionary Ideas."

Another, simpler way to create new markets for innovative developments is to change the geographical orientation. After all, besides Russia, there are at least the CIS countries (Azerbaijan, Uzbekistan, Kazakhstan, etc.), whose markets for certain products are often even more attractive in their key indicators. The absence of significant language, legislative, and other barriers is an additional advantage in working with these countries, but within such activities, it is certainly worthwhile to resort to the help of specialists or marketing agencies with experience in foreign economic activity and product implementation abroad.

In conclusion, we would like to emphasize once again that the rules described in this article are, on the one hand, quite obvious, and on the other hand, their implementation requires significant will and determination from all participants in innovation activities at the university. Therefore, we consider it extremely important to share and disseminate successful cases from our leading universities on bringing science-intensive products to market and the accompanying positive effects.