No need to invent: savvy business leaders go out, find them, and connect them to a large existing market demand
One of the biggest challenges entrepreneurs face is inventing and commercializing new technology. Doing this takes a great deal of time and money and introduces significant risk. A typical development can take several years and may cost millions of dollars. Meanwhile, there’s no guarantee the market will adopt the new product.
Conversely, if you can find an existing technology that addresses a known market need but has not been commercialized, it’s possible to dramatically accelerate the time to market while increasing the probability of success.
Multinational companies (MNCs) spend millions of dollars per year researching and developing inventions. According to the American Association for the Advancement of Science, “global R&D investment has tripled over the past 20 years, from US$672 billion in 1992 to over US$2.1 trillion as of 2020.” It’s not unusual for an MNC to spend over $20 million developing a technology and building a significant intellectual-property moat to protect their invention.
However, most inventors invent what they are interested in rather than addressing a known market need. For instance, years ago, my team and I looked at a technology billed as the “electronic tongue.” This was a microchip that could analyze a drop of liquid and assess certain parameters. The inventor had created this to “taste” wine. His idea was that you would take this chip into a restaurant and have the sommelier put a drop of wine on it to determine whether or not you would like it. While the technology was interesting, the application was clearly not commercially viable.
To increase the chances of developing usable technologies, MNCs will often aim to create solutions that address their own known problems. If the resulting technology represents an incremental change, then the MNC will typically develop it themselves. But if it is truly disruptive, the MNC will likely not commercialize the technology internally. Doing so would require such a substantial outlay in time, funding, and human capital that it would distract them from their core mission.
Though there are rare occasions when exploiting this new technology would likely fit into their strategic matrix, they more often look to others to build the solution. As a result, even promising new technologies that would meet the MNC’s own needs and potentially generate millions of dollars in value sit on the proverbial shelf, unused.
The solution to preventing these technologies from going unused – and thus, unprofitable – is first to understand what the market wants and then see if you can find a commercial offering that meets that need. Coupling an underutilized technology with a large existing market is a promising foundation for a new business.
For example, my team was approached about a technology from an MNC that converts used, dirty polypropylene into virgin resin. This innovation drastically reduces plastic waste and promises to close the circle on plastic recycling. This solution is so fundamentally revolutionary that my team estimated its total value at over $1 billion.
While the MNC was eager to utilize the virgin resin to meet its sustainability goals, it didn’t want to be in the recycling business. To solve this problem, Innventure created a new spinoff startup from the parent company that could dedicate itself to bringing this technology to market. The original MNC became this new business’s first customer, which had the advantage of further decreasing the startup’s risk.
When it comes to finding the right idea for creating a company, most aspiring entrepreneurs focus on trying to create a brilliant and novel idea. From my perspective, however, disruptive technologies already exist. Savvy business leaders go out, find them, and connect them to a large existing market demand.
By Bill Haskell
Bill Haskell, CEO of Innventure, has spent over 30 years building high-growth businesses. He has directed over a dozen private and public companies. Innventure specializes in creating, funding, operating, and scaling companies in strategic collaboration with Multinational Corporations (MNCs). Their business model allows Innventure to recognize and cultivate assets with the potential to reach a valuation in excess of US$1 billion within five years.