The Innovation Valley of Death – Idea to Value
Why is it that some promising technologies seem to progress quickly but then disappear entirely?
They may be suffering by being stuck in the Valley of Death.
Every new innovation requires a certain amount of funding to survive. This could be funding in the sense of time investment, but almost always it is also monetary funding to go from discovery, to research more about the technology, to developing concepts, products and finally scaling this into a profitable new innovation that the market adopts.
The problem is that there are often differences in who provides this funding at which stage of the development process.
While some private companies invest in cutting edge Research & Development, a huge amount of primary research is conducted through public funding, such as at Universities looking at fundamental new science and engineering opportunities. These new technologies are nowhere near commerically viable, so rely on this public funding to survive.
Once a new technology has been established and a product and business model has been shown to work, private companies are willing to invest heavily to scale this for wide commercial adoption.
However, in between, often when a problem / solution fit is being investigated and new product ideas tried, there can be a stage where public funding is not high enough because it is no longer about fundamental research, but large companies are also not willing to invest heavily as they are not sure it can scale yet. This may also be because the law of diffusion of innovation shows that only a small proportion of the market is willing to try completely new innovations, which is not a large enough market to become profitable.
Innovation Valley of Death
At this stage, no party is investing the minimum level for development to continue, and projects often have to stop due to lack of funding. Or alternatively, progress much more slowly than before. And some technologies never manage to scale beyond this stage and die.
Now, this does not mean it is impossible for projects to get through this valley. After all, history is full of example of complex new technologies that eventually found a way to scale into new products. Think of Radar, transistors and email for example.
However, it does mean that initial speed of progress after discovery often slows down while a viable, scalable solution is being searched for. At times, it can feel like no progress is being made at all. And at other times, it might take other changes in the market to happen before a concept finally becomes viable.
What I find interesting is how while the Valley of Death is often only talked about when referring to public vs private investment, many companies have internal valleys of death they don’t realise they are creating for their own innovations.
For example, they might invest in early stage innovations, even to the point of the development of a minimum viable product. However, when then investigating what further investment it would take to change their core business to scale the innovation, they begin to hesitate and the innovation no longer has the funding to get beyond the initial development stage. After all, it might be possible to develop an initial MVP for a few thousand dollars, and even test it for a few hundred thousand. But to scale a new product, it can take millions, without being able to prove in advance that the innovation will reach the anticipated revenue figures.
If any innovation is to be successful, it needs to be able to show its value throughout its journey. Only this way can it get the funding it needs to scale out of the valley of death.