top of page

There is no ‘Valley of Death’: Successful Commercialisation depends on crossing 3 Chasms.

One of the unfortunate terms adopted by some politicians when they start to think beyond the headline importance of innovation for the growth agenda is the notion that innovative companies need to cross the ‘valley of death’ before they become successful. This mind-set is usually accompanied by simplistic ideas of the critical importance of private capital and limiting the role of the state to interventions in the event of ‘market failure’.

As our detailed data-driven research over the last decade has shown, the valley of death is a myth and translating innovative ideas to deliver commercial impact depends on a wide range of drivers, or Vectors, not just the availability of investment.

Our research shows that the Commercialisation journey for all innovations follows the laws of diffusion, as first postulated by Schumpeter over 70 years ago, but this journey is characterised by 3 ‘discontinuities’ or Chasms, where the ‘shape’ of this journey changes. So, there is no valley of death but 3 distinct chasms which correspond to the following transitions:

  • Chasm I: this is where concepts and ideas are converted into demonstrable prototypes.

  • Chasm II: this where the prototypes are converted into products and services with a viable commercial model – the Chasm where the vast majority (nearly 90%) of ventures fail.

  • Chasm III: where the commercially successful products and services are taken to mainstream markets, harnessing a variety of channels, and customer numbers scale rapidly.

The 3 Chasms are connected together by the continuous growth in Commercialisation Readiness Level (CRL) from 0 to 10.

There are several problems with current mind-sets which diverge from this reality:

  • The not very helpful notion of minimum viable product (or MVP) which is used loosely to describe early versions of the product without any clarity about the real state of maturity of the product; for example, does this mean that the product is viable in terms of its functionality or is it commercially viable?

  • Confusing definitions of Scale-up, based either on the idea of manufacturing at scale or on increases in revenue, customer, and head-count growth (the accepted OECD definition), which typically kick in around Chasm III.

  • The confusion created by the use of Technology Readiness Level (TRL) which NASA developed to track the readiness of technology into space – not to fully commercialise it. While it is useful in mapping the first half of the journey from CRL 0 to 5 it offers no insight into the second, more challenging half of the journey. The two scales are approximately related as follows: CRL = TRL / 2

The really big problem with these mind-sets is that there is no explicit recognition of the existence of Chasm II – and yet our research shows most business failures occur at Chasm II!

In fact, most innovations are very successful at crossing Chasm I and the same is also true at Chasm III where access to the right go-to-market resources can make a big difference - but the highest failure rates occur at Chasm II. And yet, most interventions designed and delivered by governments and investors address Chasm I, but ignore the complexities around Chasm II. And the failure to understand the critical importance of Chasm II leads to a focus on Chasm III support, which, at best, relies on speculative funding leading to Unicorns with increasingly higher failure rates.

It is good that so much effort is going into the provision of Chasm I interventions - but we need a significant new focus around Chasm II, which is the key to successful commercialisation of innovations. Tackling the growth agenda requires a new breed of Chasm II intervention support.

bottom of page