Both good and ill sentiments have been shared about Commercialisation Australia since its launch in early 2010. Recently, Adrian Spencer pinpointed six myths about CA. But are we overlooking the benefits of the competitive process by dwelling on the shortcomings? Andrew Weller thinks so. Here, he argues that the point of CA isn’t merely to fund good ideas but to encourage strong business models that withstand the rigours of competition.

Competitive grants have been fertiliser to many innovative small businesses (in a good way).

With the demise of the $1 billion Commercial Ready Grants program and the launch of the $196m Commercialisation Australia Grants program, you might be forgiven for thinking Commercialisation Australia is a bad thing for Australian start-ups and innovation – or worse, a death knell for great ideas.

I beg to differ. There remain effective vehicles to get support for research and development. Every researcher will wish there was more, of course, but a highly competitive environment for research grants brings better ideas to the top.

Is it solely great ideas we want, or do we really want to build great businesses? Commercialisation Australia is about ensuring that great ideas – developed ideas that can demonstrate a clear path to market with minimal technical risk – are able to be converted into viable, successful commercial ventures. Now, there’s an idea!

The journey is part of the reward

A new competency is being built – not just a capacity for more transient light-bulb moments, but a capacity to develop ideas into business plans that incorporate business models.

If it succeeds, not only do researchers, entrepreneurs and innovative firms have great products, but they have differentiated business models. They have embarked on a journey using a systematic approach to understanding their cost structures and revenue streams.

This has led them through an analysis of the key activities and resources required to create sustainable businesses. They have assessed the key partners that will give them a fast start, and made contact, signed contracts and obtained commitments.

Instead of a bright idea looking for a market, the ideas become acquainted with target customer profiles, their existing solutions to these problems, the competition and other beasts that reside in the eco-system for every new product.

Distribution and customer relationship is not something to be found, once the product is ready – it is strategically identified, and the value proposition to customer and channel well understood and tested.

Surprise, surprise: if this business model is as innovative and exciting as the good idea it is proposing to take to market, a lot of people will be interested in this as an investment of their own. If the government won’t fund it – after all, there is only so much money to go around – then the hard work has been done in getting the idea investor-ready.

Success stems from having a sustainable business model

So you really do want the money – where do you sign up?

Traditionally, you call up some mercenaries – grant application consultants. They’re experienced at bashing your application into shape to meet the criteria, submitting it to Commercialisation Australia on your behalf – but all care, no responsibility. The outcome ends up in the lap of the Commercialisation Australia board, and the outcome depends on the quality of the competitors.

If your business model is well founded, however; if you’ve spent time on your business model, understanding its structure and modelling its profitability, not only will you have a competitive grant application, you’ll also be equipped to discuss it with your key partners, private equity or venture capitalists.

Six Myths of Commercialisation Australia have been exposed by Adrian Spencer. Allow me, if I may, to add one more:

Myth 7: Commercialisation Australia is about commercialising good ideas

Commercialisation is about funding great business models.

Indeed, the whole structure – including case managers, skills and knowledge, experienced executives and proof of concept as well as the Volunteer Business Mentor program – all are about sustainable, high-performance business models and are a great addition to creating successful high growth Australian businesses.

If the $2m Early Stage Commercialisation Grant sounds attractive, and you think it might give your idea and your business a step up, be assured that if you approach the application with the right attitude, the outcome of the grant application will not be the determinant of your success. The quality of the business model will be.

The process of ideation around your business model can be a lot of fun, engage your talent and develop a clear plan of where you are taking your business. The support for this activity requires an understanding of the business model canvas – the building blocks that make up your business model. It requires analysis of the options and selection of the best.

This investment of effort will be much more critical to the success of your business than the Commercialisation Australia grant you seek, yet will make you even more competitive in the highly competitive grant funding arena.

Andrew Weller is Topline Growth Advisor at Indigo Partners. His passion: creating high performing businesses incorporating disruptive business models, proven sales and B2B-marketing methods incorporating trends including China and social media.

Photo: e-magic