Indus­tri­al enter­pris­es fol­low a method­i­cal approach when inte­grat­ing exter­nal inno­va­tions into their prod­uct lines. For high-tech com­pa­ny share­hold­ers, this process can seem unrea­son­ably long and full of arbi­trary obsta­cles. How­ev­er, under­stand­ing that it’s actu­al­ly a fair­ly order­ly six-stage process can help inno­v­a­tive com­pa­nies nav­i­gate these waters more effec­tive­ly and iden­ti­fy rev­enue oppor­tu­ni­ties at each stage. In this arti­cle, we take a clos­er look at how indus­tri­al enter­pris­es oper­ate and what this means for high-tech partners.

Stage 1: The fuzzy front end

The first stage begins either with the indus­tri­al enter­prise iden­ti­fy­ing a spe­cif­ic prob­lem and active­ly seek­ing a solu­tion, or with the high-tech com­pa­ny pitch­ing an inno­va­tion that could open up new busi­ness opportunities.

For the high-tech com­pa­ny, this ear­ly stage is all about build­ing trust and demon­strat­ing tech­ni­cal poten­tial. They need to clear­ly and con­cise­ly describe what their tech­nol­o­gy can do and why it is worth pur­su­ing by the indus­tri­al enterprise.

Often, indus­tri­al enter­pris­es test small­er lab sam­ples to get a first indi­ca­tion of the technology’s poten­tial. This may be to under­stand how the tech­nol­o­gy works and performs.

It is com­mon for indus­tri­al enter­pris­es to have sev­er­al par­al­lel eval­u­a­tions run­ning simul­ta­ne­ous­ly. Many tech­nolo­gies are dropped at this stage because they do not show enough poten­tial or because they do not fit with the enterprise’s long-term strat­e­gy and goals. There­fore, the high-tech com­pa­ny must make a strong first impres­sion and present its tech­nol­o­gy in a way that cap­tures the inter­est of the indus­tri­al enter­prise and demon­strates tan­gi­ble value.

This stage is often called the fuzzy front end because many ideas are eval­u­at­ed simul­ta­ne­ous­ly, and the process is rel­a­tive­ly infor­mal. While this stage can tra­di­tion­al­ly take con­sid­er­able time, the tim­ing may accel­er­ate dra­mat­i­cal­ly if the tech­nol­o­gy address­es an urgent mar­ket need or offers excep­tion­al value.

Stage 2: Diving deep

Once the high-tech com­pa­ny has made a strong impres­sion and demon­strat­ed promis­ing ini­tial results, the indus­tri­al enter­prise typ­i­cal­ly moves for­ward by estab­lish­ing a for­mal col­lab­o­ra­tion. This might take the form of a fea­si­bil­i­ty study, a con­sult­ing agree­ment, or a joint devel­op­ment project. This for­mal engage­ment involves in-depth analy­sis of both tech­ni­cal and com­mer­cial aspects led by the indus­tri­al enterprise.

Impor­tant­ly, this stage often marks the begin­ning of both the com­mer­cial rela­tion­ship and the co-cre­ation process, with the indus­tri­al enter­prise becom­ing a pay­ing cus­tomer through these var­i­ous forms of col­lab­o­ra­tion. This co-cre­ation – where both par­ties work togeth­er to devel­op and refine the tech­nol­o­gy – begins mod­est­ly but lays the foun­da­tion for deep­er inte­gra­tion. Though typ­i­cal­ly mod­est in scale, these ear­ly rev­enues can pro­vide vital sup­port for the high-tech com­pa­ny while build­ing toward larg­er opportunities.

On the tech­ni­cal side, the indus­tri­al enter­prise defines detailed per­for­mance, reli­a­bil­i­ty, and com­pat­i­bil­i­ty require­ments. They inves­ti­gate whether exist­ing pro­duc­tion lines can be used or new invest­ments are required. Risk assess­ments are per­formed for poten­tial tech­ni­cal chal­lenges, includ­ing whether the new tech­nol­o­gy is ful­ly devel­oped, scal­able, or com­pat­i­ble with exist­ing systems.

At the same time, the busi­ness poten­tial is care­ful­ly ana­lyzed. The indus­tri­al enter­prise looks at expect­ed sales vol­ume, return on invest­ment, total cost of own­er­ship, and time to mar­ket. It con­ducts a detailed mar­ket and com­pe­ti­tion analy­sis and iden­ti­fies poten­tial customers.

This co-cre­ation study stage in tra­di­tion­al cor­po­rate envi­ron­ments might take 12–24 months, though it may pro­ceed much faster if the indus­tri­al enter­prise sees a com­pelling mar­ket oppor­tu­ni­ty or com­pet­i­tive advan­tage. Equal­ly, the process might tem­porar­i­ly slow or pause if mar­ket con­di­tions change or oth­er pri­or­i­ties emerge, before resum­ing when tim­ing is more favorable.

Stage 3: Forging partnership

Once the indus­tri­al enter­prise has cho­sen its tech­nol­o­gy sup­pli­er, the col­lab­o­ra­tion deep­ens through a sup­pli­er devel­op­ment agree­ment. This gives the high-tech com­pa­ny expand­ed busi­ness oppor­tu­ni­ties and access to the indus­tri­al enterprise’s resources and knowl­edge. At the same time, the indus­tri­al enter­prise secures access to the new tech­nol­o­gy with a part­ner who can deliv­er the required qual­i­ty and volume.

This agree­ment typ­i­cal­ly defines com­mon goals for tech­nol­o­gy devel­op­ment, with spe­cif­ic per­for­mance, reli­a­bil­i­ty, and cost require­ments. It includes mile­stones for qual­i­ty con­trol and plans for inte­grat­ing the tech­nol­o­gy into the indus­tri­al enterprise’s production.

The sup­pli­er devel­op­ment agree­ment usu­al­ly includes pro­vi­sions for com­pen­sa­tion dur­ing this deep­ened co-cre­ation stage, such as con­sult­ing fees, mile­stone pay­ments, or cost-shar­ing arrange­ments. These agree­ments pro­vide the high-tech com­pa­ny with impor­tant rev­enue streams while work­ing towards full commercialization.

For high-tech com­pa­nies, this stage rep­re­sents a sig­nif­i­cant strength­en­ing of the cus­tomer rela­tion­ship, with more sub­stan­tial and pre­dictable rev­enue opportunities.

Stage 4: Deepened co-creation

With the sup­pli­er devel­op­ment agree­ment in place, the indus­tri­al enter­prise begins detailed design work, which typ­i­cal­ly takes 6–12 months in con­ven­tion­al set­tings, though with inno­v­a­tive tech­nolo­gies and moti­vat­ed part­ners, this time­line can be sub­stan­tial­ly short­ened. Dur­ing this stage, exten­sive tech­ni­cal doc­u­men­ta­tion is pro­duced, from draw­ings to mate­r­i­al specifications.

The high-tech com­pa­ny now assumes an impor­tant role as a paid tech­ni­cal advi­sor in this co-cre­ation process. This con­sult­ing rev­enue often becomes more sub­stan­tial, help­ing sus­tain oper­a­tions while work­ing towards full-scale production.

As the indus­tri­al enter­prise pro­gress­es with design work, the tech­nol­o­gy is fine-tuned to spe­cif­ic prod­ucts and appli­ca­tions. Mate­ri­als and process­es are reviewed to ensure sup­ply chains are ready for future volumes.

Con­tracts are updat­ed to clar­i­fy respon­si­bil­i­ties, intel­lec­tu­al prop­er­ty rights, cost struc­tures, and time­lines. Suc­cess­ful projects fea­ture close inter­de­part­men­tal col­lab­o­ra­tion at the indus­tri­al enter­prise, involv­ing mar­ket­ing, man­u­fac­tur­ing, pur­chas­ing, and R&D to ensure the design is fea­si­ble, meets all require­ments, and can be man­u­fac­tured cost-effectively.

Stage 5: Practical verification

When the indus­tri­al enter­prise approves the design, the most resource-inten­sive phase begins. This stage for estab­lished indus­tries with con­ven­tion­al tech­nolo­gies can take 12–36 months, though mar­ket urgency and tech­no­log­i­cal readi­ness can com­press this time­line con­sid­er­ably. The indus­tri­al enter­prise pro­duces pro­to­types that under­go rig­or­ous test­ing to ensure func­tion­al­i­ty, reli­a­bil­i­ty, and com­pli­ance. Sev­er­al types of pro­to­types are used:

• Design pro­to­types that val­i­date the engi­neer­ing design solutions.
• Func­tion­al pro­to­types which test indi­vid­ual functions.
• Sys­tem pro­to­types which val­i­date the per­for­mance of the entire product.
• Pre-pro­duc­tion pro­to­types that ver­i­fy the man­u­fac­tur­ing process.

Test­ing pro­gress­es from the com­po­nent lev­el to com­plete sys­tem pro­to­types, often requir­ing mul­ti­ple design iter­a­tions to resolve issues and opti­mize the system.

The high-tech company’s role dur­ing this phase is cru­cial, as they must demon­strate that their tech­nol­o­gy works as intend­ed under all con­di­tions. This often involves accel­er­at­ed life test­ing, envi­ron­men­tal test­ing, and com­pli­ance test­ing to ISO standards.

In par­al­lel, the indus­tri­al enter­prise devel­ops and val­i­dates the man­u­fac­tur­ing process. Sup­pli­ers begin deliv­er­ing pre-pro­duc­tion parts in increas­ing quan­ti­ties, and pilot runs train oper­a­tors and sta­bi­lize the process for full-scale production.

For the high-tech com­pa­ny, this phase typ­i­cal­ly involves increas­ing­ly sub­stan­tial com­mer­cial agree­ments, as the rela­tion­ship moves from devel­op­ment toward pro­duc­tion. These agree­ments can pro­vide sig­nif­i­cant rev­enue even before full com­mer­cial launch.

Stage 6: Go to market

After suc­cess­ful test­ing, the project enters the deploy­ment phase. The indus­tri­al enter­prise shifts respon­si­bil­i­ty from the devel­op­ment team to the reg­u­lar line orga­ni­za­tion for ongo­ing pro­duc­tion, dis­tri­b­u­tion, and sup­port. Pro­duc­tion often starts cau­tious­ly and grad­u­al­ly increas­es as process­es stabilize.

For the high-tech com­pa­ny, this phase means the begin­ning of long-term sup­ply con­tracts and sta­ble, sub­stan­tial rev­enue streams. A suc­cess­ful launch with one indus­tri­al enter­prise can open many doors, mak­ing it eas­i­er to attract new cus­tomers and expand into new mar­ket seg­ments. This is when the high-tech com­pa­ny begins to reap the full rewards of its inno­va­tion and persistence.

The rela­tion­ship often con­tin­ues evolv­ing, with the indus­tri­al enter­prise incor­po­rat­ing the tech­nol­o­gy into addi­tion­al prod­ucts or appli­ca­tions, cre­at­ing fur­ther growth oppor­tu­ni­ties for both parties.

Managing a portfolio of opportunities

The process from first con­tact to fin­ished prod­uct in con­ven­tion­al indus­tri­al set­tings can take sev­er­al years, espe­cial­ly in indus­tries with high safe­ty and reli­a­bil­i­ty require­ments. How­ev­er, with the right tech­nol­o­gy and part­ner align­ment, these time­lines can be sig­nif­i­cant­ly accel­er­at­ed. It’s impor­tant to under­stand that high-tech com­pa­nies are typ­i­cal­ly engaged in mul­ti­ple such process­es simul­ta­ne­ous­ly with dif­fer­ent indus­tri­al enter­pris­es, each at its own stage of development.

These par­al­lel rela­tion­ships exist at var­i­ous stages of matu­ri­ty, cre­at­ing a port­fo­lio of oppor­tu­ni­ties that devel­op at dif­fer­ent paces. Suc­cess with one indus­tri­al enter­prise often cre­ates pos­i­tive momen­tum, accel­er­at­ing dis­cus­sions with oth­ers as the tech­nol­o­gy proves its val­ue in real-world applications.

This port­fo­lio approach cre­ates cor­re­spond­ing rev­enue poten­tial increas­ing at each stage. While ear­ly-stage engage­ments might involve mod­est con­sult­ing fees, lat­er stages can deliv­er sub­stan­tial pro­duc­tion contracts.

Success factors beyond technology

It’s cru­cial for high-tech com­pa­nies to have suf­fi­cient finan­cial resources to bridge the devel­op­ment peri­od and the abil­i­ty to adapt to each indus­tri­al enterprise’s process­es. Build­ing trust by deliv­er­ing on promis­es is essential.

Tech­ni­cal excel­lence is nec­es­sary but not suf­fi­cient. Inno­v­a­tive tech­nol­o­gy com­pa­nies must also demon­strate they are reli­able part­ners who can han­dle the demands of each devel­op­ment phase and com­mu­ni­cate effec­tive­ly with indus­tri­al enter­pris­es. The key is being strate­gic, patient, and per­sis­tent while rec­og­niz­ing that tim­ing can vary sig­nif­i­cant­ly based on mar­ket con­di­tions and enter­prise priorities.

In our next arti­cle, Elli­nor Ehrn­berg shares how Smoltek Hydro­gen is adapt­ing its devel­op­ment sched­ule to keep pace with where the key poten­tial buy­ers of Smoltek Hydro­gen’s tech­nol­o­gy are in their prod­uct devel­op­ment. Then we’ll explore how tru­ly dis­rup­tive tech­nolo­gies can dra­mat­i­cal­ly accel­er­ate these tra­di­tion­al time­lines, cre­at­ing oppor­tu­ni­ties for for­ward-think­ing com­pa­nies to gain a deci­sive mar­ket advantage.