The trillion-dollar innovation crisis hiding in plain sight—and the organizational model built to solve it

Right now, somewhere in a multinational corporation's R&D portfolio sits a technology that could change your life.

It could eliminate the plastic choking our oceans. Power the AI infrastructure running modern medicine. Keep your town's manufacturing plant from closing instead of shipping jobs overseas. The corporation spent millions in R&D developing it. Their market research shows the demand. Their patents protect the innovation. The technology works.

And it will never reach you.

Not because it failed technically. Not because customers do not want it. But because no one inside the organization can champion bringing it to market when doing so falls outside the company's strategic mandate.

This is the Valley of Death. And it swallows roughly $1.08 trillion in innovation annually (EU Industrial R&D Investment Scoreboard, 2024; European Commission, 2024).

When Convergence Meets Mandate

What separates the world's most transformative companies from the rest?

It's not bigger R&D budgets or smarter scientists. It's the ability to find where customer pain intersects with disruptive solutions—and then marshal the operational firepower to bring those solutions to market at scale.

Consider the iPhone. When Steve Jobs introduced it in 2007, none of its core technologies were new. Touchscreens existed—Microsoft had been demonstrating tablet PCs for years. Mobile internet was already deployed. Digital music players were mainstream—Apple's own iPod dominated the market. Mobile phones were ubiquitous, with Nokia commanding 40% global market share.

Every component technology already existed, developed by different companies pursuing different markets. Apple's genius was not invention—it was recognizing how these converging capabilities could solve a fundamental customer frustration: carrying multiple devices (phone, music player, camera, internet device) when they desperately wanted just one that actually worked well.

But here's what most innovation narratives miss: the iPhone succeeded because Apple operated with a different mandate than the corporations that dominated each underlying technology. Nokia could not cannibalize its lucrative phone business. Microsoft could not risk undermining its Windows PC ecosystem. Consumer electronics companies could not challenge the carrier relationships that controlled mobile devices.

The technologies existed. The customer pain was documented. But the organizational structure to marry them—and the mandate to disrupt existing business models—did not.

The Trillion-Dollar Gap

The world's top 2,000 companies spent over $1.35 trillion on R&D in 2024, with only 20% of resulting patents showing clear signs of commercialization (EU Industrial R&D Investment Scoreboard, 2024; European Commission, 2024). That means approximately $1.08 trillion annually produces technology solutions that never reach the customers desperately seeking them.

The biggest challenge facing large corporations today is the chasm between the customer pain they have identified, the disruptive solutions they have developed, and the operational capacity to bring those solutions to market.

Somewhere deep in the files of nearly every multinational corporation sits a technology that could change an industry, solve a pressing customer need, or create entirely new markets.

The corporation's own market research quantified the opportunity—often showing billions in addressable market value. Their R&D teams developed working prototypes, sometimes spending tens of millions of dollars validating the technology. Their legal teams secured patents protecting the intellectual property.

And then... nothing.

The innovation sits unused. Not because it failed technically. Not because customers did not want it. But because no one inside the organization could champion bringing it to market when doing so fell outside the company's strategic mandate.

If that technology remains in the corporate "closet," an invention that could have potentially created more than a billion dollars of value—and solved genuine problems for millions of customers—will simply go to waste.

What the Valley of Death Actually Is

The Valley of Death describes the critical 18-24 month transition period where technology solutions that have achieved proof of concept require tens of millions in capital and specialized operational expertise to reach commercial scale (Gbadegeshin et al., 2022).

This phenomenon manifests in predictable patterns. When technology solutions fall outside a corporation's core business mandate, the innovation loses executive sponsorship. It competes unsuccessfully for resources against higher-profile corporate initiatives. Clear technical success meets unclear pathways to commercial scale. Organizational inertia—not technical failure—determines outcomes.

Research identifies the specific failure factors (Gbadegeshin et al., 2022):

• Ten to hundreds of millions of capital requirements
• 18-24 months of operational intensity
• Manufacturing expertise corporations do not maintain
• Success rate: Only 10%

Traditional funding sources reach their limits at this stage. Corporations lack resources for non-core commercialization. Venture capital lacks the operational capabilities and operational scale-up capital required for industrial deployment.    While venture capital is well suited to funding technological breakthroughs, it's not sufficient to fund the huge projects required to increase national productivity with transformative technologies like AI, robotics, autonomous systems, biotechnology and nuclear energy (Lonsdale, 2025).

Venture capital has proven unprepared and under-tooled for the debt-dominated, project-centric scaling model required of physical technology companies that will define the coming hard asset supercycle (Bernstein et al., 2025).

Additionally, between 1995 and 2019, 83% of all VC investments flowed into life sciences and information technology — mainly software — rather than capital-intensive hardware sectors like semiconductors and batteries, demonstrating that the private sector lacks sufficient incentives to invest in hardware-based or capital-intensive industries (Brown & Singh, 2024).

Beyond capital limitations, VCs often lack the industry-specific expertise to guide startups through their operational challenges, leaving founders to navigate complex issues on their own (7startup, 2024).

Why Three Forces Make This Crisis Urgent Now

The need for a different organizational model to bridge this gap has never been more urgent. Three forces are converging to make the current approach untenable:

1. The Manufacturing and Supply Chain Crisis

US manufacturing experienced what William Bonvillian describes as "a disastrous decade from 2000 to 2010," losing one-third of manufacturing employment and recovering only one-fifth of nearly 6 million lost jobs by 2019 (Bonvillian, 2024). The nation runs a $913 billion trade deficit in goods, including $244 billion in advanced technology goods (Bonvillian, 2024).

Corporations need disruptive manufacturing and materials innovations to compete globally—but cannot commercialize them within existing business unit structures. The technologies exist. The market needs are documented. The organizational capability to bridge from one to the other does not.

2. The Infrastructure and Energy Transition Challenge

Next-generation industrial technologies face acute commercialization challenges. Data center cooling systems struggle to keep pace with AI infrastructure demands. Energy-efficient solutions typically require high development costs, long timelines, and substantial infrastructure changes Bonvillian, 2024).

These innovations need commercialization pathways that neither traditional venture capital nor internal corporate development can provide. The timeline is measured in 18-24 months of intensive operational focus. The capital requirements often exceed $100 million. The expertise demands span manufacturing, supply chain, quality systems, and regulatory compliance. Most importantly, success requires operational scale-up capital and sustained operational commitment—precisely what portfolio risk management approaches cannot deliver (Gbadegeshin et al., 2022).

3. The Strategic Mandate Squeeze

Corporations worldwide are narrowing their strategic mandates, focusing on core competencies where they can maintain competitive advantage. Boards push management to reduce complexity, cut SKUs from 150 to 25, and concentrate resources on proven business models that generate predictable returns Bonvillian, 2024)..

This discipline makes sense for operational efficiency. But it creates a growing class of "strategic orphans"—validated innovations that address real market needs but fall outside narrowed mandates.

Why Traditional Approaches Fail

Research demonstrates that flexible, dedicated transition teams at high-risk technology readiness level handoffs reduce demonstration failures by approximately 50% and shorten critical transition periods by about 30% (Bonvillian, 2024, MIT Press).

Yet few organizations maintain the required capabilities: deep industrial expertise across manufacturing and supply chain operations; sustained relationships with multinational corporations who understand their market needs precisely; the growth capital needed to support intensive transitions; and organizational commitment to creating and operating companies rather than investing in them.

Research confirms corporations with strong innovation capabilities still lack operational capabilities to commercialize outside core mandates (Chatterjee et al., 2023). The data becomes more specific: commercial viability explains 39% of innovation success variance. Organizational performance improves 71% when companies navigate the Valley of Death through appropriate operational structures (Chatterjee et al., 2023).

As Dr. John Scott, creator of Innventure's model and former astrophysicist turned entrepreneur, explains:

"The Valley of Death persists not because it's unsolvable but because most organizations approach it backwards. They start with technology solutions and search for markets. They fund development without confirming economic viability. They delegate commercialization to investors who lack operational capabilities and depth of how to bring a company to scale."

Scott's analysis crystallizes what building companies for three decades reveals:

"The difference between success and failure is not about finding better technology or raising more capital. It's about building organizational structures that provide sustained operational focus through the specific transitions conventional models cannot navigate."

What Different Actually Looks Like

Innventure's model (NASDAQ: INV) emerged from understanding what research confirms: the Valley of Death is not a funding problem—it's an organizational commitment problem requiring specialized structures capable of providing sustained operational focus through a specific transition that conventional models cannot navigate.

Bill Haskell, who brings over 30 years of experience in company creation and has served as CEO since 2021, explains the fundamental difference:

"When we created Innventure, we asked: What if we could maintain the high returns of early-stage company creation without the high risk? Traditional conglomerates buy established companies. They get compound growth by summing revenues, but they pay market prices—they miss the steep part of the value curve. We start at zero."

Innventure does not invest in companies. It creates and operates them from inception.

The DownSelect® Analysis

Since 2015, Innventure has evaluated over 160+ corporate technology opportunities through Innventure's DownSelect® rigorous analysis that evaluates opportunities against stringent criteria. We don't compromise on our standards. The systematic evaluation starts with corporate technology solutions that have moved beyond proof of concept—typically representing tens of millions in prior R&D investment. But the analysis itself focuses primarily on commercial viability factors: market size, competitive advantage, manufacturing scalability, regulatory pathway, and execution feasibility.

Before creating any company, Innventure's rigorous techno-economic analysis determines whether delivering solutions at roughly one-third the customer's value creation point makes economic sense. This terminology—known as the Immediate Compelling Quantitative Value Proposition (ICQVP) and was created by Dr. Scott.

Research on technology commercialization demonstrates that successful adoption requires immediate value realization, compelling economics relative to switching costs, and quantifiable dollar-specific benefits (Nieto, J., Gbadegeshin, S., & Consolacion-Segura, C., 2021).

Through Dr. Scott’s ICQVP framework, the solution must drive new dollars and cents in the market, be compelling enough to drive potential early adoption, and deliver value immediately when the customer uses it.

• What's the quantifiable problem and its economic impact?
• How much value does your solution create in dollars?
• What are your top three success and failure factors?

The power isn't complexity—it's in Dr. Scott’s systematic rigor in creating this model. Making decisions based on quantified value creation, not technical elegance.

Evidence of the Model in Action

From those 160+ opportunities evaluated, Innventure has created four companies since 2015:

• PureCycle Technologies (founded 2015, NASDAQ: PCT), which recycles polypropylene plastic based on technology sourced from Procter & Gamble
• ‍AeroFlexx (2018), which produces a sustainable, flexible liquid packaging solution, was also created with P&G technology
• ‍Accelsius (2022), one of the few companies solving data center infrastructure with its two-phase direct-to-chip liquid cooling technology
• ‍Refinity (2024), which seeks to commercialize advanced recycling technologies for the conversion of plastic waste to drop-in chemicals in collaboration with The Dow Chemical Company

As Dr. Scott notes: "At Innventure, we have assembled a team of serial C-suite executives with decades of experience steering companies from inception to initial public offering. This enables us to skip a lot of steps. The companies we give birth to are 'young adults'—not 'infants'—and we start out running rather than crawling."

The Industrial Growth Conglomerate Model: A Different Organizational Structure

The Industrial Growth Conglomerate model inverts conventional assumptions about how industrial innovation reaches markets.

Where traditional approaches start with technology solutions and search for markets, this model begins with market needs identified by multinational corporate partners who have spent years gathering customer intelligence through thousands of marketing professionals. Where venture capital manages portfolios through capital allocation, this model creates and operates individual companies with sustained operational commitment. Where most organizations view the Valley of Death as a fundraising challenge, this model recognizes it as an organizational commitment issue that requires specialized structures.

Research validates the approach through what scholars term the "Buztech Model," which confirms operational capabilities as the critical success factor (Gbadegeshin et al., 2022). The model provides four distinct risk reductions that conventional approaches cannot match:

• Market Knowledge Risk Elimination: Starting with market intelligence gathered by corporate partners means technology solutions address documented needs rather than assumed opportunities. Research demonstrates that 42% of startups fail because of "no market need" (CB Insights, 2023). Corporate partnerships eliminate this primary cause of failure.
• ‍Technology Risk Reduction: Corporate partners have already invested $30-50 million developing and protecting technology solutions. This eliminates the capital and time required to prove technical viability—investments that early-stage companies typically cannot make (Gbadegeshin et al., 2022).
• ‍Market Adoption Risk Mitigation: Corporate partners often become first customers before commercialization completes. Research confirms that having committed early customers represents "a huge risk reduction" because adoption pathways exist before product development finishes (Gbadegeshin et al., 2022).
• ‍Execution Risk Management: Experienced operators who have built multiple industrial companies navigate the 18-24 month transition rather than first-time entrepreneurs learning through trial and error. Studies show that 90% of startups fail within their first decade, with 70% failing within the first five years (CB Insights, 2023), primarily because technology innovators underestimate commercialization challenges.

Academic studies validate the operational imperative. Research demonstrates that flexible, dedicated transition teams at high-risk technology readiness level handoffs reduce demonstration failures by approximately 50% and shorten critical transition periods by about 30%(Bonvillian, W.B. 2024). Enhanced organizational performance—71% variance explained—comes from successfully navigating the Valley of Death through operational excellence rather than portfolio diversification (Chatterjee et al., 2023).

The Value Proposition for Corporate Partners

Roland Austrup, Chief Growth Officer at Innventure, explains the value proposition: "The real advantage for multinationals is gaining exposure to the commercialized technology solution...sometimes driven by sustainability mandates, other times by economic benefits from integrating the end product into their business lines."

Scaling industrial technology solutions depends on established infrastructure: market data from multinational partners, existing supply chain relationships, distribution channels, operational expertise, and sufficient capital to navigate the 18-24 month Valley of Death—advantages that enable faster market velocity than traditional investment approaches or independent startups can achieve.

But leveraging these assets requires a different organizational model than either traditional corporate innovation or venture capital can provide. Success demands:

• Market intelligence that only thousands of corporate marketing professionals gathering customer data can provide.
• Validated technology that has already achieved proof-of-concept and often represents $30-50 million in prior R&D investment.
• Operational expertise capable of navigating 18-24 months of intensive commercialization work across manufacturing, supply chain, quality systems, and regulatory approval.
• Operational scale-up structured for early-stage economics while managing late-stage risks through partnerships and compounding growth.
• Strategic alignment that gives corporate partners potential access to new revenue and growth without requiring them to operate outside their core mandate.

No single existing model—not venture capital, not corporate innovation labs, not technology transfer offices—provides all five elements simultaneously.

Why The Valley Persists

In their landmark 2002 study for the National Institute for Standards and Technology, researchers Lewis Branscomb and Philip Auerswald identified the period between invention and innovation as the deepest part of the Valley of Death, where support mechanisms become critically weak (Branscomb and Auerswald, 2002). More than two decades later, that gap persists—not because solutions do not exist, but because appropriate organizational structures remain rare.

Research confirms the critical factors: operational capabilities trump financial capital, commercial viability explains success variance, strategic partnerships provide essential infrastructure, and patient capital enables the operational intensity required (Gbadegeshin et al., 2022; Chatterjee et al., 2023). Yet few organizations combine all elements simultaneously.

Cash Is Fungible. Technology Is Not.

This principle explains why the Valley of Death persists—and why bridging from validation to value creation requires a fundamentally different organizational model.

The convergence of manufacturing crisis, infrastructure transition demands, and strategic mandate pressure means corporations can no longer afford the luxury of letting billion-dollar innovations sit unused. The market needs what these solutions could provide. Customers are asking for products that these innovations could create. Competitive advantage awaits the companies brave enough to choose the alternative path to market.

What's missing is the organizational model that can systematically combine customer pain with validated technology—then execute the intensive 18-24 month operational transition that transforms technology solutions into market-leading companies.

The Valley of Death does not just kill companies. It kills solutions to real-world problems.

As National Science Board Chair Darío Gil states, "Science and technology now have the same economic and geopolitical importance as trade or military alliances." In this new reality, the question is no longer whether the industrial growth conglomerate model works. The evidence answers that definitively.

The question is how quickly corporations, investors, and policy makers recognize what's required to unlock the trillion dollars in annual R&D investment currently producing technologies that never reach the customers who need them—and what becomes possible when organizational structure finally matches the scope of the challenge.

Someone has to build the bridge, own the bridge, and guide innovations across to the other side. That model exists. Its necessity has never been clearer.

This article is the first in a series examining why traditional innovation models fail for disruptive industrial technology—and what organizational structures can systematically bridge the Valley of Death. Stay turned for the next article in this series.

References:

• Bernstein, Gregory, William Godfrey and Brett Bivens. "The Rise of Production Capital." The New Industrial Corporation, June 19, 2025
• ‍Bonvillian, W.B. (2024). Pioneering Progress: American Science, Technology, and Innovation Policy. Cambridge, MA: The MIT Press.
• Brown, Michael and Pavneet Singh. "Why Venture Capital is Indispensable for U.S. Industrial Strategy." Institute for Security and Technology, October 2024
• Branscomb, L.M., & Auerswald, P.E. (2002). "Between Invention and Innovation: An Analysis of Funding for Early-Stage Technology Development." NIST GCR 02-841. National Institute of Standards and Technology.
• CB Insights. (2023). "Why Startups Fail Report."
• CB Insights. (2024). Startup failure statistics and analysis.
• Chatterjee, S., et al. (2023). Innovation capabilities, operational capabilities, and organizational performance. Journal of Business Research.
• European Commission. (2024). EU Industrial R&D Investment Scoreboard.
• Gbadegeshin, S. A., Al Natsheh, A., Ghafel, K., Mohammed, O., Koskela, A., Rimpiläinen, A., Tikkanen, J., & Kuoppala, A. (2022). Overcoming the valley of death: A new model for high technology startups. Sustainable Futures, 4, Article 100077.
• Gil, D. (2024, July 24). Connected horizons: New opportunities in a changed landscape [NSB Chair address]. National Science Board Open Meeting, National Science Foundation, Alexandria, VA.
• OECD Main Science and Technology Indicators (March 2025)
• Innventure Q2 2025 Earnings Call.
• NSF Science & Engineering Indicators 2025 (NSB-2025-7)
• Lonsdale, Joe. "Apollo and 8VC Partner to Accelerate the Next Wave of American Industrial Innovation." Apollo Global Management, Oct. 29, 2025
• Nieto, J., Gbadegeshin, S., & Consolacion-Segura, C. (2021). Commercialization of disruptive innovations: Literature review and proposal for a process framework. International Journal of Innovation Studies, 5(3), 127–144
• SSTI Research on Patent Commercialization 2025

Note: This article reflects systematic observations from evaluating corporate technology commercialization pathways and is informed by academic research on innovation systems. It does not constitute investment advice or recommendations regarding any specific securities.

This article contains forward-looking statements that are inherently subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties, including funding, regulatory, operational and market risks, are discussed and identified in Innventure’s SEC filings, which can be accessed at https://ir.innventure.com/financial-information/sec-filings. The forward-looking statements speak only as of the publication date.