Tools for Technology Evaluation: TRLs

An Introduction to Technology Readiness Levels

Key Takeaways:

• The “Technology Readiness Level” or TRL is an internationally recognized scale for describing where a new technology is in the research and development process.
• The TRL scale ranges from 1 to 9, with 9 being ready for commercialization.
• TRL benchmarking is used by public and private industries and investors to inform decision making.
• NASA originally developed the TRL scale and continues to use TRLs to manage complex projects, including rover development for Mars missions.

The Technology Readiness Level (TRL) scale describes the stages from an inventor’s first “Ah ha!” moment to commercialization. It’s a fast way to manage expectations and get everyone on the same page. The TRL scale was developed by NASA to define technology maturity fifty years ago. [1] Today, TRLs are used by companies like BP, John Deere, and GoogleX as well as government agencies around the world to benchmark technologies on their path to commercialization. [2] The TRL scale has been an important consideration for me in multiple roles: as a technology developer, a reviewer for grant programs, and as an early-stage investor.

What is a “Technology Readiness Level”?

The TRL scale has nine levels: 1 is the lowest, and 9 is essentially commercial. Each level is achieved when the activities within a level are completed. During the first three levels, research is conducted to establish technical feasibility. The focus for technologies at TRLs of 4–6 shifts from research to development: system design, validation, and integration, including the difficult transition from research lab to the intended environment between TRL 4 and 5. When TRL 7 is reached, the system is essentially in final form and the remaining milestones are related to deployment.

Who Uses TRLs?

NASA developed the TRL scale in the 1970s to track the development status of each new part prior to integrating it into a space-bound system. It became the basis for an International Standard for classifying space system hardware.

These three Mars exploration vehicles (from left to right: Spirit/Opportunity, Sojourner, and Curiosity) were developed using the Technology Readiness Level (TRL) scale for space-system components. Courtesy of NASA (2011), Image Source.

Other government agencies, including the US Department of Defense (DoD), Dept of Energy (DOE), several California programs, and the EU Horizon program have adopted TRLs to define eligibility and track progress for procurement programs and grants.

The private sector increasingly uses Technology Readiness Levels, particularly in industries with low risk tolerance like defense, oil & gas, and infrastructure. Many organizations map TRLs to the organization’s standard technology development or “stage gate” process, with minimum acceptable TRLs at certain gates.

Advantages of the TRL System

The main purpose of using technology readiness levels (TRLs) is to help inform decisions concerning the development and implementation of technology. Major advantages and use cases for TRLs include:

• Providing a common understanding of technology status between technology developers, project managers, and other stakeholders.
• Informing risk management activities.
• Inform decisions concerning future technology funding.
• Inform decisions concerning transition of technology to the next stage of development or commercialization.

For companies, identifying and tracking the development status of key components helps to ensure that everything is on track. If progress on one component is lagging, this can be recognized early and addressed. If a technology is not progressing as expected, the company may shift resources to a more promising area.

For grant programs, screening applicants by Technology Readiness Level helps ensure that the development stage is appropriate for the goals of the program. It also helps ensure that the funding amount will be sufficient for the proposed scope of work. Requiring applicants to state their TRL helps manage expectations and enable “apples to apples” comparisons. A technology that is at TRL 4 will likely look much more polished and is likely to have received much more traction than a new concept at a TRL of 2, irrespective of technical merit.

For investors, understanding the current TRL level, the funds raised to date, and the level at which revenue or acquisition is expected can help predict a startup’s trajectory. It can also be a useful tool for mapping early value inflection points, and informing the timing and amount of pre-revenue rounds.

Challenges and Limitations

Applying the TRL scale outside of its original context (space programs) has created ambiguity around standards. Even within the space sector, there can be ambiguity around the TRL of a system vs individual components.

The subjectivity of TRL assessments also leaves ample opportunity for bias. Entrepreneurs or technology developers may overestimate the maturity of their technology due to optimism, competition for resources, to avoid scrutiny, or awareness of their own sunk costs. If the performance requirements are not explicit, the TRL definitions leave considerable room for interpretation. Consider these three situations that might lead a company to describe their technology as TRL 4 (lab prototype completed):

1. “We ran the lab prototype once and it worked.”
   There is some reason to believe that the system might work.
2. “We tested the lab prototype over the range of operating conditions, and repeated each test multiple times.”
   There is evidence that the system will perform as expected.
3. “We tested the lab prototype(s) over extended periods at both operating and challenge conditions, assessing performance changes and conditions that might cause it to fail.”
   Significant technical risk has been eliminated and transition to larger scale development activities may be warranted.

Clearly different levels of technical risk remain in each of these situations. Despite its importance, the status of longevity or lifetime testing can be particularly challenging to capture, as this type of testing can take months or years to complete.

At higher TRLs (6–8), integration with other processes, systems, or components becomes an increasing concern, especially when multiple component technologies are developed in parallel. Having one component at a lower TRL compared to the rest of the system creates risk that this component will lag and delay product release. Subsystems developed in isolation may turn out to be difficult to integrate into a client’s process at later TRLs — technology developers should establish integration requirements and seek feedback early.

A final word of caution — the TRL scale does not discuss critical business development activities that should accompany each level. While this may be unnecessary for NASA programs, it can be a blindspot for some highly technical founders. At TRL 1, basic business assumptions like the size of the target market should be known. TRL 2 activities should include some level of modeling to understand the cost and performance metrics needed to be commercially viable. The impact of design decisions on cost and integration should be considered in parallel with experimental programs at TRLs 3–4.

Implications for Early-Stage Investing

As early-stage investors, we target startups who have largely addressed the scientific risk and are ready to scale. This generally maps onto technologies at TRLs of 3–5, although many exceptions exist.

The amount of funding needed to advance a technology to the next TRL varies widely by sector. Both prototyping and validation for electronics components may proceed rapidly. For a satellite component, development of the first part may be extremely time and labor intensive, but readily replicated once validated. New chemical processes can require very large investment at high TRLs to build large first-of-a-kind (FOAK) demonstration plants. Investors, advisors, or grant application reviewers with technical expertise in a specific area are helpful to more accurately assess the funds needed to complete all development activities. This should be compared against projected revenue (if any) to understand how much additional funding will be required to reach commercialization.

TRL Example: Tiger Tea Koozies

Let’s say you notice that your 200 tigers shed A LOT. You have an idea to convert this tiger hair into fashionable tea koozies. Eureka! This idea is at technology readiness level 0.

1. You inventory the tiger hair and start trying to shape tiger hairballs into tea coozies, comparing it to other knitting materials. TRL 1.
2. You sketch the steps in the coozie making process and what the final product will look like. TRL 2.
3. You experiment with the tiger-hair spinning process and make some passable koozies. TRL 3.
4. A prototype system to make a few coozies is up and running in your home lab, and the koozies are looking pretty darn good. TRL 4.
5. You rent a larger, semi-industrial spinning wheel and start demonstrating other process steps at the alpaca wool farm nearby. TRL 5.
6. You finally complete all the fur-to-coozie steps on small-scale industrial equipment. At this point, you’re using ~10% of the hair your tigers shed each day. TRL 6.
7. You build out a tiger tea-koozie factory and get the first koozie line started up! TRL 7.
8. You finally get all of the equipment qualified and running smoothly, turning all the tiger hairballs into beautiful, high-quality koozies. Your initial tea-koozie customers are delighted. TRL 8.
9. Anyone can buy a tiger tea-koozie through your website or mail-order catalog. You have licensed the tea-koozie making process to some of your tiger-owning friends. TRL 9.

Conclusion

Standardized metrics like “technology readiness levels” are valuable tools to communicate and assess the status of technology development programs. If this is the first time you’ve seen it (outside of the “Total Request Live” MTV show in the ‘90s), I hope that TRL also becomes one of your favorite TLAs. [3]

Notes

1. The current NASA TRL definitions are available here.
2. MIT has published a great open access paper on Technology Readiness Levels, discussing their use at 15 major organizations. International governments that use the TRL scale include the European Union and Australia. For a more in-depth look at the history of TRL use in the US and Europe, M. Heder wrote this informative guide in 2017.
3. TLA = Three Letter Acronym

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