Technology Readiness Level and Investment Readiness Level Deconstructed

What is Technology Readiness Level (TRL) 

TRL was created by NASA and primarily applies to physical products. Though the principles behind TRL are broadly useful, they often don’t align well with software-based products and services. Over time, the TRL model has been adopted by various industries beyond aerospace, including energy and the European Space Agency. While the original nine-level model remains the standard, some researchers have proposed additional levels, such as TRL 10 and TRL 11, to reflect continuous technological improvement or application in new contexts. However, these additional levels have not yet been standardized and are not as widely recognized, meaning the focus remains on the nine-level framework. 

 

TRL 1	Basic principles observed and reported	This is the lowest "level" of technology maturity. At this level, scientific research begins to be translated into applied research and development.
TRL 2	Technology concept and/or application formulated	At this level, the application is still speculative, but specific applications are being considered in academic papers.
TRL 3	Analytical and experimental critical function and/or characteristic proof of concept	At this step, active research and development is initiated. This must include both analytical studies to set the technology into an appropriate context and laboratory-based studies to physically validate that the analytical predictions are correct.
TRL 4	Component and/or breadboard validation in laboratory environment	Next, basic technological elements must be integrated to establish that the "pieces" will work together to achieve concept-enabling levels of performance.
TRL 5	Component and/or breadboard validation in relevant environment	At this level, the fidelity of the component and/or breadboard being tested is increased. The basic technological elements must be integrated with reasonably realistic supporting elements so that the total applications (component-level, sub-system level, or system-level) can be tested in a 'simulated' or somewhat realistic environment.
TRL 6	System/subsystem model or prototype demonstration in a relevant environment	This stage requires that the fidelity of the component and/or breadboard being tested is again increased.
TRL 7	System prototype demonstration in an operational environment	TRL 7 is a significant step beyond TRL 6, requiring an actual system prototype demonstration in a space environment. The prototype should be near or at the scale of the planned operational system.
TRL 8	Actual system completed and qualified through test and demonstration	In almost all cases, this level is the end of true 'system development'. This stage might include integration of new technology into an existing system.
TRL 9	Actual system proven through successful mission operations	This represents the end of the last 'bug fixing' aspects of true 'system development'. This TRL does not include planned product improvement of ongoing or reusable systems.

TRL and Co-Creation Limitations 

Recent studies indicate that the TRL model might not adequately reflect the maturity of technologies developed through co-creation or open innovation. These collaborative settings do not always follow a linear progression, thus requiring adaptations to the traditional TRL model. Extending the TRL framework to accommodate such co-creative efforts could improve its applicability to a broader range of technological advancements. 

What is Investment Readiness Level (IRL) 

IRL was developed by Steve Blank to serve as a framework for startups similar to how TRL is used in aerospace. Blank’s IRL model continues to be relevant in 2024, emphasizing hypothesis testing, data collection, and evidence-based metrics. His methodology incorporates tools like the Business Model Canvas and focuses on validating ideas through customer interviews and “lessons learned” rather than traditional product demo days. This approach offers a systematic way to gauge investment readiness and navigate the uncertainties of early-stage ventures. 

 

IRL 1	First pass canvas	This is the lowest "level" of investment maturity. At this level, a rough outline of a business model has been put to paper, but it's mostly unvalidated assumptions.
IRL 2	Market size/competitive analysis	Once a rough business model in place, the next most important ancillary step is market research. It's important to know what the market looks like and who your potential competitors are.
IRL 3	Problem/solution validation	Now that you have completed your market research, the next step is to begin validating that there's a problem and that your business plan aligns with possible solutions to that problem. Based on the problem driven approach to software development, we adapted the Lean UX Canvas which provides a framework for documenting the problem statement along with other considerations.
IRL 4	Low fidelity MVP	Once you have validated your solution in theory, it's time to begin validating it in practice. Do this with a low fidelity MVP to conserve resources.
IRL 5	Product/market fit	Building on the previous steps, next you need to validate that your offering represents the best way to solve the problem(s) experienced by your market. This is where you hammer down what your UVPs are and validate that they actually matter to your market.
IRL 6	Validate right-side of canvas	It's time to validate the left-side of your business model canvas (customers, relationships, customer segments, channels, revenue streams). Some of this will have been completed during previous steps.
IRL 7	High fidelity MVP	Now that you have a good idea about your product/market fit, it's time to begin validating your idea in earnest. Do this with a high fidelity MVP to maximise your investment readiness and prove your technology.
IRL 8	Validate left-side of canvas	It's time to validate the right-side of your business model canvas (key partners, key activities, key resources, cost structure). Some of this will have been completed during previous steps.
IRL 9	Metrics that matter	Once you have a validated business model and product, the next step is planning your growth. Key to this is identifying the metrics that matter (e.g. revenue, sales, social media clout).

Whereas TRL is too specific to be directly applied to all organisations, IRL can be accused of being the opposite; too general. So which is better? Technology Readiness Level or Investment Readiness Level? 

TRL vs. IRL 

The TRL model remains more hardware-focused and specific, asking clear yes/no questions like “Does it work in a lab?” IRL, however, is more subjective and adaptable, making it suitable for software and startups but potentially too broad for direct application in all contexts. 

In terms of technology advancements in 2024, software development tools, such as low-code/no-code platforms and AI integrations, continue to affect how readiness levels like TRL and IRL are applied in practice. This ongoing evolution emphasizes the importance of domain-specific models, like WorkingMouse’s Brief process, to better guide app development. 

UQ business lecturer TIm Kastelle made this table aiming to convert each level in the IRL model into distinct, bite-sized actionables: 

 

In the case of market size/competitor analysis, the actionables include a detailed map of total addressable market divided in subsections, an estimated return based on total market value and expected market share and a petal diagram of competitors. 

Kastelle's cheat sheet goes a long way towards demystifying the relatively broad levels in Steve Blank's IRL model. Conversely, TRL is more easily broken down. 

In a nutshell, TRL 1, 2 and 3 can be applied to ideas in theory and TRL 4 and onwards apply to ideas in practice. In each case, new milestones are progressively achieved. For example, to be at TRL 1, all that is required is the theory (e.g. maths) underpinning your idea is valid. Let's unpack this. 

Imagine your idea is a transparent aluminium windshield (like in Star Trek) to go on a new NASA space shuttle. Step 1 would be checking peer-reviewed papers to see if the basics/general principles of this idea are within the reach of contemporary science. In this example, the questions that may need to be answered include: what is transparent aluminium's melting and freezing points? 

It's only once these questions are answered that you should progress to the next step, which is a deeper exploration of the topic of transparent aluminium windshields. 

This process of gradual progression in theory and then in practice is not mirrored in IRL, where you begin with a basic business model that is progressively expanded and validated piecemeal. For example, in IRL 2 you explore your market's landscape and in IRL 3 you explore how your idea could solve a problem. These are related, but not directly. 

Another point of distinction is that it is only at IRL 4 and 7 that the execution of your idea is actually required. 

Despite this, however, each system is built upon the idea that it's better to validate ideas as early as possible. Will this work in cold temperatures of space? Cool it in a lab and see. Can we use this unique navigation method in our app? Create a paper mock-up of your app and test the idea before writing a single line of code. 

It's possible that some of the steps in the TRL and IRL models will be irrelevant to your idea; however, their value is less in creating strict rules and more in empowering you and your idea with best practices that help you to understand where your idea stands in terms of investment and technology readiness. 

The Problem with App Development 

The issues with applying TRL to app development still stand, given its hardware-centric nature. Similarly, IRL can seem too vague, as it aims to be relevant to various ideas but may not address the realities of app development directly. The current industry trend leans toward models that accommodate the iterative and collaborative nature of software development, especially given the prevalence of outsourced development and the unpredictable path to MVP.  

In summary, both TRL and IRL continue to offer value in understanding technology and investment readiness, though they come with their respective limitations. Their evolving application in areas like co-creation and app development demonstrates the need for continuous adaptation and refinement to meet the demands of innovative technologies in 2024.