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Monetizing Innovation: How Smart Companies Design the Product Around the Price Hardcover – Illustrated, May 2 2016
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Surprising rules for successful monetization
Innovation is the most important driver of growth. Today, more than ever, companies need to innovate to survive. But successful innovation—measured in dollars and cents—is a very hard target to hit.
Companies obsess over being creative and innovative and spend significant time and expense in designing and building products, yet struggle to monetize them: 72% of innovations fail to meet their financial targets—or fail entirely. Many companies have come to accept that a high failure rate, and the billions of dollars lost annually, is just the cost of doing business.
Monetizing Innovations argues that this is tragic, wasteful, and wrong.
Radically improving the odds that your innovation will succeed is just a matter of removing the guesswork. That happens when you put customer demand and willingness to pay in the driver seat—when you design the product around the price. It’s a new paradigm, and that opens the door to true game change: You can stop hoping to monetize, and start knowing that you will.
The authors at Simon Kucher know what they’re talking about. As the world’s premier pricing and monetization consulting services company, with 800 professionals in 30 cities around the globe, they have helped clients ranging from massive pharmaceuticals to fast-growing startups find success. In Monetizing Innovation, they distil the lessons of thirty years and over 10,000 projects into a practical, nine-step approach. Whether you are a CEO, executive leadership, or part of the team responsible for innovation and new product development, this book is for you, with special sections and checklist-driven summaries to make monetizing innovation part of your company’s DNA. Illustrative case studies show how some of the world’s best innovative companies like LinkedIn, Uber, Porsche, Optimizely, Draeger, Swarovski and big pharmaceutical companies have used principles outlined in this book.
A direct challenge to the status quo “spray and pray” style of innovation, Monetizing Innovation presents a practical approach that can be adopted by any organization, in any industry. Most monetizing innovation failure point home. Now more than ever, companies must rethink the practices that have lost countless billions of dollars. Monetizing Innovation presents a new way forward, and a clear promise: Go from hope to certainty.
Frequently bought together
—Bill Gurley, Board member of Uber and General Partner at Benchmark
From the Inside Flap
Businesses need to innovate to survive, yet the failure rate for innovation is shockingly high. Nearly three out of four new products or services miss their revenue and profit goals or fail entirely. Companies embark on the long and costly journey of product development hoping they'll make money on their innovations, but not knowing if they will.
It doesn't have to be that way.
This book lays out nine rules for monetizing innovations, built on the lessons Simon-Kucher & Partners has learned through conducting more than 10,000 projects on behalf of companies around the world. This deep body of knowledge allows the authors to identify issues and solutions in new product monetization. For example, while most of us believe that there are many reasons why new products might fail, Monetizing Innovation reveals that failures fall into four diagnosable categories: Feature Shocks, Minivations, Hidden Gems, and Undeads and that each is easily preventable.
Case studies showcase how some of the world's most innovative companies like Uber, Porsche, LinkedIn, Dräger, Optimizely, and Swarovski have used principles outlined in this book.
A direct challenge to the standard "spray and pray" style of innovation, Monetizing Innovation presents a practical approach that can be adopted by any organization, in any industry. Companies must rethink the innovation practices that have cost countless billions of dollars. Monetizing Innovation presents a new way forward. Find out what customers value and how much they are willing to pay. Design the product around the price, and the results will surprise you.
- Publisher : Wiley; 1st edition (May 2 2016)
- Language : English
- Hardcover : 256 pages
- ISBN-10 : 1119240867
- ISBN-13 : 978-1119240860
- Item weight : 454 g
- Dimensions : 16 x 3.05 x 23.37 cm
- Best Sellers Rank: #45,874 in Books (See Top 100 in Books)
- Customer Reviews:
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1. 'If you simply build a great new product, customers will pay fair market value for it. 'Build it and they will come' is the mantra.'
2. "The new product or service must be controlled entirely by the innovation team working in isolation.'
3. 'High failure rate of innovation rate is normal and is even necessary.'
4. 'Customers must experience a new product before they can say how much they will pay for it.'
5. 'Until the business knows precisely what it's building, it cannot possibly assess what it is worth.'
As Ramanujam and Tacke would presumably agree, there are exceptions. Moreover, Steve Jobs has been perhaps the most outspoken among those who believe that most (if not all five) of these myths and misconceptions are, in fact, true; especially the first two.
With regard to #3, most experts seem to agree that a high number of low-risk experiments (using prototypes) rather than a high failure rate is desirable. The mantra 'fail fast' should be subject to reasonable limitations. If DOA, bury it.
The wisdom of the Lakota advises against feeding a dead horse.
These are among the dozens of passages of greatest interest and value to me, also listed to suggest the scope of Ramanujam and Tacke's coverage:
o Product innovation (Pages 3-13)
o New product development (15-32)
o Feature shocks (16-20)
o Hidden gems (24-27)
o Undeals (27-32)
o Monetization and innovation (33-36)
o Customer segmentation (53-62)
o Key principles of bundling (71-73)
o Pricing strategies (97-110)
o Business cases for new products (111-120)
o Behavioral pricing (135-147)
o Example of behavioral pricing at Internet companies (137-140)
o Behavioral pricing tactics (140-145)
o Price integrity (149-159)
o Post-Launch (153-157)
o Porsche (164-170)
o The "Porsche Principle'(169-170)
o LinkedIn (170-174)
o B2B (174-182)
o Swarovski (188-193)
o Optimizely (194-200)
o Implementing the 'design the product around the price' approach (207-218)
With regard to monetizing failure, Ramanujam and Tacke have found four recurring patterns of product failures that all into four categories:
1. Feature Shock: 'Cramming too many features into one product ' sometimes even unwanted features ' creates a product that does not fully resonate with customers, and is often overpriced.'
COMMENT: There may not be immediate resonation but a liquid always assumes the shape of its contained. Over time, applications will be used to the limit of the capabilities available. Especially with a new product, offering more can accelerate adoption.
2. Minivation: 'An innovation that, despite being the right product for the right market, is priced too low to achieve its full revenue potential.'
COMMENT: With pricing, almost everything depends on two factors: margins and market appeal.
3. Hidden Gem: 'A blockbuster product that is never properly brought to market, generally because it falls outside of the core business.'
QUESTION: Who or what determines that?
ANSWER: Eventually if not immediately, the market.
4. Undead: 'An innovation that customers don't want but has nevertheless been brought to market, either because it was the wrong answer the right question, or an answer to a question no joined was asking.'
COMMENT: People can't make a choice they don't know exists. Some of the most successful products answer questions that consumers had not asked. Swiffer, for example, and handles built into large containers of liquids such as milk and antifreeze.
These are among Madhavan Ramanujam and Georg Tacke's concluding thoughts: 'In a world in which innovation success has become more important [begin italics] and [end italics] more difficult, we believe no company can afford to build its future on wishes, hopes, and dreams.' I agree. In fact, I cannot recall a prior time when the business world was more volatile, more uncertain, more complex, and more ambiguous than it is now.
This book offers an abundance of information, insights, and counsel that can help leaders in almost any organization'whatever its size and nature may be ' to use the principles of monetiization to design new or improved products and/or services that are most likely to create or increase demand.