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Monetizing Innovation: How Smart Companies Design the Product Around the Price

ISBN: 978-1-119-24086-0
256 pages
May 2016
Monetizing Innovation: How Smart Companies Design the Product Around the Price (1119240867) cover image

Description

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.

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Table of Contents

Foreword xi

Acknowledgments xiii

PART ONE: THE MONETIZING INNOVATION PROBLEM 1

Chapter 1 How Innovators Leave Billions on the Table: A Tale of Two Cars 3

Chapter 2 Feature Shocks, Minivations, Hidden Gems, and Undeads: The Four Flavors of Monetizing Innovation Failure 15

Chapter 3 Why Good People Get It Wrong 33

PART TWO: NINE SURPRISING RULES FOR SUCCESSFUL MONETIZATION 37

Chapter 4 Have the “Willingness-to-Pay” Talk Early: You Can’t Prioritize without It 39

Chapter 5 Don’t Default to a One-Size-Fits-All Solution: Like It or Not, Your Customers Are Different 53

Chapter 6 When Designing Products, Configuration and Bundling is More Science Than Art 63

Chapter 7 Go beyond the Price Point: Five Powerful Monetization Models 79

Chapter 8 Price Low for Market Share or High for Premium Branding? Pick the Winning Pricing Strategy 97

Chapter 9 From Hoping to Knowing: Build an Outside-In Business Case 111

Chapter 10 The Innovation Won’t Speak for Itself: You Must Communicate the Value 121

Chapter 11 Use Behavioral Pricing Tactics to Persuade and Sell: Sometimes Your Customers Will Behave Irrationally 135

Chapter 12 Maintain Your Price Integrity: Avoid Knee-Jerk Repricing 149

PART THREE: SUCCESS STORIES AND IMPLEMENTATION 161

Chapter 13 Learning from the Best: Successful Innovations Designed around the Price 163

The Porsche Story—Veering Off the Sports Car Track to Create Two Winning Vehicles 164

LinkedIn—Monetizing the World’s Largest Professional Network 170

Dräger—Collecting the Specs for Successful Industrial Products before Engineering 174

Uber—Monetizing a Disruptive Innovation through Innovative Price Models 182

Swarovski—The Payoff from Crystal-Clear Ideas on What Consumers Will Pay 188

Optimizely—How to Price Breakthrough Innovation 194

Innovative Pharma—How a Customer Value Driven R&D Approach Boosts Success 200

Chapter 14 Implementing the “Designing the Product around the Price” Innovation Process 207

Notes 219

Index 227

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Author Information

MADHAVAN RAMANUJAM is a Board Member and Partner at Simon-Kucher & Partners, based in the San Francisco/Silicon Valley office. He has provided advice to companies of all sizes, ranging from Fortune 500s to startups. He has led more than 125 monetization projects for Internet, Software and Technology clients, and has helped bring numerous new products to market.

GEORG TACKE is co-CEO of Simon-Kucher & Partners. Over the last 25 years he has helped develop the firm from a small boutique to a global consultancy with over 900 employees. Georg is regarded as one of the leading international pricing and monetization experts. In this area he also acts as a personal consultant to C-level executives in various industries.

SIMON-KUCHER & PARTNERS is the world's largest pricing consultancy. For more than 30 years it has been helping companies boost their sales and profits through superior monetization strategies. Simon-Kucher is active in all major markets; currently the global network spans 32 offices in 22 countries.

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Reviews

"Madhavan Ramanujam is to monetization strategy what Bob Marley is to reggae music. You must read this book."
—Bill Gurley, Board member of Uber and General Partner at Benchmark
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Press Release

May 02, 2016
Monetizing Innovation How Smart Companies Design the Product Around the Price

Companies obsess over being creative and spend significant time and expense in designing and building products, yet struggle to monetize them: 72 percent of innovations fail to meet their financial targets—or fail entirely. Many companies have come to accept a high failure rate as the cost of doing business, losing billions of dollars in the process. It does not have to be this way.

Monetizing Innovation: How Smart Companies Design the Product around the Price (Wiley, May 2, 2016) explores what happens when companies stop guessing at whether an innovation will succeed and put the customer’s willingness to pay at the very core of product design. Price is more than just a dollar figure, it is an indication of what the customer wants—and how much they want it. In fact, it is the single most critical factor in determining whether a product makes money. However, too often it is an afterthought and frequently a last-minute consideration made after a product is developed.

Authors Madhavan Ramanujam and Georg Tacke – partner and co-CEO of the world’s premier monetizing consulting services company Simon-Kucher & Partners – have helped clients ranging from massive pharmaceuticals to fast-growing startups find success. Now, in “Monetizing Innovation” they distil the lessons of 30 years and more than 10,000 projects into a practical, nine-step approach, emphasizing:

  • How to leverage the science of monetizing innovation, illustrated through case studies including Porsche, LinkedIn, Swarovski and Uber
  • Patterns of failure that doom so many innovations and how to avoid them
  • Specific techniques to dramatically improve the odds of new-product success using Simon-Kucher’s empirically validated framework
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