Monetizing Innovation

Synopsis

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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Summary

Chapter 1: The Need for Monetization

* Summary: Innovation drives growth and competitive advantage, but it's crucial to effectively monetize innovation to reap its benefits.
* Real Example: Tesla's electric cars revolutionized the automotive industry, but the company also faced challenges in monetizing its innovation due to high production costs and limited charging infrastructure.

Chapter 2: The Monetization Process

* Summary: Monetization involves creating value for customers, capturing value through pricing and distribution, and increasing value through continuous innovation.
* Real Example: Spotify's streaming music service allowed users to access millions of songs for a subscription fee, capturing value through a direct-to-consumer distribution model.

Chapter 3: Value Creation

* Summary: Understanding and meeting customer needs is essential for value creation. It involves identifying customer problems, developing solutions, and validating the value proposition.
* Real Example: Apple's iPhone created value by providing a seamless user experience and connecting people through its app ecosystem.

Chapter 4: Value Capture

* Summary: Pricing is a key element of value capture. It should reflect the value created for customers and align with market demand. Distribution channels must also be optimized to reach the target market effectively.
* Real Example: Netflix's subscription-based pricing model allowed it to capture value from its streaming content, while its distribution partnerships with ISPs and device manufacturers expanded its reach.

Chapter 5: Increasing Value

* Summary: Continuous innovation is necessary to enhance the value of offerings and stay ahead of the competition. This involves iterating on existing products or services, introducing new features, and exploring new markets.
* Real Example: Amazon's Amazon Web Services (AWS) cloud computing platform added new services and capabilities over time, increasing its value to customers.

Chapter 6: The Innovation Funnel

* Summary: The innovation funnel is a framework that describes the process of identifying, selecting, developing, and commercializing innovative ideas. It helps in allocating resources effectively and maximizing the return on investment.
* Real Example: Johnson & Johnson's innovation funnel enabled the company to bring new healthcare products to market efficiently and reduce the risk of failed projects.

Chapter 7: Monetizing Intellectual Property

* Summary: Protecting and monetizing intellectual property (IP) is essential to protect innovation and generate revenue. This involves obtaining patents, trademarks, copyrights, and exploring licensing or joint ventures.
* Real Example: Microsoft's Windows operating system generated significant revenue through licensing fees charged to computer manufacturers.

Chapter 8: Corporate Culture for Monetization

* Summary: A corporate culture that values innovation and monetization is crucial for sustained success. It involves fostering collaboration, risk-taking, and accountability.
* Real Example: Google's "20% time" policy allowed employees to work on personal projects, leading to the development of successful products like Gmail and Google Earth.

Chapter 9: Case Studies

* Summary: The book presents case studies of companies that have successfully monetized innovation, including Amazon, Apple, Google, Tesla, and Johnson & Johnson.
* Real Example: Apple's iPhone App Store revolutionized the mobile app industry and became a major revenue generator for the company.