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    Profitable Innovation
    Profitable Innovation
    Profitable Innovation
    Ebook62 pages42 minutes

    Profitable Innovation

    By Dr. Georg Tacke, David Vidal and Jan Haemer

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    About this ebook

    The most urgent management challenge of our time is to combine innovation and marketing into one unified process. Even the best marketing can’t save a company that fails to innovate. On the other hand, even the most innovative ideas will flop if companies do not understand the value of their products and establish that value profitably. Combining these two functions gives you the best odds of escaping the oppressive price and competitive pressures that plague today’s markets around the globe. It gives you the best chances to generate the profit that continuously fuels further innovation and ensures long-term survival.

    LanguageEnglish
    PublisherSimon-Kucher & Partners
    Release dateNov 7, 2014
    ISBN9783981681222
    Profitable Innovation
    Author

    Dr. Georg Tacke

    Dr. Georg Tacke is the Co-CEO of Simon-Kucher & Partners. He leads the global strategy and marketing consultancy together with Dr. Klaus Hilleke. Georg has more than 25 years of consulting experience in the service sector (telecommunications, transportation/logistics, travel and hospitality, B2B services, etc.) and the automotive industry. His areas of expertise include strategy, marketing, sales and pricing. He is well-known as one of the top pricing experts in these fields and supports numerous CEOs and management boards as a personal consultant and coach. Georg joined Simon-Kucher just three years after its foundation and became a partner in 1989. With the founders and the other partners, he has helped Simon-Kucher to grow from a small German consultancy into an international consulting firm with approx. 720 associates and offices in 22 countries. Georg holds a Master’s degree in business administration (Diplom-Kaufmann) and a PhD from the University of Bielefeld. He also studied and conducted research as a visiting scholar at the Stanford Business School. Georg is the (co-) author of books and numerous articles on strategic business issues, sales and pricing.

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    • 5/5
      This book that explains the importance of innovation and marketing in a informative, clear and easy to read way.

    Book preview

    Profitable Innovation - Dr. Georg Tacke

    Introduction

    The most urgent management challenge of our time is to combine innovation and marketing into one unified process. Even the best marketing can’t save a company that fails to innovate. On the other hand, even the most innovative ideas will flop if companies do not understand the value of their products and establish that value profitably. Combining these two functions gives you the best odds of escaping the oppressive price and competitive pressures that plague today’s markets around the globe. It gives you the best chances to generate the profit that continuously fuels further innovation and ensures long-term survival.

    Peter Drucker once declared that business has only two functions: innovation and marketing. The logic behind his statement is intuitively simple. In the ideal firm, the research and development teams create new products and services. Some will become breakthroughs, while others represent incremental yet valuable improvements. Marketing then enters the picture. The marketing teams entice customers to buy those products, generating enough revenue to make a profit. These profits fund the next innovations, and the cycle continues.

    There is one problem with that ideal view. It isn’t working.

    The reality is that most new products flop. The respondents in our Global Pricing Study 2014 revealed that 72% of the new products they have launched within the last five years have failed to achieve their profit targets. Even worse, one-fourth of the companies in the survey said that not one single new product or service met its profit targets.

    Many of the flops make headlines. Think Segway. Think Apple Newton or New Coke. But the serious damage lies behind the headlines. It occurs in the financial statements these companies release months and sometimes years later. It occurs in the minds of millions of frustrated employees who walk the hallways and work in the labs at thousands of companies who poured their energies into a new idea, only to see most potential customers ignore it or reject it.

    Does the solution lie with innovation, perhaps by improving the quality of the products or the manufacturing process? Or is the solution on the marketing side, which needs to do a better job of defining and communicating the innovation’s value? After all, the best marketing cannot save a poor product, and a great product may struggle to overcome poor marketing.

    What if you could double your chances for a successful product launch?

    That might sound too good to be true. One additional finding from the Global Pricing Study 2014 shows that it isn’t. That finding leads us to suspect that the problem with successful innovation — and therefore its solution — may lie with a widespread misconception. Many companies act as if they believe that innovation and marketing are separate and sequential processes. We feel that belief is mistaken.

    If you want to launch a new product successfully — and avoid frustrating flop after flop — your chances of success double when you treat innovation and marketing not just as parallel processes, but as interconnected processes, each supporting the other right from the start of new product development.

    This insight matters. The need for new products, and the pressure on them to succeed, has never been greater in today’s precarious market environment. Our Global Pricing Study, which included detailed responses from 1,600 respondents in 40 countries and across all major industries, revealed four key insights[1]:

    Market conditions are oppressive and are forcing companies to seek new profit opportunities

    Innovation is the only way to escape these pressures

    Most new products fail to meet profit targets, putting companies’ profits and

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