“Value Capture” Series: Part 1 -Fueling Innovation

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February 5, 2015 by The Pricing Authority

Fuel INNOVATION TPA Blog

Part 1 in our “Value Capture” Series

What does “innovation” mean to your company? Many incredibly successful companies and brands struggle to capture the value of their creativity. Unless businesses have put as much effort into value capture as they have value creation (i.e., new product development processes), significant profits are lost in their creative toil.

To sustain innovation, companies need to put as much thought and effort into value capture as they do value creation. A great product that appeals to customers is only half of the innovation battle. Ringing the register on the value created is the other piece, and one without the other is failing at innovation.

Conventional wisdom says that with so many competitive alternatives and the constant flow of product innovation, the market’s willingness to pay hits its limit and pricing pressure increases. Meaning, companies with the most efficient and effective processes for capturing the value inherent in their products will be able to consistently funnel more money back into product development to sustain their innovation and competitive advantage over the long haul. Unfortunately, many companies overwork value creation and undervalue their capture efforts.

To capture value means to secure the processes and capabilities and ensure the full profit potential is achieved for each incremental improvement, or enhancement in pa product. If companies do not invest properly in value capture capabilities, they can get hammered by the market. Businesses and their competitors are trained to commoditize on price. The marketplace of competitors and customers drive behavior and expectations towards the rewards and investments required to sustain innovation.

A company’s innovation and commercialization capabilities are their growth engine. Savvy marketing and aggressive pricing can only take a company so far- for long-term growth and competitive advantage, companies must continue to fuel the innovation engine. And profit is that fuel.

Next week: Part 2 in our “Value Capture” Series!

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One thought on ““Value Capture” Series: Part 1 -Fueling Innovation

  1. […] week we shared the “What” regarding leveraging pricing value for businesses. This week, we will share an example to show why Value Capture is the right lever for business, or […]

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