In this episode of the #INSIGHTSPodcast series, Madhavan Ramanujam, Partner at Simon-Kucher & Partners and author of ‘Monetizing Innovation’, deep-dives into the nine-step framework for successful monetisation and the four kinds of monetising innovation failures.
We continue with the #INSIGHTSPodcast series and on this episode, we have with us Madhavan Ramanujam, Partner at Simon-Kucher & Partners and author of Monetizing Innovation. Simon-Kucher & Partners is regarded as the world’s largest pricing strategy consulting firm, operating in 60 countries with a 1,500-strong team and having consulted on 15,000+ projects.
On this podcast, Madhavan talks about his work at Simon-Kucher and rounds up the top highlights from his book Monetizing Innovation: How Smart Companies Design the Product Around the Price. These include the four kinds of monetising innovation failures, the nine-step framework for successful monetisation, and various other toolkits that founders can use for monetising today.
Madhavan passed out from IIT-Madras and did an MBA from Stanford, before joining Simon-Kucher where he has worked for the last 11 years.
When it comes to thinking about monetisation, Madhavan believes there are two important lessons: “to think early” and “to think often”. Madhavan recommends validating willingness to pay in the early stages of a product.
“Take a wireframe or prototype to the customer and have the same sales and marketing conversation you would have after you’ve built the product. If you can’t convince them that the product delivers value, chances are you won’t be able to convince them after you’ve built the product too.”
Probing the reason for unwillingness to pay can help tailor the product based on customer needs, value, and willingness to pay.
“It is common for companies to obsess about product and product-market fit making pricing as more of an afterthought, but it is important to include pricing as part of the product-market fit validation,” he says. Madhavan calls it the product-market-pricing fit.
These principles apply across industries. Talking about ways of monetising innovation, he says there are four ways that it can fail: feature shocks, when a product has been packed with far too many features (over-engineered and usually overpriced); minivation, when you don’t charge the right price (leaving money on the table); hidden gems, or the products that go against the grain of the company’s normal offering; and undead, or products that shouldn’t have been launched in the first place.
He says 72 percent of innovations fail; the remaining 28 percent see success primarily by doing two things right: having the willingness-to-pay conversation early on and having C-level involvement and building a culture around monetising innovation.
Giving a glimpse of the nine-step framework to avoid failure, Madhavan talks about the importance of having the willingness-to-pay conversation early on, prioritising features, segmenting products, productising to the segments, and focusing on “how you charge” versus “how much you charge”.
Madhavan summarises the discussion in numbers: 72 percent of innovations fail; they fail only in four ways; there are two secrets for getting to the breakthrough success; and there’s a nine-step framework to unlocking your monetising potential.
72=4 X 2 X 9.
Tune in to listen to Madhavan Ramanujam as he speaks about what founders need to keep in mind to monetise innovation.