Collaboration between Innovation and Pricing Teams – survey results

by Stephan Liozu

In the age of greater focus on innovation and customer value, one of the question that remains unanswered is how much collaboration is required between the innovation and the pricing teams to achieve greater pricing power for innovative products and services. In recent survey conducted with 144 pricing and value professionals, we asked them that question.

The results were eye opening and deserving of a wakeup call! We asked these pricing professionals about their level of cooperation with their innovation colleagues on seven key activities (Indicate the extent to which your Innovation team cooperates with your pricing team for the following activities: 1 = we do rarely to 7 = we do frequently). The table below shows the summary results for all seven items.

The mean scores are not very encouraging. In fact, we can conclude with some confidence that pricing and innovation teams do not collaborate much on these seven activities. Most troublesome is the fact that pricing and innovation teams do not collaborate in the Stage-Gate® review process (43% of rarely scores) and in the deployment of value-in-use analysis (49% of rarely scores).

Should innovators learn about pricing? And should pricers learn about innovation? You bet they do. If your company manages customer value with intention, these two groups of professionals should collaborate, integrate their activities, and learn about each other processes. In fact the Pricing Council should include members of the Innovation Council and vice verse.

Managing customer value in the innovation process requires integration of innovation and pricing activities in both the front-end and back-end of the innovation process. Pricing components and deliverables should be included in the NPD and Stage-Gate® processes. Concepts of segmentation, willingness-to-pay, customer value modeling, value-based pricing strategies, and cost-to-serve analysis should be widely discussed in the Innovation Council. The innovation pipeline, pricing strategies for innovations, and value activities for innovation should be discussed in the Pricing Council.

To get there, innovators should start learning about the science and art of value-based pricing. This is why I have partnered with Stage-Gate® International to launch the very first value-based pricing workshop for innovation professionals. This workshop will be held in Philadelphia in June of this year and will cover most of what innovators should know to pay close attention to pricing and value management in the innovation process. Participants will earn the Customer Value Modeler™ certification . Spread the word. Let us get excited about integrating pricing and innovation. That is a revolution.

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