Traditional ways to screen new product innovation opportunities includes effort/benefit analysis, cost/margin analysis, or risk/attractiveness matrices. A different method to screen these opportunities is to pay close attention to the expected differential economic value they generate versus respective competitors. Mapping new products and services based on both expected gross margins and expected differential value is a much more balanced approach especially when considering the pricing power firms all aim at generating.
In order to be able to plot your innovations in this matrix, you have to be able to deploy the Economic Value Estimation (EVE®) methodology and embed it in your innovation process. The recent webinar hosted by Sopheon offered a review of this methodology as well as some practical examples. EVE is a challenging but highly rewarding technique that allows innovators to focus on differentiation they create in the market place and to measure that differentiation versus competitors. Measuring product advantage and thus differentiation is one of the steps of the value management chain. That chain starts with value creation in the innovation process. Then value gets measured and quantified using EVE. Finally value gets captured through value-based pricing.
If you missed our webinar and you wish to watch the recording, please view it by visiting Sopheon’s webinar archive.
Using differential economic value measurement to screen innovation and new product innovation initiatives can improve results significantly. What method do you currently use to determine the highest value opportunities and how effective is it?