Product and service innovation
Find a better way to break through
Every company, in every industry, needs an innovation strategy — whether it be high-tech product innovation, packaging innovation in consumer goods, or process innovation at financial services companies. Now more than ever, innovation is key to growth, to acquiring and sustaining competitive advantage, and to building shareholder value for the long term. At the same time, the innovation process is fast becoming more open, and more global: Setting up shop in local markets around the world and getting customers more involved in innovation efforts are now a vital part of any successful innovation effort.
Developing a powerful innovation capability is no easy task. PwC’s strategy consulting team PwC’s innovation practice has demonstrated again and again, in its annual Global Innovation 1000 research, that there is no correlation between the amount of money a company spends on research and development and its overall financial results. Instead, success depends on a variety of factors, including a company’s openness to new ideas, its ability to manage innovation projects from conception to market introduction, to kill projects early on, if necessary, and to tie new-product development tightly to specific sales, marketing and financial goals.
Since the 1950s, when it introduced the concept of product life-cycle management in the seminal article “How to Organize for New Products” in the Harvard Business Review and created the PERT (Project Evaluation and Review Technique) methodology to streamline the U.S. Navy’s development of the Polaris missile, PwC has been a trusted innovation advisor.
Our innovation experts can help clients improve their innovation functions, including new-product development, research and development, and engineering. We advise companies on setting strategy, making needed process and organizational changes, building new innovation capabilities, and assessing the scientific and technological robustness of their offerings. Our proven expertise in these areas, combined with our rich industry insight, allows us to identify innovation strategies and processes that are both technically and economically sound.
- Innovation strategy
- Global innovation networks
- Product development excellence
- Portfolio management
Innovation strategy
Our product profitability service offering helps clients design their products for maximized customer and end-user value, while maintaining cost effectiveness in the delivery of that value.
Product profitability cannot simply be about cost reduction. We believe that significant improvements in product profitability, whether from pricing or margin improvement, must begin by capturing real insights into customers and markets, and then understanding, targeting, and delivering the right “value mix.” A comprehensive focus on both top-line and bottom-line levers helps improve product competitiveness and drive increased profitability.
By focusing on the top-line, we can help clients quantify and translate customer insights and needs into advantaged product concepts and feature sets — together with an understanding of the willingness of customers to pay for them. Advantaged products drive superior competitive positioning, and that, in turn, drives higher sales.
Our bottom-line focus helps companies deliver advantaged products and feature sets to customers at the lowest possible price. Our goal is to reduce basic product or service “functional” costs and then reinvest the savings into product features and consistent quality, attributes that create real and perceived value in the minds of customers.
Global innovation networks
Our global innovation networks service offering enables clients to design, build and optimize innovation on a global scale through the creation of innovation networks that combine R&D, market intelligence, and local talent and resources.
Large manufacturing companies have long headed offshore to reap the benefits of lower labor costs and closer contact with local markets. Now, companies of all kinds are applying that same principle to their innovation efforts, leveraging lower costs, local talent and worldwide markets to improve efficiency and effectiveness. The benefits are clear: according to our 2008 Global Innovation 1000 study, companies that deployed more than 60 percent of their R&D outside their home countries tended to have better operating margins, total shareholder return, market cap growth and return on assets than their rivals.
A global knowledge economy is emerging in which the winners will be those who can successfully manage a global network of partners with access to technology, capabilities and local market understanding. PwC can help companies develop a global innovation program that can reduce costs while taking advantage of the talent and resources available in local markets throughout the world.
Product development excellence
Our product development excellence service offering helps companies create strong innovation engines backed by a deep knowledge of customers and the ability to rapidly convert good ideas into successful products.
Implementing consistent product development processes, however, can take a company only so far in achieving product development excellence. Leading innovators know what their customers want and work to partner with them for product ideas and improvement. And they learn to develop new products faster and make a point of fully leveraging the capabilities of their partners and suppliers.
PwC’s approach to product development begins by diagnosing the client’s current innovation processes and results, and then helping them build distinctive capabilities to drive future performance. Those capabilities include open innovation networks that can integrate global customers, partners and suppliers to generate more high-value ideas, and product development and lifecycle management processes that enable companies to bring the right new products to market faster.
Portfolio management
Our portfolio management service offering helps clients increase the health of their innovation portfolio by improving the overall return on their innovation investments — a metric we call ROI2.
In our experience, too many companies prefer to stay well within their product development comfort zones, thus failing to maximize the value of their innovation investments. While these companies may effectively manage the day-to-day execution of commercialization projects, they fail to take a holistic approach to managing the entire innovation portfolio. Such companies typically fall into three “portfolio traps.” The first is to excessively overweight the innovation portfolio with incremental product and service extensions, creating the risk of a growth or revenue gap in later years. The second involves allowing an excessive amount of small, poorly justified projects with low payoff potential to creep into the portfolio, stealing resources from high-quality opportunities. Finally, many companies fail to define and rigorously manage the front-end processes of idea generation, concept development and technology creation, slowing the innovation engine to a crawl.
By comparison, the most innovative companies carefully balance their investments in both incremental, substantial, and “big bet” breakthrough innovations, rigorously managing the innovation portfolio from ideation to product introduction.
PwC’s portfolio management service offering begins by diagnosing the health of the client’s current innovation portfolio, and then systematically applies tools and best-practice templates to improve performance. Our methods have dramatically improved the quantity and quality of clients’ ideas and product concepts, and boosted clients’ efficiency by tailoring and implementing innovation portfolio processes to their particular situations. Our efforts have yielded real benefits in several metrics, from portfolio valuation and time-to-market to percentage of revenue from new products and overall return on innovation investment.
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