Cologne (ots) – DAX companies' current plans to invest significant resources in R&D represent a positive shift. After years of cost cutting, we are now investing more in the future again. But even if the statistics show the scale of these investments in listed companies, small and medium-sized technology and industrial companies in Germany should not be overlooked, explains Gregory Bokeria, partner at global strategic consulting firm Simon-Kocher.
Phoenix Contact is an example of this development, achieving about 4.5 patents per 100 employees per year in the period 2020-2023, and the company shows great innovation strength, which is 25 percent higher than that of Siemens. So there is no doubt that both companies contribute significantly to the innovation landscape, even if they are not the focus of DAX statistics.
However, we have found that high spending on innovation alone does not guarantee commercial success. Current global pricing study* shows that only 45 percent of innovations meet expected profit goals. In other words: every second product fails. The main reasons for this are:
– Over-engineering: overloading products with unnecessary functionality or features that provide no actual added value to the customer – Downsizing: the actual benefits of the product are not recognized or not adequately monetized – Hidden Gems: the potential of the product is not recognized or not monetized appropriately Pursued – Non-dead products: Products that continue to exist despite insufficient demand or customers not taking advantage.
The key to business success lies in early consideration of customer benefits and the ability to monetize them. However, many industrial companies have only weak institutional processes and only focus on these aspects late in the development process.
There is also the challenge that industrial companies increasingly face to move into new areas of innovation. The proportion of services (service), software/data (digitization), and non-hardware is increasing. Another hurdle is the changing value standards in automation and automation. As inflation rises and skills shortages increase, solutions that reduce the need for labor are becoming increasingly attractive. This not only means cost savings in operations, but also means less effort for HR departments in recruiting and developing employees.
Companies are increasingly realizing the strategic value of automation technologies in order to enhance their long-term competitiveness. Both challenges also provide industrial companies with the opportunity to move from volume-oriented metrics to value-oriented metrics and open up new sources of revenue (one-time vs. recurring).
To increase the efficiency and ROI of research investments, understanding customer value and monetization potential should be an integral part of every innovation process from the beginning. In some cases, it is not necessarily a matter of increasing research spending, but rather targeting it more carefully and considering alternative investment opportunities.
*About the study: In the Global Pricing Study, Simon Kocher has been regularly surveying companies around the world since 2009 about their pricing and growth strategies. A total of 2,704 companies from over 29 countries and over 39 different sectors and industries participated in the Global Pricing Study 2024 (https://www.simon-kucher.com/en/insights/global-pricing-study) from July to October 2023 Part .
About Simon Kocher
Simon-Kucher is a global management consulting firm with more than 2,000 employees in 30 countries. Our focus: “Unlocking better growth”. We help our clients grow “better” by improving every aspect of their business strategy, from product and pricing to innovation, digital, marketing and sales. With nearly 40 years of monetization and pricing experience, we are a global leader in pricing and business growth consulting.
We are happy to assist you with any questions or detailed information:
Roxana Mueller (Communications and Marketing Director) Tel: +49 160 92180752 Email: [email protected]
Original content by: Simon – Kucher & Partners, transcribed by news aktuell
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