There are many instances in today's business world where companies have failed to leverage their differentiation for increased profitability. Recently, Business Week's Chief Economist, Michael Mandel, wrote about this in his article, "Innovation, Interrupted—The Failed Promise of Innovation in the U.S." Mandel asserted that innovation efforts in the United States have failed to deliver their intended benefits over the last decade, with companies now suffering at the hands of lower cost producers. Incremental improvements, rather than true innovation, have been the norm. There are a number of reasons for this:
- Benefits are not clearly defined for the selling organization:
- “Our business call goes through contracting and all they care about is the lowest price.”
- “The competition can do anything we can do.”
- Product managers cannot effectively articulate the value proposition or provide effective selling tools.
- There is not much focus beyond commodity cost recovery.
- There is no price premium at higher performance levels for a product due to a focus on the bundle or “job” price.
- Pricing organizations cannot effectively mediate the disagreements, etc.
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