Monetizing Innovation

Chapter 9From Hoping to KnowingBuild an Outside-In Business Case

A critical step in your new product development process will be making the business case for it inside your organization. Even though this will be for internal purposes, you must get external input—specifically, your target customers' willingness to pay (WTP) for your product (Chapter 4). That doesn't exist anywhere within the four walls of your company. You have to go out and get it.

Your very first version of the business case should be created right after you determine the high-level WTP for your product. You need to keep evolving it as you define your customer segments (discussed in Chapter 5), determine product configurations and bundles (Chapter 6), select a monetization model (Chapter 7), and set your pricing strategy (Chapter 8).

In this way, your business case document will be an up-to-the-moment reflection of your product's evolution and the most accurate representation of its monetization potential. It will be a living, breathing document—one that you continually update with your latest knowledge about the market opportunity at hand.

The business case that global car auctioneer Manheim put together for a new service is a great example.

How Auto Auctioneer Manheim Tested a New Offering

Since its launch in 1945 as an auctioneer of used automobiles between car dealers, Manheim has grown into a multibillion-dollar global enterprise. Now based in Atlanta and a subsidiary of $17.5 billion Cox Enterprises, ...