Summary: Value and innovation go hand in hand to produce new products and improve existing ones. Learn how disruptive value makes the biggest impact in any market.
The way we make value
We’ll come to identifying and creating value later. For now an overview will suffice. Innovation, rather than Value Innovation, is something that advances technology, but offers no superior value to the user – it is worthless innovation. Conversely, Value without innovation is a ‘me too’ product – a copy of something else already out there.
As a business you need to use Value Innovation to improve existing products and create new products.
Yesterday’s innovations are often today’s merely expected features, so it’s vital to keep innovating across all your brands and products.
Innovation and value are required together. Often innovation requires technology but not always new technology. Just as often as completely new technology can be used, so can old technology in new ways. So, pay close attention to the value offered by new technologies and new ways to use old technology. Look at trends. New technology or old technology being used in a better way displacing one of your key technologies may be the biggest threat to your products you have. Remember that this can come from anywhere, the technology itself may not be new, but the way to apply it may well be. Often only one or two technologies will be the foundation of delivering the key value that drives buying decisions.
Innovations and ideas are often borrowed from other fields. A sort of cross pollination. Problems have often been solved by products from different industries.
Value Innovation can also take place across any place on any Value Line – such as consumer experiences, customer services, the supply chain, business structures and organisational structures too. Indeed as the whole company affects customer value, Value Innovation can take place absolutely anywhere within it.
Disruptive value
The best ideas and products are those that are most disruptive to the market place. Imagine an ever lasting razor blade for example.
Here are some characteristics of really disruptive innovations -
- Industry segmentation is ignored and redrawn – for example Southwest Airlines destroyed the segmentation between ground transportation and airlines attracting many who would have not flown at all because they would have used their cars.
- New lower or higher price points for the same or better value are created.
- Educating customers is required for sales growth.
- Channels are reconfigured e.g. FedEx used its own planes and a hubs and spokes system over the traditional point to point commercial flights competitors used.
- Buzz network exploited – a firm offers such a leap in value that many customers notify others of their amazing new find.
- Customer expectations are absolutely overwhelmed.
- Existing business is cannibalised.
- There is a high degree of risk to the business itself.
- Processes are in place to encourage out of the box thinking and discover hidden entrepreneurs within the firm.
- There are multiple challenges for new idea approval and reward.
- Experimentation is encouraged within the business and mistakes are tolerated.
Conclusion
We’ve now addressed Value from the consumer’s perspective in some good detail and how value can mean many different things to different people. But how do we actually go on and provide it?
Now, in our next article, we go on to looking at how value comes from within the company itself, through Value Creators working through the DNA of value – The Value Line.
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