Value Innovation and Predicting Industry Change

8/3/2019 Value Innovation and Predicting Industry Change

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Value Innovation andPredicting Industry

Change


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Agenda

Innovation

Value Innovation Blue Ocean Strategies Wrap


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The Process

BusinessModel

Ideas Economic Value


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Translating Creativity into

Innovation

Some Inventors are Great Innovators

10 Year Study of most successful inventorssuggests the following traits:

Mastered the basic tools of they field they invent inbut yet pursue two or three fields simultaneously

More curious in problems than solutions

Question the assumptions of previous work in thefield

Seek global solutions all knowledge is unified.


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Dean Kamen

Inventor of the Segway

Dropped out of Worcester Polytechnic Institute

Other Inventions Autosyringe, Insulin Pump,Electronic wheelchair that can cover rough terrain

owns the small North Dumpling Island off the coastof Connecticut, and has "declared" the island to bean independent state.

An assembly of pillars resembling Stonehenge islocated near the house, although its function and

significance are currently unknown.

In Spring of 2006, an amphibious vehicle, similar toa WWIIDUKW, was observed parked next to one ofthe buildings on the island.
http://en.wikipedia.org/wiki/North_Dumpling_Islandhttp://en.wikipedia.org/wiki/Connecticuthttp://en.wikipedia.org/wiki/Independent_statehttp://en.wikipedia.org/wiki/Stonehengehttp://en.wikipedia.org/wiki/Amphibious_vehiclehttp://en.wikipedia.org/wiki/World_War_IIhttp://en.wikipedia.org/wiki/DUKWhttp://en.wikipedia.org/wiki/DUKWhttp://en.wikipedia.org/wiki/World_War_IIhttp://en.wikipedia.org/wiki/Amphibious_vehiclehttp://en.wikipedia.org/wiki/Stonehengehttp://en.wikipedia.org/wiki/Independent_statehttp://en.wikipedia.org/wiki/Connecticuthttp://en.wikipedia.org/wiki/North_Dumpling_Island


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Sources of Innovation

Unexpected Occurrences

Perception/Reality Incongruities(Unrealistic Customer Expectations)

Process Weaknesses

Industry/Market Changes

Demographic Changes

Changes in Buyer Attitudes

New Scientific/Business Knowledge


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Types of Innovations

Types of Customers:

Overshot Customers

Undershot Customers

Non Consumers

Types of Innovation

Incremental:

Substantial

Breakthrough/Disruptive


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Value Innovation/Blue Ocean

Strategy

Is a way to make the competition irrelevantby creating a leap in value for both thecompany and its customers.

Red ocean strategy is about how to out-pacerivals in existing market space; it is a market-competing strategy.

In contrast, blue ocean strategy is about how

to get out of established market boundariesto leave the competition behind; it is amarket-creating strategy


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Key Rules

1. Avoid head-to-head competition

2. Value curves

3. Six Paths analysis 4. Day In the Life Of (DILO) interviews


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Value Innovation and Value Curves

Value Innovation is the search for new,radically different value curves.

The idea is to reduce or eliminate somevalue elements (the ones the customerdoes not care much about) to save cost,and

Increase or add others to deliver specialvalue.


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FOUR ACTIONS FRAMEWORK: KEY TO THEVALUE CURVE

Reduce

What factors shouldbe reduced wellbelow the industrystandard?

Raise

What factors shouldbe raised well abovethe industrystandard?

The key to discovering a

new value curve lies inanswering four basicquestions

Source:Adapted from W.C. Kim and R. Mauborgne, Blue Ocean Strategy, California Management Review 47:3 (2005), 105-121

Creatingnew markets:

A new valuecurve

Eliminate

What factors that theindustry has taken forgranted should beeliminated?

Create/Add

What factors that theindustry has neveroffered should becreated or added?


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Value Curves


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Six Paths

Approach to finding new value curves

Path 1 Look across industries

Path 2 Look across strategic groupswithin same industry

Path 3 Look across the chain of buyers

Bloomberg revolutionized the trading room

information business by selling directly to thetraders rather than to the IT director


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Six Paths


Path 4 Look across complementary offerings

A recent client was selling plastic foil for waterproofing roofs.It decided to add a service to help its customer lay out the foilon the roof and locate the fastening points.

Path 5 Look across functional or emotionalappeal.

The Body Shop shook up the cosmetics industry by

functionalizing its products (thereby saving huge costs) andemphasizing health rather than fashion and beauty


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Six Paths


Path 6 Look across time (trends).

Curves, the hugely successful womens exercise

franchise, rides the trend towards an ageingpopulation that eats junk food and is in desperateneed of exercise.


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Value Innovation the process

Value Innovation is typically a process lasting from threeto five months.

The project team carries out a Six Paths analysis,involving both face-to-face and desk/Internet-based

tasks. The list is narrowed down to the most interesting ideas,

and these are developed further and tested again withcustomers.

The surviving ideas are then developed into more formalproject proposals, including business cases.

The best proposals are presented and discussed at afinal workshop.


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Nintendo - Wii

Laurent Fischer, Marketing Director forNintendo Europe commented:

"The success of our products this Christmasclearly shows that Nintendo's drive to makegaming accessible to everyone has attracted

people of all ages and abilities to the industry.


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Summary

Must Translate Creativity into Innovation

Different Sources and Types of Innovation

Breakthrough Innovations can besubstantial Economic Value Creators

Documents

Value Innovation and Predicting Industry Change