Value innovation
| Value innovation |
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Value innovation is the process of the emergence, maturation and dissemination of these technical ideas, practical application, accompanied by specific economic and social effects but also reducing cost and unnecessary aspect during the product lifecycle.
Components of the value innovation process
It consists of all phases of technological change, inventiveness (idea), innovation (invention) and diffusion (or dissemination). Main goal of value innovation is creation of new value for customers, stakeholders, employees and suppliers. Value innovation can be linked to the life cycle of the product, which consists of such stages as: introduction, growth, maturity, decline, withdrawal. Carefully watching this product life cycle, especially the first phase, i.e. the introduction of a new product to the market, we note the final stage of the innovative process of a given product. More precisely, before introducing a new product to the market, this product had to go through a certain path of evolution. Continuous success in retaining the customers drives a sustained increase in the value of the organization. Innovation can take place in product, service and delivery [1].
Five Stages of the value innovation process
This road consists of activities such as[2]:
- Research - First of all we must search for new services, products, information. We must identify new business model's that create a unique value for our customers.
- Analysis and value modeling – Our idea from the first step are alanysing, the risk is recognized and assessed. The ideas are evaluated during conversations with key customers
- Decision – Thanks to step number 2 we can make the most accurate decisions, that have a small risk. The chances of positive effects are very large.
- Design - translating the requirements into a language understandable to the interested, in a suitable form for use during use or manufacturing. Our team creates new desting ideas that maximize our success to the greatest possible extent.
- Implementation - introduction of services and products to the market. It is last step that is only introduced when we are sure that the new business opportunity or model creates exceptional value for our consumers.
The importance of value innovation process
We know that innovation is very important but also very hard to achieve. First step to create innovation is invent many ideas from witch we have to choose the best ones. Only a few of them will have an impact on our further achievements. We must always remember that innovations also involve risks. What is more we should involve our entire organization in effort, everyones has their own role in making efforts to achieve the goal. The organization should use all possible sources in pursuit of innovation. Innovation must help our employees and our organization to use their full potential by striving for the basic value they are[3]:
- responsibility – Innovation is very important element for the leaders.
- capability – Innovtion can help us built strong and capable orgaization
- possibility – Innovation are discoveries that arise through human imagination.
- opportunity – We need to use experience and our knowledge to identify and shape innovation opportunities in a way that enable us to act.
- sustainability – A sustainable futute for the organization must be created by innovation.
- inclusivity – Innovation is an internalprocess based on cooperation. Everyone has to play their part
Each of above mentioned stages adds value and improves profitability of the company. These six elements of innovation should motivate everyone to change. Innovation must be a priority for the organization. The market is changing customers are demanding a larger value, which will be adapted to their needs. Organizations that want to survive must innovate and invent new ways to create value[4].
Examples of Value innovation
- Online streaming services- Online streaming services, such as Netflix, Hulu, and Amazon Prime, are a great example of value innovation. Not only do they provide users with instant access to thousands of movies and television shows, but they also offer a low monthly subscription cost. This value-based system allows customers to watch as much content as they want while saving money in the long run.
- Robotics- Robotics technology is another example of value innovation. By automating certain processes, companies are able to reduce labor costs while also increasing efficiency. This value-based approach allows businesses to remain competitive and profitable while also providing customers with a high quality product or service.
- Self-service kiosks- Self-service kiosks are an example of value innovation that has become increasingly popular in recent years. By allowing customers to quickly and easily purchase goods and services without the assistance of a cashier, businesses can save on labor costs while also providing customers with a convenient shopping experience.
- Cloud computing- Cloud computing is yet another example of value innovation. By allowing users to store and access data from anywhere in the world, cloud computing makes it easier and more cost-effective for companies to manage their data. This value-based approach allows businesses to remain competitive and profitable while also providing customers with a secure and reliable service.
Advantages of Value innovation
Value innovation provides several advantages to businesses, including:
- Increased customer value, as value innovation focuses on improving the customer experience and creating products or services that meet the changing needs of customers.
- Cost savings, as value innovation seeks to reduce waste in the product lifecycle and make processes more efficient.
- Improved competitive advantage, as value innovation can help businesses develop products or services that differentiate them from their competitors.
- Increased market share, as value innovation can increase customer loyalty and create a more engaged customer base that is willing to pay a premium for the products or services offered.
- Improved innovation, as value innovation can help businesses to develop new products or services that are more creative and meet the changing needs of their customers.
Limitations of Value innovation
Value innovation is a powerful tool for driving economic and social value, but it is not without its limitations. The following are some of the key limitations of value innovation:
- It requires a high level of expertise and resources to successfully implement. As a result, only larger companies or well-funded startups can typically afford to pursue value innovation.
- It can often take a considerable amount of time to develop and implement an effective value innovation strategy. This can be difficult for companies with limited resources or short timelines.
- It is not always easy to identify value innovations and to differentiate them from other types of innovations. This can make it difficult to identify which innovations are most likely to be successful and to focus resources on those initiatives.
- The success of value innovation initiatives often depends on the ability to properly assess the market conditions and customer needs. Without proper market research and customer feedback, it can be difficult to accurately determine whether an innovation will be successful.
- Value innovation initiatives can be disrupted by competitors who are able to quickly identify and replicate the same innovations. This can make it difficult to maintain a competitive advantage.
One of the main approaches related to value innovation is customer-centric innovation. This approach focuses on putting the customer’s needs and wants first when creating new products and services. Additionally, it involves understanding the customer’s preferences, behaviour, and expectations to create products and services that are tailored to their needs.
Other approaches related to value innovation include:
- Design Thinking: This process involves identifying customer needs and wants, and then creating and testing prototypes to create the most effective and efficient product or service.
- Open Innovation: This approach involves external parties such as customers, partners and suppliers to collaborate on innovation initiatives. This can help accelerate the innovation process and generate new ideas and solutions.
- Lean Start-up: This approach focuses on minimizing risks and costs associated with developing new products and services. It involves developing a minimum viable product and testing it with customers to validate the concept and then iteratively improving the product or service over time.
Overall, value innovation is an approach that focuses on creating new products and services that provide value to the customer while minimizing costs and risk. It involves customer-centric innovation, design thinking, open innovation and lean start-up strategies to create innovative solutions that can help businesses stay ahead of the competition and increase their profits.
References
- Chan Kim, W., & Mauborgne, R. (2005). Value innovation: a leap into the blue ocean. Journal of business strategy, 26(4), 22-28.
- De Cagda J. (2007) The Six Core Values of Innovation. Change This. 41(03), 1-9
- Dillon T. A., Lee R. K. & Matheson D. (2005) Value innovation: passport to wealth creation. Industrial Research Institutr, Inc. p. 22-36
- El Sawy O. A., Malhotra A., Gosain S. Young K. M.(1999) IT-intensive value innovation in the electronic economy: Insights from Marsh... MIS Quarterly 23(3) p. 305-308
Footnotes
Author: Justyna Tereszkiewicz
