Sunday, August 14, 2011

Innovation is All About Value

This is a great discussion on the meaningful “outcome” of innovation. I always say that innovation is not the critical outcome, growth is. This describes driving growth by truly creating and delivering value to the target customer/consumer.

Innovation transforms the useful seeds of invention into solutions valued above every existing alternative – and widely adopted…..
  …Often usefulness comes from what a product or service does for you, and value comes from how it does it. If you’re looking to truly deliver innovative products and services into the marketplace, then once you succeed at the designing and developing the ‘what’, don’t forget to also focus on achieving excellence in the ‘how’.”….
 ….Innovation = Value Creation (x) Value Access (x) Value Translation
 Now you will notice that the components are multiplicative not additive. Do one or two well and one poorly and it doesn’t necessarily add up to a positive result. Doing one poorly and two well can still doom your innovation investment to failure. Let’s look at the three equation components in brief:Value Creation is pretty self-explanatory. Your innovation investment must create incremental or completely new value large enough to overcome the switching costs of moving to your new solution from the old solution (including the ‘Do Nothing Solution’). New value can be created by making something more efficient, more effective, and possible that wasn’t possible before, or creates new psychological or emotional benefits
.Value Access could also be thought of as friction reduction. How easy do you make it for customers and consumers to access the value you’ve created? How well has the product or service been designed to allow people to access the value easily? How easy is it for the solution to be created? How easy is it for people to do business with you?
 Value Translation 
is all about helping people understand the value you’ve created and how it fits into their lives. Value translation is also about understanding where on a continuum between the need for explanation and education that your solution falls. Incremental innovations can usually just be explained to people because they anchor to something they already understand, but radical or disruptive innovations inevitably require some level of education (often far in advance of the launch).

1 comment:

Bob Cooper said...

Comment from Dr. Hamsa Thota, PDMA Research Foundation:

I enjoy reading your blog posts. I have recently published a fundamental reference book for innovation, “Key Concepts in Innovation” published by Palgrave Macmillan. “Key concepts in innovation” has received excellent editorial reviews. You can read them at: