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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_Island8/3/2019 Value Innovation and Predicting Industry Change
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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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11
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
Approach to finding new value curves
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
Approach to finding new value curves
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