As we have mentioned previously, the question of innovation can often be this: adapt or die. Part of successfully adapting a business model to new times can go to the heart of the business model: your business’s unique value proposition. Value is one of the components of Getting Innovation Right, a book from business strategist and founder of Visionary Leadership® Seth Kahan. In Getting Innovation Right, Kahan details the areas in which many leaders with newfound ideas often fall short in their efforts in implementing these initiatives and offers a series of practical exercises for leaders to overcome them.
On his website, as he explains the contents of Getting Innovation Right, Kahan spells out one of the most common pitfalls for innovators: [t]hey don’t think through value from the customers’ point of view, taking the time to discover what customers are compelled to buy.” To remedy this, value-generation is a key part of the exercises Kahan proposes.
Kahan explains that “[s]killful innovators understand what drives value, what it looks like to customers and other stakeholders, and how to generate it by delivering something more, better, or new.” The phrase “delivering something more, better, or new” includes all facets of innovation, especially when considering that many innovations are mere adaptations of existing market conditions, finding where there may be a gap, and mitigating it.
In fact, Kahan says that while generating value is one of the most fundamental tools leading toward innovation, people do not understand it correctly. That is because value gets perceived by the target consumer. To effectuate meaningful changes to your organization’s unique value proposition, it’s vital that you put yourself into your target market’s shoes so you can figure out what value means to them. If your product or service is not perceived as valuable by your target market, then it’s clear your chances for long-term success are small.
What exactly does each of these values mean? Let’s look at the three from easiest to most difficult to achieve.
Creating more value involves looking at your present business model and, as the word more implies, that you make a shift in the perception of your offering in the buyer’s favor. How can you do that? Kahan cites that you can employ one of three methods: “[y]ou can keep the purchase price the same and deliver more with every purchase; you can lower the purchase price and deliver the same quantity of value; or you can do both.”
Better value, in contrast to more value, is about a change in the quality of what you are currently doing instead of focusing on the quantity. How does this work? According to Kahan “[c]reating better value with impact simply means delivering a more powerful punch behind the value that you currently have. To create better value through impact, change the consequence, the effect, the influence of a benefit your offering delivers.” Just as there were three options for creating more value, there are three options for creating better value: you can make “a change in impact, intensity, or application.”
Kahan gives examples of each. Increased impact could be perceived when a print publication gets turned into an online forum, allowing for a multi-voice dialogue to replace a one-way street of communication that a traditional print journal could have. Greater intensity could mean that if you have a cleaning service that already meets local and national standards, you decide to become the most highly-valued service in consumer circles because that pushes you to go above and beyond the stated minimums. As for increased application, the increase in online education from universities (including the HiOPs from IE) is an example because instead of being a service accessible only to a few, more students can get served in several modalities: from face-to-face traditional programs and shorter yet more-specific and intense learning experiences.
Yes, new value is the hardest one to create. That’s because, while many companies do it well, it requires complete disruption, or as Kahan states, “…breaking into a whole new sector.” Don’t fret; this doesn’t imply that your organization needs to be on the cusp of creating the next Facebook, Google, Amazon, or Apple to do this. It could be as simple as finding a new revenue source. Let’s use Kahan’s example of an association that relies on membership dues as its business model. Along with recruiting individual members, the association could also branch out to adding a new type of membership in its organization for vendors that service the association’s sector. This will achieve new value in two ways: first, members can gain access to new potential vendors, and through enlisting the vendors, the association can tap into new potential members.
The lesson that Kahan leaves us with is, no matter what the traditional definition of value only focuses on how much a good or service is worth, it leaves out a pivotal detail we must keep in mind in the VUCA environment: value can change because it is subjective. When considering companies of lore that are no longer players, say Kodak and Blockbuster Video, they did not foresee the changes in value since the circumstances for their buyers changed. That’s why looking at where your organization can tap into opportunities that are right under your nose or simpler modifications can help you ensure long-term success for your enterprise.