MASTERING VALUE INNOVATION SATISFYING MARKET NEEDS MAXIMIZING PROFIT Terry Say Value Innovations, Inc.

MASTERING VALUE INNOVATION WHY VALUE INNOVATION? Value Innovators deliver exceptional value to the most important customer in the value chain. This: ESTABLISHES THE MARKET MAXIMIZES ACHIEVABLE PROFIT

MASTERING VALUE INNOVATION EXCEPTIONAL VALUE CAN COME IN MANY FORMS Business Model Delivery Packaging Service Process Product Technology, etc. Generally have the longest cycle times

MASTERING VALUE INNOVATION CONVENTIONAL INNOVATION VALUE INNOVATION Red Ocean Strategy Blue Ocean Strategy Compete in existing market spaces Beat the competition Exploit existing demand Compromise between value & cost Align the whole system of a firm’s activities with its strategic choice of differentiation OR low cost Set price based on cost to company Create uncontested market spaces Make the competition irrelevant Create and capture new demand No compromise between value & cost Align the whole system of a firm’s activities in pursuit of differentiation AND low cost Set price based on the value to the customer

THE HEART OF THE PROCESS

MASTERING VALUE INNOVATION WHAT IS A VALUE CHAIN? It identifies each company or entity that is involved in either a buying, selling, or using transaction between the original provider or manufacturer and the end user. WHY IS UNDERSTANDING THE VALUE CHAIN IMPORTANT? Because we need to understand who the MOST IMPORTANT CUSTOMER is in the Value Chain. This is the person who can understand and appreciate the value your product brings to them. Examples – Applicare, Yellow Tail Wine

THE HEART OF THE PROCESS

MASTERING VALUE INNOVATION With your Most Important Customers (MIC’s) Engages your MIC’s in the process Easy for the team to communicate project goals Clear to Management what’s at stake Sorts out the wheat from the chaff Takes the Fuzziness out of the Front End WHAT IS A VALUE CURVE?

MASTERING VALUE INNOVATION WHAT IS A VALUE CURVE? Internally: Enable the strategic planning process Stimulate game-changing ideas Identify how to bring greater value to the MIC for existing or new products and services Help technologists see a much bigger picture Prioritize your project portfolio

MASTERING VALUE INNOVATION HOW IS A VALUE CURVE GENERATED? On the left side of the curve (light blue) are rank ordered Elements of Performance . WHAT’S AN ELEMENT OF PERFORMANCE? The Elements define the service or product. An Element is: A succinct statement Not an objective Not a feature or benefit Element 1 Element 2 Element 3 Element 4

MASTERING VALUE INNOVATION HOW IS A VALUE CURVE GENERATED? On the right hand side (yellow) The values to the MIC for each element Metrics for each Element define absolute values Curves for your company “now” and competitor(s) Element 1 Element 2 Element 3 Element 4

Case Study example of Step 3 “As is” and “Best in class” Generated using the Slalom® Template Value Innovations, Inc., facsimile of VC developed at Samsung © Value Innovations, Inc., 2004-2008. All rights reserved.

THE HEART OF THE PROCESS

MASTERING VALUE INNOVATION CONTEXTUAL INTERVIEWING Uncover the MIC’s unmet needs Use open ended questions Start at the highest level What issues keep you awake at night? What critical issues will you face over the next 3 to 5 years in your job? What changes do you expect to see in the next 3 to 5 years? Don’t ask “What do you need?” Interviewees don’t know what they don’t know Interviewees don’t know what you could do Determine repetitive sentences or phrases

THE HEART OF THE PROCESS

Case study example of Step 5 the “To Be” Value Curve © Value Innovations, Inc., 2004-2008. All rights reserved. 1

THE HEART OF THE PROCESS The next two steps are a iterative process designed to ensure the Value Curve consistency with the MIC’s perspective. Blah blah blah….

THE HEART OF THE PROCESS The next two steps are a iterative process designed to ensure the Value Curve consistency with the MIC’s perspective. Blah blah blah….

THE HEART OF THE PROCESS The next two steps are a iterative process designed to ensure the Value Curve consistency with the MIC’s perspective. Blah blah blah….

MASTERING VALUE INNOVATION VALUE PROPOSITION 1 or 2 paragraph statement describing the value your product, service or offering brings, or will bring, to the MIC in the value chain Must be compelling to the MIC.

THE HEART OF THE PROCESS In summary…

MASTERING VALUE INNOVATION FOR MORE INFORMATION: www.valueinnovations.com (Many Examples) terrysay@aol.com

MASTERING VALUE INNOVATION BLUE OCEAN STRATEGY by W. Chan Kim & Renée Mauborgne Harvard Business Press, 2005 Thesis: Many companies are in competition, blood is spilt, and the oceans they are swimming in run red. Solution: Make the competition irrelevant CREATE A BLUE OCEAN 1 million copies sold in the 1st year

MASTERING VALUE INNOVATION Those who read it, love it This is great! But….. How do I do this? BY USING VALUE INNOVATION METHODOLOGY AND TOOLS