What is Value Innovation?

The Value Innovation approach is a sweeping set of frameworks that is revolutionizing business strategy and innovation all over the world. Value Innovation frames strategy in each industry in the form of a Strategic Canvas that captures the Value Curves of the incumbents as perceived by customers. The process allows individual competitors to create new market space by lowering or eliminating some value elements in their Value Curve, while raising or creating new ones. This process – known as the Six Paths framework – provides the analytical structure for the field work required by the creation of new market space.

The strategy resulting from the creation of a new Value Curve through the Six Paths framework is also frequently referred to as Blue Ocean Strategy – i.e., the strategy that results in having no competitor – by contrast with the Red Ocean Strategy – where competitors fight to death like sharks inside established industries.

In addition, the Value Innovation approach also offers a view of how to create leadership for large-scale transformation by creating an epidemic-like “tipping point” dynamic inside an organization.

Where does Value Innovation come from?

The Value Innovation methodology was originally created by Chan Kim and Renée Mauborgne, both Professors of Strategy at INSEAD, the leading European business school, located in Fontainebleau, France. Chan Kim and Renée Mauborgne are Academic Partners of the MAC Partnership. Both are world-recognized thought leaders in academic and business circles. Their work extends across the spectrum of strategy and innovation challenges – the "hard" part of change-- and behavioral issues – the "soft" part of change.

Together, they have authored multiple articles on Value Innovation, most notably:

• Value Innovation, the Strategic Logic of High Growth, Harvard Business Review, Jan-Feb 1997.
• Creating New Market Space, Harvard Business Review, Jan-Feb 1999.
• Knowing a Winning Business Idea When You See One, Harvard Business Review, Sept-Oct 2000.
• Charting Your Company's Future, Harvard Business Review, June 2000.
• Tipping Point Leadership, Harvard Business Review, April 2003.
• Harvard Business School Press will publish the much awaited Blue Ocean Strategy by Chan Kim and Renée Mauborgne on December 9, 2004.

What's the difference between Value Innovation and other approaches to strategy or innovation?

Value Innovation is rapidly displacing Michael Porter's view of strategy. Porter's framework describes how individual companies can gain an advantage over their competitors by analyzing the structure of an industry through a predominantly economic paradigm. Value Innovation characterizes this approach, the Red Ocean Strategy noted earlier, as largely flawed, because it limits companies to the defined structure of existing industries.

Value Innovation focuses on creating new market space and inventing new industries from the perspective of customers, not competitors. As a result, the analytical tools used by Value Innovation are radically different from those used by Michael Porter, and the strategic moves devised through Value Innovation are more sweeping and imaginative.

What's the “Tipping Point” part of the Value Innovation approach and how is it different from other approaches to leadership and large-scale transformation?

Most approaches to leadership and large-scale transformation are ineffective because they fail to recognize the link between the external reality of customers and the internal motivation of the organization for change. They also tend to underplay the role of left-brained models such as conceptualizations of strategy, or understate the relevance of economic considerations. The Tipping Point Leadership approach moves an organization across the full spectrum of external and internal realities, using vivid images of customers' frustrations to mobilize the organization toward change. It also addresses both the conceptual side of change – through the articulation of a differentiated Value Curve – and the behavioral side of change – through the use of targeted individual and collective processes.

The strength of the Tipping Point Leadership process lies in the attention it pays to resource considerations. Many approaches to Leadership Development require a vast amount of resources to produce large-scale change: creation of transformation teams, moving people off their jobs, etc. The Tipping Point Leadership approach offers a way to produce large-scale change at comparatively low cost.

Who should sponsor Value Innovation programs?

Because Value Innovation often produces dramatic changes in strategy, CEOs and General Managers are the natural sponsors of Value Innovation efforts. Heads of Strategy or New Business Development also frequently originate Value Innovation projects, for the investigation of specific business opportunities or as the backbone of the firm's strategy development process. Chief Marketing Officers often introduce Value Innovation to their firms as a way of personally engaging in the strategy process, using their legitimacy as representatives of the customers' point of view. Research and Development Managers and Product Managers also often use Value Innovation as a way of devising their function's or product's strategy. The Heads of Organization Development or Leadership Development also frequently play a major role in Value Innovation efforts, either as internal pathfinders for the approach, or as functional support to CEOs or General Managers driving the effort.