Week One “Value Innovation”

Explain and illustrate the differences between ‘conventional logic’ and ‘value innovation’ as defined in the Harvard Business Review ‘Value Innovation: The strategic logic of high growth’ by Chan, Mauborgne.

Conventional logic is when companies compete head to head. Companies slug it out and attempt to one up one another in the market place. Conventional way of thinking focuses on improving cost, or quality while often times not going after a larger unsuspecting market.

What sets ‘Value Innovation’ apart is it not concerned with traditional ways of doing business. The ocean is blue, and there are plenty of unexplored markets for a product. Value Innovation goes after opportunities in expanding a market, over what the traditional competition is seeking. For example: technology markets have a short life expectancy, software changes often. Thus, if one were to use a traditional product cycle marketing plan it may not be successful in the end, timing.

Describe the Value Curve

Are the standards and norms found in the market/service or product going across the board and then applied to a chart. Then the standards of a business, product or service’s are perceived through a consumer’s point of view. This is going vertical on a chart. Let’s get better picture by looking at a potential purchase of a Wave Runner. A customer may look at utility, comfort, hull design (wet ride or dry ride), speed, storage costs, trailer cost and guilt. Then the customer takes these factors into account and places a high or low value on these factors. Businesses can shift product or services to accommodate the market by viewing a value curve and factor the thoughts of the customer accordingly.

List the viewpoints that are challenged in a value innovation strategic approach and offer a brief explanation of each.

The points are this; in the value innovation way is taking a look at lets say a business, a market, and customers and seeing if there is some potential for improvement. The business is looked at inside and out, and they find what matters to the customer. What is overrated, underrated, overlooked, and not needed? Then this untraditional view is looked at the market. Why do these markets perform, decline, what assumptions a wide held and are they completely accurate or not? Add it all up and see if there maybe an opportunity to succeed.


What are the four basic questions underlying value innovation?

What can be improved on? Look at the business, the customer and the market and throw away traditional notions, assumptions and norms. Then graph what you find. The information can be found from surveys, experts, consumers. The knowledge you find can be applied back to the model and what is shows can be an opportunity or not.

Name a company that has apparently followed a value innovation strategy, or one that could make good use of this strategy in today’s market.

One good example is Volkswagen’s Routan mini van. The critics hate the van, consumers love it and the sales prove this. There is a stigmatism with Chrysler mini vans out there and VW shattered the image with a costlier, similarly rebadged product. VW found a new market, with a little help from struggling Chrysler and some odd commercials with Brook Shields.