Because there are always at least two parties involved, value always has at least two faces, one for each. The fact is that usually there are more than two. Just as it takes a village to raise a child, it takes an ecology to cultivate value. Every participant including partners, suppliers, allies, beneficiaries, and others is a player in value generation.
It is normal for each side to appreciate a different facet of the transaction. If the store sells you a package of potato chips, you get the chips and the store gets your cash, two very different benefits. But each is required for a successful transaction. Each is equally valid to its recipient.
There are four different ways to provide value, all of which are used to generate successful innovation. They are the four building blocks of innovation:
1. Latent Value
This is value that is latent, waiting to be found and exploited. It is like an underground reservoir, sitting there unnoticed, dormant, and ripe for discovery.
2. More Value
Here you increase the worth of current, established value. You achieve this one of three ways:
i. Decrease the required investment and provide the same benefit
ii. Keep the investment the same and provide a greater return
iii. A combination of 1 and 2.
Increases and decreases can happen either incrementally, in linear steps, or in multiples by scale.
3. Better Value
This uses existing benefits but increases impact, intensity, or application.
Impact is the consequence, effect or influence of a given benefit.
Intensity refers to the strength, power, or potency of a benefit.
Application means that the same benefits can now be transferred to a wider variety of uses.
4. New Value
When some new benefit that has not existed before is mid-wifed, you have new value. Many people will tell you this cannot be done. They are most often doing one of two things when they say this: (a) referring to the emotional state of the person you are satisfying, implying that our emotional states are known and finite, or (b) abstracting so much that the value they describe becomes relatively useless in application.
I disagree with them whole-heartedly. While universals are a fact of life, our world is rife with new developments never before seen in history. The Internet, quantum computers, the printing of skin through inkjet technology, nano-sized batteries… The list is endless. New products give rise to new services and make possible new desires.
There is plenty of new value and there always will be. It is in our nature to invent, create, design, contrive, devise, develop, conceive, and originate. Further, evolution is not by any means over. Its only gotten this far.
Sources of new value include: never before exploited synergies, new constellations, emergent properties of novel combinations, applications of new technologies, unsatisfied yearnings, dreams, the desire to improve bad customer experience, taboos emerging as acceptable behavior, changing market trends, random or serendipity successes, evolution, coexistence of mutually exclusive possibilities, paradox, insight, applied natural phenomenon, intentional stretching of possibility, trial and error, and thats just what I dreamt up sitting at my keyboard in two minutes!
image credit: wandix.com
Seth Kahan is a Change Leadership specialist. He has consulted with CEOs and executives in over 50 world-class organizations that include Shell, World Bank, Marriott, Prudential, Project Management Institute, and NASA. His book, Getting Change Right: How Leaders Transform Organizations from the Inside Out, is a Washington Post bestseller. Visit GettingChangeRight.com for a free excerpt.