What is value innovation?

To answer the question, what is value innovation, I'd like to tell you a story.

A few years ago, I was going through a difficult time and found myself feeling like I was locked in a game of cat and mouse. Despite operating from the best of intentions, it seemed that no matter what I did, I felt trapped and like I couldn’t get ahead. Searching for answers and a way to stop the craziness, I stumbled across a quote from the wise sage Yoda of Star Wars fame.

Copy of Motivational Quote Twitter Post (2) copy

This was a game changer for me. I realized I wasn’t winning because I was playing the wrong game – one dictated by the assumptions I was holding about what I and others had done before. That day I chose to step away from my own assumptions, and those of the people around me, and to change how I was responding to these circumstances.  By so doing, changed the game.

And that, in a nutshell, is how you can answer the question – What is value innovation?

What is value innovation?

Simply, value innovation is a practice of choosing to do new things that create value for customers and your business without being constrained by what you’ve done in the past, or what others are doing today. It’s about finding the sweet spot of where you can shine in creating value.

More specifically, value innovation is a strategic focus for driving high growth in a business. It simultaneously pursuits radically superior value for customers and lower costs for the company serving those customers. It challenges the traditional approach to business strategy that makes decisions based on the actions of competition by pushing you to define new places to create value where there is no competition.

The trick to doing value innovation well is to approach value creation as a balance between three inter-related factors - product, service and delivery. While the meaning of these factors varies across industries, generally you can look at product as the physical product that is offered. The service factor includes things such as maintenance of the product, customer service, warranties, support to distributors or retailers to get your product in the hands of customers. Think of delivery factors as logistics and the channel(s) used to deliver the product to customers.   

A strategy for value innovation requires that you consistently challenge your assumptions and find new realities within which to operate. Developing a strategy for value innovation means stepping outside of the traditional approach to strategy development and being willing to stand in places that others are not. It takes guts and a whole new way of thinking.

The concept of value innovation was originally introduced by W. Chan Kim and Renée Mauborgne in a Harvard Business Review article in 1997. They later went on to publish the book you may be more familiar with – Blue Ocean Strategy.


Strategy development is different if value innovation is your game

Below are five things you can do to shift your traditional strategy to one driven by value innovation

1. Whose assumptions inform your decisions?

Value innovation requires that you dance to the beat of a different drum. You need to be aware of, challenge and step outside of conventional assumptions about your industry.  Just because things have operated a certain way in the past or are the norm now, doesn’t mean they will be going forward. And, if you do what everyone else is doing, how will you differentiate and stand out from the pack?


2. You do you – What’s your strategic focus?

When you’re in the innovation game it’s easy to get caught up in what your competitors are doing. A large part of innovation is about staying ahead of the competition and protecting and growing your market. But when you focus on comparing yourself to a competitor’s strengths and weaknesses you lock yourself into a game of cat and mouse and lose sight of delivering value to customers. You’re focused on proving you can do something better than your competitors. This, at best gives you incremental growth in your market. 

In value innovation your strategic focus is on making great leaps in value, not on doing what competitors do and only better. The focus is on bringing new sources of value to customers.

3. Get to the essence of what your customers want

It’s only natural to want to keep and expand your existing customer base. You worked hard to get them. But in a traditional strategy development model, this practice breeds the “everyone’s special” syndrome and has you fighting to segment your customer base and find ways to customize offerings for narrower and narrower slices of customers. 

In value innovation the focus is on finding the sweet spot of what your customers want. Looking for ways to deliver value that resonates with customers and unifies, rather than stratifies your client base optimizes your offering.

4. Paint from new canvas

When you’ve spent a lot of time developing capability and assets in your business, it’s difficult to imagine living without them.  In traditional strategy development the focus is on managing existing conditions or constraints around assets and capabilities – the natural question is “how can I leverage what I’ve already got to get to where I want to be?”

When your focus is on value innovation the idea is to look beyond existing conditions and constraints to instead build strategy as if you’re working from a completely new reality. The focus is on the opportunity and potential, bigger thinking that isn’t constrained by past experience.

5. Think outside the box of typical product and service offerings

In the traditional strategy model a focus on what competitors are doing creates limits and draws boundaries around how products and services are traditionally perceived or offered.

With value innovation you’re challenged to think beyond the boxes defined by these products and services. The idea instead is to consider the entire process of satisfying a customer’s need and finding ways to bridge gaps in the customer’s experience of satisfying the need. It means that businesses might need to cross boundaries, blur or re-conceive the traditional lines between delivering products and services.  


How to shift your strategy for value innovation 

Shifting from traditional approaches of strategy development to one focused on value innovation isn’t for the faint of heart. Going against status quo is never easy, and the process of shifting to a value innovation approach requires that you first understand the prevailing logic, so to speak, under which your current strategy was developed and implemented. It's a process of soul searching and thinking creatively to explore possibilities and find uniquely different solutions.  These sorts of thinking processes are better served by having a meeting facilitator support you and your team as you move through this thinking. In the meantime, below is a 3-step approach to give you a sense of what that process might look like. 


Be honest

In my experience, while many organizations have a corporate strategy, they don’t typically have an innovation strategy. The realities surrounding how either strategy is implemented are often not articulated or understood. As you seek to understand your current strategies and how they have been implemented, it’s important that you do so in a way that deals with the realities of the situation at hand. Be honest about what you planned to do and what you actually did.


Challenge your current strategy

Once you’re familiar with your current strategies you need to start challenging them. The five ways to rethink strategy listed above are a good starting point.  And because innovation is a team sport, challenging your strategy isn’t something that should be done in a vacuum or by a select few; cross-functional collaboration and senior leader involvement are essential. And while you’re at it, how about engaging some of your customers in this process too.

Once you’ve developed some insights into new ways of thinking about your strategy, you’ll have a base upon which to think about how you can move up the value curve.


Take your new thinking up the value curve

This is where you need to start refining the insights you gained from challenging your existing strategies. You need to take the thinking deeper, and hone in on the areas that make the most sense to build new strategies.  

As I mentioned at the start of this blog, value innovation is an approach to innovation that creates value simultaneously for the customer and the business.  So, a good question to hold in mind through this next round of thinking is:

How might we deliver radically new value to customers while at the same time create cost savings for our business? 

Here are four questions to get you started on finding the sweet spot for value:

  1. Which of the factors that our industry takes for granted should be eliminated?
  2. Which factors should be reduced well below the industry’s standard?
  3. Which should be raised well above the industry’s standard?
  4. Which factors should be created that the industry has never offered?


Make no mistake. To drive value innovation you need a new strategy. One that challenges held assumptions about your industry, customers, products, service and delivery approach and leads you to think in new ways as you find new and previously unimagined opportunities for growth.


https://hbr.org/2004/07/value-innovation-the-strategic-logic-of-high-growth retrieved 2019-09-28

Kim, W.C., and Mauborgne, R.A. (2015). Blue ocean strategy, expanded edition: How to create uncontested market space and make competition irrelevant. Boston: Harvard Business School Publishing Corporation.

About BridgePoint Effect

BridgePoint Effect is an organizational development and innovation strategy firm dedicated to helping organizations thrive through change and innovate to create value. We serve courageous leaders who want to inspire and equip their teams to change, innovate, collaborate and think better together. Our goal is to make it easier for individuals and teams to contribute results for their organization.


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