Monday Morning Mojo

Innovation & Value Creation

If business is a web of interrelated activities, value is at the center. Value is what customers pay for, members show up for, and investors write checks for. Value drives the enterprise. When it’s present, all the other pieces of the puzzle form a clear picture. When it’s missing, everything falls apart.

Traditionally value has represented the worth of a good or service as determined by the market. But, there is a broader way to look at it that yields richer results for innovation’s sake.

Value is the perceived benefit that drives a party to spend money, time, energy, or other capital, be it political, social, financial material, or any other form.

The benefits are ultimately determined by the person who lays out the resources - no one else. In other words value is in the eye of the beholder.

Some beholders are transparent - you know exactly what they want - and others are opaque, fickle, oblivious, or inconsistent. But, it doesn’t matter. Ultimately each makes their own judgment as to what they value. If they’re willing to pay, work, or barter for it, you have good evidence that it’s valuable to them.

People and organizations invest in value with a variety of resources. Currency can be attention, energy, people, time, assets, materials, favor, clout, money, or anything else the party they are doing business with desires.

When it comes to innovation, you have to widen the scope of value creation. Get out of the box to create products, services, and ideas that create more, better, and especially new value. If innovation were ice cream, these would be your chocolate, vanilla, and strawberry.

More value is all about increasing current worth. You can achieve this by (a) decreasing the required investment and getting the same value, (b) keeping the investment the same and getting more value, or (c) a combination. Increases and decreases can happen either incrementally (in linear steps) or in multiples (by scale).

Better value uses the existing benefits but increases the impact, intensity, or application. Impact is the effect or influence of a given benefit. Intensity refers to the strength, power, or potency of a benefit. And application means that the same benefits can now be transferred to a wider variety of uses.

New value opens up a wholly different form of worth that has not yet been provided. It is the most difficult to gain traction for initially.

Typically real wealth is made once value has been established. This happens through either (a) growing a social movement: reaching early adopters and cultivating appeal that spreads, or (b) riding a wave that is already spreading and focusing on more and better value.

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