Authors W. Chan Kim and Renee Maubourgne introduced the concept of ‘Value Innovation’ in their book, ‘Blue Ocean Strategy’.
They have noticed that Blue Ocean companies have undergone the process of value innovation.
In a previous post, I have touched about what a ‘Blue Ocean’ is and how you can create your own Blue Ocean industry by doing 2 exercises.
Today’s post will build on the thought processes behind those exercises by examining the 1 common factor amongst Blue Ocean companies presented in the book.
And this factor is the ‘Value Innovation’.
What is ‘Value Innovation’?
A combination of the words ‘value’ and ‘innovation’, value innovation requires the creation of innovative value that will delight consumers.
If any of these 2 factors is missing, a company may differentiate slightly from its competitors but would not be able to create a Blue Ocean.
Focusing on value alone leads merely to value creation. Creating value or increasing the value you can provide may position you as a more desirable solution for your consumers however it will not differentiate you from the rest.
Similarly, focusing only on innovation merely creates systems or technologies that are better than the current industry standards. This could increase your cost and your customer’s cost. However, it would only provide additional functions that your consumers may not need.
It is only when you focus on innovating the value provided to your consumers that you will be able to create a solution that provides additional value not provided by your competitors, and yet desired by your consumers.
Case studies of actual companies give a great idea of how the concepts work.
Here’s a case study from the book, Blue Ocean Strategy on Cirque du Soleil.
In the circus industry, costs were rising and backlash from the public was high due to the use and abuse of animals.
Most circus focused on animal shows and the invitation of famous clowns who came with a high price tag. They targeted children and families with the animal acts, circles stunts and tricks.
Instead of doing what everyone else was already doing, Cirque du Soleil value innovated and did things their way.
Shifting their target audience
Instead of focusing on families and children, they focused on adults. By targeting adults and redefining the circles experience, Cirque du Soleil could raise their ticket prices.
Shifting their focus – selling a different experience
Instead of packing people in a small space, they created a premium circus experience that was enjoyable.
On top of creating a desirable circus experience, Cirque du Soleil created shows with story line that did not require the use of animals.
Ultimately, they merged the theatrical experience with the beloved circles stunts that appealed to the adult circles goers.
By shifting their audience focus and the way they ran their shows, Cirque du Soleil created a whole new market segment of circles audience.
How can you value innovate your business offering to reach out to a new audience segment that belongs entirely to you?
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