Value innovation is a marketing strategy that Renee Mauborgne and W Chan Kim introduced in the book called “Blue Ocean Strategy.” The idea behind creating this strategy is to break away from competition by simultaneously trailing variation and low costs. Value innovation aims to create a new marketing space, or blue oceans, instead of competing within industry boundaries or existing markets (red oceans).
All the unknown markets are referred to as blue oceans. The red oceans are filled with colossal competition that will remove the company’s profits, whereas the blue oceans are away from competition. So, the blue ocean will create a new demand by developing uncompetitive marketing space.
Why is Value Innovation Important?
- Value innovation will understand and try to meet the customer’s needs innovatively. When companies understand the value of customer needs and remove unnecessary features, the company can create things that stand out in the market.
- This innovation process requires strategic creativity that will encourage companies to think outside the box. This will help in creating a disruptive innovation that can reshape industries.
- It is essential to challenge industry norms and question the existing traditions. This process requires the redefinition of industry boundaries. If possible, try to introduce entirely new products or services.
- This innovation involves a holistic approach to strategy. It encourages organizations to consider all business model aspects, including products, services, processes, and delivery, to create a unique and compelling value proposition.
- Basic business strategies will involve a trade-off process between variation and cost leadership. But this value innovation will challenge this trade-off by advocating for both. This will help the company offer customers unique value and maintain costs.
In conclusion, when you work on value innovation, companies can escape the “red ocean” of intense competition and instead create uncontested market space where they can thrive. The process involves rethinking conventional strategies, challenging industry assumptions, and delivering innovative customer value.
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