Innovation: Creating Long-term Value in New Business Models and Technology - Knowledge@Wharton
Excerpts
One of the most common misconceptions is that innovation is primarily, if not exclusively, about changing technology.
- Value proposition: What is sold and delivered to the market.
- Supply chain: How it is created and delivered to the market.
- Target customer: To whom it is delivered.
Value Proposition
Changes in the value proposition of the product or service — essentially, what you sell and deliver to the marketplace —
may be an entirely new product or service or an expanded proposition for an existing offering.
For example, several brands of toothpaste have recently added whitening to their ever-growing list of delivered values such as cavity protection, breath improvement, and tartar control.
Likewise, automobile manufacturers often add new features to their car and truck models, or they provide enhanced after-purchase services.
In the world of computing and information management, IBM is moving away from a product-driven value proposition and has tightly bundled a wide range of services with its products. In fact, services have become a major part of its business;
in 2003, 48% of IBM’s revenues came from providing services, generating 41% of profits.
IBM’s acquisition of PricewaterhouseCoopers (now IBM Global Services)
and the growth of hosted applications within the OnDemand initiative
are all strategic moves towards enhancing the service aspect of IBM’s product offering.
Amazon changed its service offering to become an online mall or retail platform selling goods from other retailers on its site, such as clothes from the Gap, Nordstrom, and Eddie Bauer and sporting goods with more than 3,000 brands.
