Value innovation is a term that we will look at and study in the context of thinking about analyzing entrepreneurial opportunities and creating new ventures.
Within this, value innovation is the eighth opportunity component of the Opportunity Analysis Dashboard. And so we're going to spend some time exploring that term today.
How to determine the value innovation
To determine value innovation, what we're talking about are tools, techniques, and approaches to realize that we may have big ideas but that as entrepreneurs we may have scarce resources.
Within that, especially for entrepreneurs, it is important to be efficient in our use of these resources. To realize how we spend our limited time and limited money.
Value innovation is a particularly valuable mindset and tool in the context of value curves for the ability to truly understand what our competition is, what value is to our customers, and thus, how we can compete and where to invest.
See: Demand Conditions in Understanding the Industry
What is the value curve?
Value curves are truly a tool for developing and delivering value innovations. So the value curve is the graph that compares certain products or services in selected factors on a relative scale from lowest to highest.
They may be, when we look at those factors, benchmarking features or benefits, price points, brand, location, access, or a variety of other factors that we think are important to customers and the market.
1. The “value curve” of a law firm
When we look at this by example we can think of law firms. And traditional law firms illustrated by the blue line. Most traditional law firms are located in very luxurious offices with a big difference.
They offer a high product of work and have very well qualified and well educated lawyers.
They come at a cost. Thus, law firms are often one of the highest levels of expenses faced by entrepreneurs.
Whether it's in the initial project configuration, to employment agreements and operating agreements, to patents, trademarks and other items, to contracts, business and customer related matters.
So, for a variety of reasons, entrepreneurs have turned towards web-based self-service companies and tools. Green Line With this online self-service, it's not luxurious at all.
They are not necessarily employees, you are working with programs and models that have already been created. A work product may be appropriate.
But you're not likely to come close to the level of customization, detail, and thought you'd get if you were working with a traditional law firm. So the work product is roughly three instead of ten, based on this scale.
Lawyers, once again, are involved in developing the tools, perhaps. But not the one you are actively involved in.
But the affordability is huge, which is why we see the affordability as very high for web based self-service businesses.
That's because you might be able to get certain things done for tens of dollars, $20 or $30. Maybe $100 or $200 instead of thousands or tens of thousands of dollars.
So by this metric, that's what we mean by looking at the value curve and comparing traditional law firms and self-service web tools for your legal services.
Now in between is this red line of what a New Age firm might be, a young law firm. Perhaps this mixes some elements of self-catering with the traditional.
This is probably a combination of some robot versus human, and it might fall somewhere in the middle. There may be an opportunity for them to get an office, have a team, and deliver a high working product under the direction and supervision of an attorney.
But they may be able to do so at a reasonable cost because they have cut back on some of these other high cost items.
Again, this is an example of a value curve applied to a very traditional environment for law firms. And how you can think about the different features, benefits, and price points that may be relevant to customers.
See: What are the Tangible and Intangible Complementary Assets of Companies
2. Value curve
Now, the value of value curves, is that they give us the opportunity to diagram and put some ideas about competitors on paper, and think of that individual graphic as a point to highlight where there might be opportunities for entrepreneurs.
We can think about potential changes in value propositions. What we can do to change the curve that we might be competing with or even extend that curve and create some new factor.
It also suggests areas of focus for entrepreneurs, and where we may want to spend our time, if we are trying to enter a new industry or market.
Summary
When we think about what to do with value curves, the part that we're going to explore is elimination and elimination.
Are there certain factors that we can eliminate? The second element we'll look at is downsizing. Are there factors on this value curve that we can reduce without significantly reducing value to customers?
Another element we'll look at is scaling up our implementation within certain factors. Then finally, we'll look at weeping and creating.
Are there new agents we can create? So when we look at these four collectively, we'll spend some time talking about all of them in the future. And think about how to deliver value and innovation in the importance of using the value curve tool.