Between 1975 and 1995, 60% of Fortune 500 companies were replaced, showing that markets and competitors are constantly changing. Industries and companies continuously rise and fall, so there are no permanently dominant players. Strategic moves that continuously create new value for customers allow companies to stay at the top. Value innovation aims to substantially raise customer value rather than focus only on new technologies. By identifying and serving overall customer needs through an unparalleled value proposition, companies can dominate their market.

1. Ajay Mohan Goel
ajaymgoel@gmail.com

2. A wake up Call!!!!
 Between 1975 and 1995, 60 percent of Fortune 500 companies were
replaced on the list.
 Markets are opening
 Competitors are agile
 Competitors can pick and choose where to compete
 In 10 years time will your market place still be populated by the same
dominant industry players????
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3. The Lessons we all need to learn
 Industries and companies continuously rise and fall.
 Therefore, there are no permanently great industries or companies
 Instead, there are strategic moves that propel companies and
continuously create new industries.
 Example: Nokia
 137 year old company, leading mobile manufacturer with USD 31
Billion in sales in 130 countries
 Has practiced renewal for a lifetime, starting out making paper,
then boots, rain coats, hunting rifles, consumer electronics and
now mobile phones.
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4. Staying at the top is not about having a great new
technology to deploy
 In strategy formation, innovation is often equated with technology
requiring sizable development and investment.
 In contrast, Value Inn0vation aims to substantially raise the value
proposition towards customers (Hence “Innovation in Value”).
 The question is: “How can we best identify and serve their overall
needs and offer them unparalleled value?”
 Example: IBM
 Between 1991-1993, $16B in losses
 In ‘93 first non-IT CEO switches co. focus from ‘technology
driven’ to ‘customer solutions driven’, creating new “Global
Services Group”
 By 2001 the Global Services Group represents $35B of $86B in
total sales.
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5. When should a company consider using value innovation
 Highly competitive industry
 Few differentiators
 Low entry barriers
 Downward margin pressures
 Limited opportunity for new customers
 Struggling to compete
 Leadership position stagnant
 Forced into acquisition model to sustain growth expectations.
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6. The Commerce Bank Experience – Blue Ocean Strategy
in Financial Services
The Commerce Model
Growth Retailers Not Bankers
FANS Not Customers
Unique Deposit Driven/Retail Focus
Service Not Rate Drives Growth
Growth is Essential to Success and Value
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7. How Commerce Bank changed the paradigm
Key Elements of Product, Service and Delivery
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8. What did Commerce Bank do?
 Moving to a convenience retailer
 Assessing what’s really important to customers
 Convenience (62%)
Convenience (29%), Checking account (16%),
Personal/Friendly/Nice, Treated well (9%), Good Service (8%)
 Good Rates/Returns (3%)
 The Philosophy of Commerce Bank is ‘dare to be different’
 Bankers Hours – Open 7 days
 Need a pen
 Paint your vans
 Dogs rule!
 Coins!
Results are impressive:
•Consistently winning consumer awards
•Annual growth of 19%
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9. Comparing Conventional Thinking with Value Innovation
approaches
Conventional Value Innovation
Industry Industry conditions are given Industry conditions can be shaped
Assumption
Strategic Build competitive advantages to beat Create a quantum leap in buyer value
Focus the competition to dominate the market
Customer Retain and expand the customer Go for the mass of buyers and
base through further segmentation willingly let some existing customers
and customisation. go. Think in terms of embracing key
Think in terms of embracing customer value commonalities.
customer differences
Assets & Think in terms of a company’s Think free from a company’s existing
Capabilities existing assets and capabilities. assets and capabilities.
Build on what it has. Ask, what if we start anew?
Product/ Think in terms of products/ services Think in terms of buyer’s solution
Service offered by the industry. Seek to even if that transcends the industry.
offerings maximise the value of these Seek to solve buyer’s major
offerings. bottlenecks/ chief compromises in
using the products/services of the
industry.
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10. What are the characteristics of Blue and Red Oceans
 Market space is in existence today  Untapped Markets
 Boundaries are defined  Products / Services not in existence
 Competitive rules are known  Demand is yet to be created
 Companies compete fiercely  Non-customers
 Market space (Ocean) is crowded  Opportunity to earn high profits
 Market share / profit share  No competition
 Competition is cut –throat
 Market space (ocean) ‘bloody’
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11. Value Innovation encourages organisations to seek
strategies in ‘Blue’ rather than ‘Red’ oceans
RED OCEAN STRATEGY BLUE OCEAN STRATEGY
Compete in existing market space Create uncontested market space
Beat the competition Make the competition irrelevant
Exploit existing demand Create and capture demand
Make the value cost trade-off Break the value-cost trade off
Align the whole system of a firm’s Align the whole system of a firm’s
activities with its strategic choice of activities in pursuit of differentiation
differentiation and low cost.
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12. Blue ocean strategy is all about customers and non-
customers.
Tier 1 ‘soon to be’
Tier 2 ‘refusing’
Tier 3 ‘unexplored
Tier 1 Tier 2 Tier 3
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13. Cirque du Soliel – Revolutionising a dying industry
10
9 9
Cirque du
8 8
Soliel
7 7
6 6 6
5 5
4
3
2
Traditional circus
1 1 1 1
0
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14. Cirque du Soliel – Revolutionising a dying industry
10
9 9
Cirque du
8 8
Soliel
7 7
6 6 6
REDUCED
5 OR 5
4 ELIMINATED
3
2
Traditional circus
1 1 1 1
0
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15. Cirque du Soliel – Revolutionising a dying industry
10
9 9
Cirque du
8 8
Soliel
7 7
6 6 6
REDUCED
5 OR 5 RAISED
4 ELIMINATED &
CREATED
3
2
Traditional circus
1 1 1 1
0
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16. Cirque du Soliel – Revolutionising a dying industry
10
9 Sales Increase 9
Cirque du X22 in 10 years
8 8
Soliel
7 7
6 6 6
REDUCED
5 OR 5 RAISED
4 ELIMINATED &
CREATED
3
2
Traditional circus
1 1 1 1
0
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17. Understanding where the value innovation took place at
Cirque de Soleil
•Opera
Across •Theatre
Industries •Rock Music
•Ballet
Across Across
Time/ Strategic
Trends Groups
New Value
Curve
Across
Reduces Animal Emotional/ Across Focus on Adults
Functional Buyers
Acts Appeal
Across
Complementary
Offerings
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18. Eliminate-Reduce-Raise-Create Grid: Cirque du Soleil
Eliminate Raise
Star performers Unique venue
Animal Shows
Aisle concession sales
Multiples show arenas
Reduce Creates
Fun and Humor Theme
Thrill and danger Redefined environment
Multiple productions
Artistic music and dance
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19. Steps in Value Innovation
 Drawing the existing Value Curve
 Creating a new ‘Value Curve’ (‘to-be’) that fundamentally differentiates
your offering
 In creating our ‘to-be’ value curves we seek to address four elements –
eliminate, reduce, raise, create.
 This allows us to address the leap in value at the same time as reducing
the cost structure
PUSHING FOR A QUANTUN LEAP IN BUYER VALUE
WHILE:
PUSHING FOR A SHARP DROP IN THE INDUSTRY COST
STRUCTURE
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20. Six Pathways Across Industries
Across Time/ Trends Across Strategic Groups
New
Value
Curve
Across
Emotional/Functional Across Buyers
Appeal
Across Complementary
Offerings 20

21. Six Pathways Across Industries
Reduce
Factors well below the
industry standard
Across Time/ Trends Across Strategic Groups
Create
Eliminate New Factors that the
Factors that the industry has never
industry has taken Value
offered
for granted Curve
Across
Emotional/Functional Reduce Across Buyers
Appeal Factors well beyond the
industry standard
Across Complementary
Offerings 21

22. The Four steps of Value innovation
1 VISUAL AWAKENING
 Compare your “as is” strategy canvas with your ‘competitors’
 See where your strategy needs to change
2 VISUAL EXPLORATION
 Go into the field to see how people use or not use your products
 Discover adoption hurdles and advantages of alternative offerings
3  Review both customers and non-customers
VISUAL STRATEGY FAIR
 Draw several “to be” strategy canvases based on field insights
 Get feedback form customers, lost customers, competitors’
4 customers and non-customers to build best “to be” strategy.
VISUAL COMMUNICATION
 Distribute old and new strategic profiles
 Support only initiatives that meet new strategic needs
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23. Typical stages of a Value Innovation project
Phase 1: Phase 2: Phase 3: Phase 4:
Visual Awakening Visual Exploration Visual Strategy Fair Visual Commn.
1a. See the 2a.
3a. 4a. Awareness
Objectives
Need for Broadening
Determining &
Change Perspectives
“to be” strategy Internalisation
Programmes of strategy &
1b. Start the 2b. Sourcing
and initiatives Initiatives
conversation for Feedback
3b. Teams “to
Deliverables
1c. “As is” 4b. Effective
2c. Alternative be” Value
Curves based commn. of
“to be” Curves
on current strategy
strategy 3c. Proposed
strategy canvas &
canvas Programmes &
blueprints initiatives
initiatives
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24. Typical stages of a Value Innovation project
15/Dec 7/Feb
Phase 1: Phase 2: Phase 3: Phase 4:
Visual Awakening Visual Exploration Visual Strategy Fair Visual Commn.
1a. See the Activity Team led by Date
Objectives
Need for Kick off training
Change
for team
1b. Start the Create “as is” Value
conversation curve
Present “as is”
Deliverables
1c. “As is” Value curve and
Curves based finalise
on current
strategy
blueprints
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25. Typical stages of a Value Innovation project
23/Dec 7/Feb 31/Apr
Phase 1: Phase 2: Phase 3: Phase 4:
Visual Awakening Visual Exploration Visual Strategy Fair Visual Commn.
2a. Activity Team led Date
Objectives
Broadening by
Perspectives Study Customers, non-
Customers, competitors
2b. Sourcing customers, placement clients,
for Feedback Tech partners, BPs,
Each team prepares six value
curves each
Deliverables
2c. Alternative
“to be”
strategy
canvas
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26. Typical stages of a Value Innovation project
1/5Dec 25/Jan 31/Apr 7/Jun
Phase 1: Phase 2: Phase 3: Phase 4:
Visual Awakening Visual Exploration Visual Strategy Fair Visual Commn.
Activity Team led Date
3a.
Objectives
by
Determining
“to be” strategy Strategy Fair at 4 Zones
Programmes Refinement of 6 value curves by
and initiatives each team
Strategy Fair at Delhi &
Finalisation of “to be” value
3b. Teams “to curve
Deliverables
be” Value
Curves Development of Proposed
3c. Proposed programmes & initiatives,
Programmes & communication plan and action
initiatives plan
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27. Typical stages of a Value Innovation project
1/Dec 7/Jan 28-Feb 9-Apr
Phase 1: Phase 2: Phase 3: Phase 4:
Visual Awakening Visual Exploration Visual Strategy Fair Visual Commn.
4a. Awareness Activity Resp: Date
Objectives
&
Internalisation Implementation of action plan
of strategy & & communication
Initiatives Review implementation
Deliverables
4b. Effective
commn. of
strategy
canvas &
initiatives
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