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An innovation value proposition (IVP) is not the easiest place to go. It must build meaning and purpose and provide that unique identity that enables innovation to flow. Building your innovation value proposition is critical to your innovation success.

Thinking about my own identification with the IVP took me back to when I started out on my innovation journey 18 years ago. That now seems like ages ago, and a lot has changed in how we manage innovation since then. But, strangely enough, a lot has also stayed the same – especially the fact that delivering good innovation is hard work.

Yet, the one thing I firmly believe reduces the "pain" comes back to how you design and relate to your value proposition – your meaning of what innovation needs to do.

Understanding the innovation value proposition

Back in 2003, I came across a two-page document written by a U.S.-based consulting firm, called Macroinnovation Associates. Though the company seems no longer around today, back when I was beginning to switch my focus to advising, consulting, and learning about innovation, their innovation value proposition struck me as excellent. I kept it, shaped it to my own emerging thinking, and it still has as much value today as it did 15 years ago. Some of its parts may have fallen away or need rephrasing, but its basic frame holds good. I will expand on those later.

The other important part of my learning about value propositions comes back to its critical focal point in the Business Model Canvas, conceived by Alexander Osterwalder and Yves Pigneur (and the basis of HYPE's Collaborative Innovation Canvas). I found the idea of a one-page business canvas brilliant.

This sought out of our thinking “to describe the bundle of products and services that create value for a specific customer segment.” Osterwalder and Pigneur argue that the value proposition is the reason why customers turn to one company over another. They suggest that the value proposition "is an aggregation or bundle of benefits that a company offers customers.” It creates value “through a distinct mix of elements catering to that segment’s needs.” That value can be quantitative (e.g., price, speed of service) or qualitative (e.g., design, customer experience).

Osterwalder and Pigneur further teamed up with other writers to generate the book “Value Proposition Design: How to Create Products and Services Customers Want,” which explores the value proposition in a highly structured way and explains how to write a business model. The book opens with three messages that will resonate with anyone who has given thought to a value proposition. These are:

1. Understand the patterns of value creation
2. Leverage the experience and skills of your team
3. Avoid wasting time with ideas that won’t work

These three points ring equally true for innovation.

people sitting around a table and talking

Four parts to consider when building your value proposition

There is a lot of advice out there that deals with value propositions, but there's not as much that focus on innovation value propositions.

The starting point in designing an IVP is “what will bring it to life?” Does it reflect the mission? Does it "paint" the innovation initiative? Does it indicate where value creation lies? Well, all three and then some.

The IVP needs to state the most important point of “how it serves others.” That comes back to solving a problem, its relevance, its benefits, and its differentiation. If you can capture those four main aspects, you are shaping your IVP in a unique way.

An IVP also is a “statement of intent.” It is beginning to provide why your innovation needs to be compelling, to make it valuable to those that have a clear and vested interest.

This “vested interest” part is why the initial value proposition I came across in 2003 hit home. It sought to break down the IVP into four constituents that needed consideration, which include:

1. The Value Proposition to the Management and Staff
2. The Value Proposition to Shareholders
3. The Value Proposition to Customers
4. The Value Proposition to Other Stakeholders

So, tell me how often do we consider all four in their distinctive ways? Or do we tend to merge and blur these into one?

Let’s look at these four critical entities separately as your triggering points to build out in your specific meaning and validation.

There are four distinct groups to consider when you build an IVP, and each wants to see and hear differently. Take your time to separate out your IVP for each of these stakeholders. In separating these out, you are confirming each of these stakeholder groups is mutually reinforcing and being rewarded.

1. The Value Proposition to Management and Staff

  • Improves the rate and quality of innovation: to detect problems and opportunities and to address them effectively
  • Enables earlier and more thorough detection of problems and opportunities: so early responses reflect the continually changing environment to capture ground-breaking valuable additions
  • Expands the range of business solutions available to management: through diversity, seeking out worldview perspectives and how to translate these
  • Enhances the quality of inventive thinking: share entitlements to innovations with employees
  • Raises employee satisfaction and morale: all employees need to be actively engaged in organizational learning
  • Leads to richer "communities of communities": communities are essential to learning and innovation in a firm
  • Amplifies knowledge sharing and integration: by focusing on the policies and programs for knowledge sharing
  • Results in "sustainable innovation": supports, strengthens, and reinforces the self-organizing tendencies of organizations to innovate in their own endemic ways

2. The Value Proposition to Shareholders

  • Enhances the quality of information about a company's operations: the "open enterprise" approach
  • Lowers risk in investments: decisions are more open to scrutiny from stakeholders
  • Improves financial performance: enhanced capacity to detect and solve problems and opportunities
  • Increases the value of intellectual capital: the social capacity to learn and innovate is the most valuable form, building a company’s intangible "assets"

3. The Value Proposition to Customers

  • Advances the quality of fit between a supplier and its customer: responding to individual expressions of customer demand, thereby increasing the value and fit of their offerings – and themselves – to their customers
  • Lowers risk to the customer: the risk of disruption can be mitigated by choosing to do business with suppliers whose operating environments are "open" and innovative

4. The Value Proposition to Other Stakeholders

  • Enhances the quality of relationships with trading partners: for all of the same reasons as customers
  • Reduces risk of irresponsible social behaviors by companies: in broader social responsibility efforts and in the conduct of business affairs

Now, imagine this was written in 2002 or thereabouts. Taking my thinking into these does it not hold true for today? Or maybe even more so? It establishes dialogue and openness.

If we can build out our IVP on these value-adding parts, we are making a compelling statement of innovation’s contribution. Can you see why I liked this and often refer to its ideals? I think the customer value-adding can be built out in stronger, value-adding ways for example, same as we can build our intent into each of these.

Also, as you reflect, you can perhaps make it more personal and more compelling to project out your innovation ambition.

Over time, I took the concept of innovation value propositions into my consulting work. I was looking to turn the need to convert IVPs into new business results by promoting the meaning (to the client) on the following positioning:

Innovation services consulting – additional value proposition statements that drive a value proposition to arrive at a bundle of benefits.

I used the below as my triggering points for opening discussions.

Building a more effective innovation transformation system, which:
  • Leads to higher conversion rates
  • Increases business volume throughput
  • Improves business quality and evaluation techniques
  • Uncovers the unmet needs of customers (clients become marketing resources)
  • Enhances perception of professionalism in the marketplace and by other stakeholders

Achieving a higher integrated development program for innovation, which:
  • Allows individuals to develop at their own pace but in structured ways
  • Increases workforce effectiveness and engagement
  • Links competency with rewards/recognition
  • Provides empowered career paths due to higher motivation and identification
  • Integrates strategy, vision, and governance within embedded practices
  • Offers greater value from your business process, systems, and their design

Searching for and building a robust management evaluation toolset, which:
  • Generates on focused customer needs (data mining/management)
  • Explores priority analysis (individual/grouped/clustering)
  • Promotes developmental analysis (benchmarking and best practices)
  • Improves strategic forecasting/planning and alignment capability
  • Advances resource management capabilities
  • Enhances internal mechanisms (resources/business transactions)

Establishing the levers for a motivated workforce focused on innovation, which:
  • Seeks out and resolves concerns with clear adoption techniques
  • Emphasizes organizational and team focus
  • Stimulates individuals' desire to participate and share
  • Evaluates candidate capabilities (attitude, reasoning, and learning capacity)
  • Reduces organizational "risk" with improving profiles and learning experiences

Then, I wanted to force the IVP thinking even more to explore the “differentiation” points of seeking competitive advantage.

Amplifying the value proposition (and rethinking it every 12 months)

Delivering a set of innovative solutions in these changing market environments needs to focus on your resources to provide you with clear freshness on a constantly-updated basis. Markets don’t stand still, nor do competitors. We are constantly “disrupted,” so any future innovation results need to lead to significant competitive advantage within your offerings. You and your firm should also evaluate your IVP every 12 months by asking the questions below.

 

a man sitting in front of his computer

How can we…

Increase operational effectiveness (channeling your resource management)?

  • Build more effective and systematic management frameworks to grow a more adaptable, flexible business
  • Improve the rate and quality of our innovation
  • Gain an early warning system of detection to stop or accelerate opportunities
  • Create a robust innovation process that moves concepts to market faster

Achieve greater people retention and productivity returns (focused more on outcomes and needs)?

  • Grow the use of networks and knowledge necessary for value creation
  • Encourage a more engaged and motivated workforce wanting to innovate
  • Foster confidence across self-forming, motivated teams
  • Improve the quality of inventive thinking and knowledge exchanges

Drive innovation across the organization (through different tools and techniques)?

Provide a return on innovation (ROI)?

  • Reduce costs through a better idea or project development structure
  • Increase revenue by spotting new business opportunities, realizing new products/service in faster delivery, extending existing lifecycles
  • Align goals and business objectives to intangible benefits that generate our make up of much of our innovation capital
  • Build your intangible assets as the core capabilities to generate market advantage

 I provided these points above to strengthen the innovation value proposition

Conclusion

Every day our innovation is being eroded. We must continually seek out new positioning, differences, and points of value – those new value pools that build and sustain our business.

By crafting a well-thought-through IVP for all its constituent parts, we are giving innovation a robust and dynamic framework to build out and point back as validation.

Building your innovation value proposition is critical. It forms a bedrock of your actions and your big picture of your innovation intent. We often must restate the value of innovation. If you work through some of the above suggestions, then those that “might doubt” will see the compelling value that makes innovation central to your company’s future. Innovation creates value, but it is by stating these value propositions in clear and highly visible ways that you are held to the “innovation flame.” Get this right and innovation burns bright.

Paul Hobcraft

Paul Hobcraft

Paul Hobcraft researches and works across innovation, looking to develop novel innovation solutions and frameworks where appropriate. He provide possible answers to many issues associated around innovation with a range of solutions that underpin his advisory, coaching and consulting work at www.agilityinnovation.com . His aim is to support individuals, teams and organizations in their innovation activity applying what he has learnt to further develop core innovation understanding so clients can achieve positive and sustaining results from their innovating activities to extend and build their capacity and capabilities.

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