Using Transformation [Disruption] to drive Value Innovation

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What is Disruption?

The in-vogue term today is disruption. All industries are being disrupted, But we are not comfortable with the.word because it infers a negative outcome. So the inference: No matter what you do the outcomes will be bad..

But our experience is nothing could be further from the truth and outcomes can be very positive. Think in terms of Transformation and experience a breath of fresh air.

What is Transformation?

Transformation defines the process moving from the current state in an industry to the new end state. Transformations bring seismic change as opposed to incremental change. So to assure a positive outcome, a business must understand each Transformation in play and the end states.

Key industry players must recognize they:

  • Cannot change end states, and
  • Must successfully manage through each Transformation, both to survive and thrive.

The best way to manage through these Transformations:

  • Use Value Innovations’ Processes and Tools (because the reverse will be catastrophic).
  • Assure Transformation drives Innovation to deliver greater value.

We’d advise against driving innovation without first fully understanding the Transformations bringing change to your business.

What is a Transformation Axis?

Let’s take the global auto industry and use it as an example.

Over a six month period in 2017 a group of Value Innovation subject matter experts developed 6 Transformation Axes bringing seismic changes to the auto industry.(see below).

The circle at the center of the diagram is where the global auto industry is positioned today.  The 1st Transformation Axis (at 12 o’clock high) shows we are transforming from an internal combustion engine (ICE) as the primary power source for a car or light truck to an electric motor (see below):

What is the end state?  Legacy auto manufacturers will only sell new cars and light trucks powered by an electric motor.

What is unclear is How and When we will reach this end state.  Tony Seba in his book “Clean Disruption”, published in 2014, predicted no major auto manufacturer would sell a new car or light truck powered by an ICE starting in 2030.

The challenge for every manufacturer is to manage through this and the five other transformations.

How do you manage Transformations?

Using the Value Innovation Process and a complete set of Value Innovation tools.

What is Value Innovation?

It was first described by W Chan Kim and Renee Mauborgne in 1997 in their classic paper, “Value Innovation: The Strategic Logic of High Growth,” published in Harvard Business Review and expanded upon in Blue Ocean Strategy in 2005. 

The first Value Innovation Process (VIP) was defined in 2005. It was refined over the next several years with client users. The latest version was described in depth in the book “Value Innovation Works.”  (see below)

Central to the 10-Step Value Innovation Process (see below) is the Most Important Customer.

   The over-arching goal is to deliver exceptional value to “Most Important Customer” in the value chain (see below).

How is Value Innovation different?

There’s a process with a full set of tools which include:

  • Value Chains and how to develop them,
  • The 3 Questions to identify the Most Important Customers, and
  • “As Is” Value Curves with metrics (see below), and
  • Setting up, and conducting Contextual Interviews, and
  • “To Be” Value Curves with metrics (see below)

Next Steps

  1. Next week, we will share the Importance of PURPOSE, because it drives strategy.
  2. In future weeks, we’ll address:
  • Managing Transformations
  • Putting Value Innovation to work for you
  • Why Most Important Customers, not customers, are Critical.
  • How Value Curves bring Focus
  • Value Curves: How they assure you’ll deliver exceptional value
  • Uncover customers’ unmet needs – not with surveys or GEMBA visits.
  • What is Contextual Interviewing?
  • How to make Contextual Interviewing work.

Have Questions?

Contact us:

@ViRKL. dick_lee@valueinnovations.net or +1-720-291-0758.

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Want to up your innovation game? Want to up your organization’s innovation game? Attending one of our Mastering Value Innovation Workshops is a great place to start. In 2016 we are going to change our approach. We will work with you to develop your own custom workshop that addresses your problems and you define the length and location. More information can be found in the Workshop Brochure.