TEACHING MATERIALS

Searching for Value: Value Innovation vs. Technology Innovation – Mini Cases & Exercises

Author(s): KIM, W. Chan, MAUBORGNE, Renée, OLENICK, Michael

Summary:

The case helps participants explore and understand the difference between value innovation, the creation of a leap in value, and technology innovation, the creation of breakthrough technology. It teaches students to identify value innovation offerings, how value innovation differs from technology innovation and their commercial consequences. The case also explores if and how patterns in value innovation remain constant across industries and throughout time. The case is designed to foster a lively classroom discussion driven by mini cases and exercises.

Teaching objectives

Understand the difference between value and technology innovations and that value innovation is more likely to lead to the creation of a successful product or service than technology innovation. Teach “build it and they will come” product development is a myth. Value attracts buyers. Interesting technology, new product introductions, or a promise of innovation not backed up by real value may make a marketing splash but is unlikely to serve as the foundation of a strong, sustainable product or service offering. Many value innovation businesses include technology but the technology is not what attracts customers: the value the technology delivers attracts buyers. Technology is oftentimes catalytic to value creation – the technology enables the creation of value – but the technology itself is not the value. The value/cost trade-off can be broken. More “stuff” in an offering, which comes with more cost, does not always equate to more value and, not infrequently, the opposite is true. Marketplaces judge innovations as they are when delivered, not marketed, and innovations that focus on technology are less likely to become successful than innovations that focus on buyer value. These lessons work across industries and throughout time. They are not tied to high-tech.