Creating a new value curve

In today’s rapidly innovating markets it’s not enough to be just nimble & agile. As an incumbent or market leader you cannot expect that operational efficiency & excellence will allow you to out-compete your competitors. You need something more. You need a combination of thorough industry analysis, market re-segmentation and creating a new value curve where the existing one is being infringed upon by players from all directions.

A recent article by Victor Belfor @ Techcrunch suggests that innovation moves at much rapid pace and the 3 ways to combat this were proper customer discovery thereby correctly identifying and fulfilling a specific need, keeping competitors at bay by really analyzing who might be capable of fulfilling that need you’ve identified and lastly bigger companies ensuring that lower tier markets were fully accounted for by scaled down versions of their existing products. While I think these 3 points are essential – its still not enough. You always need to be on the lookout for new opportunities for creating new markets. How do you do that? By identifying opportunities to form a new a value curve.

A value curve is your offering and its plotted on an x,y axes along with alternate offerings on multiple metrics – price, ease of use, features, speed, accuracy. These metrics of course change based on products. By looking at the existing market offering you can quickly analyze which metrics to modify in order to create a new value curve. For example Bloomberg created  its own value curve by looking across the chain of buyers – from IT managers to the traders and created a product customized for traders. The value stemmed from recognizing that at the end of the day the drivers for decision making would rest with traders and as such they were able to capture and retain market share by catering value added features towards them.

value-curve

In summary, when monitoring the competitive space always look for new market space to infiltrate. You need to be on the lookout for creating a blue ocean. Ask yourself 4 key questions -

1.) What factors should be reduced well below the industry standard? (Price)

2.) What factors should be completely eliminated which the industry has taken for granted? (Complexity)

3.) What factors should be created that the industry has never offered before? (Bloomberg offered analytics in addition to market data).

4.) What factors should be raised well above the industry standard? (Quality, customer service)

By asking those 4 essential questions you might just be able to create a blue ocean amidst an ocean of red.

References:

http://techcrunch.com/2013/01/19/every-company-is-up-for-disruption-so-keep-your-products-simple/

Harvard Business Review – Creating a new market space

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