Value Propositions 08-18

Value Propositions

Companies that have demonstrated a business model innovation have often done so by shifting incentives in the value chain.

When a business understands what each stakeholder wants or needs and responds creatively, or perhaps even radically, business model innovation begins to take shape.

For example, late in 2013, GlaxoSmithKline announced that it will stop paying doctors to promote its drugs and that it will no longer link the compensation of sales representatives to the number of prescriptions that doctors write—practices that have long been deemed conflicts of interest in the pharmaceutical industry. Glaxo says that it will now pay sales people based on their technical knowledge and the quality of service they provide, completely changing the incentives for its sales force, and also changing the incentives for doctors, likely reducing the quantity of unnecessary medications prescribed, and perhaps unlocking other opportunities for innovation and value creation that better serve customer needs.

·         Bundle of products and services that create value to specific segment

·         VP is the reason why customers choose one company over another

·         VP solves customer problems and satisfies his needs

·         Some VP might be innovative while others may be similar to other offers

·         What value do we deliver to our customers?

·         Which one of our customer’s problems are we solving?

·         Which customer needs are we satisfying?

·         What bundle of products/services are we offering to each customer segment?

·         VP are quantitative: Price, speed.

·         VP are qualitative: Design, customer experience

Examples of VP:

·         Newness

·         Performance

·         Customization

·         Getting the job done

·         Design

·         Brand status

·         Price

·         Cost reduction

·         Risk reduction

·         Accessibility

·         Convenience/ Usability

Please read the main article about innovative business Models  Here