VALUE PROPOSITION IN KNOWLEDGE ECONOMY

A.S.Rao

asrao@nic.in

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Value proposition

• Value delivered to the customer results in a satisfied customer, who will pay a reasonable price in return for the product service.

• Value is the worth, importance or usefulness to the customer.

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Value creation

To create value, a firm needs to :

• Understand how customers needs evolve

• Understand how technologies evolve

• Develop world class products and services that meet customer needs

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T-CUBE-INTEGRATING TLC, MARKET SEGMENTS AND INNOVATION STRATEGY

To understand the complexities involved in positioning a firm, small or big, one must look at all the three dimensions; Technology Life Cycle (TLC), Market segment and Innovation strategy.

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STAGES IN TECHNOLOGY LIFE CYCLE

• Inception point

• Stage 1 Technology Development

• Stage 2 Technology Application

• Stage 3 Application launch

• Stage 4 Application growth

• Stage 5 Technology maturity

• Stage 6 Degraded technology

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Y-axis-MARKET SEGMENTS

• Innovator …. Technology enthusiast

• Early adopter …. Visionary

• Early majority…. Pragmatist

• Late majority …. conservative

• Laggard…. skeptic

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Z-axis-INNOVATION STRATEGY

• First mover strategy-Pioneering advantage, is realized only if the first mover succeeds in framing consumer preferences.

• Fast second strategy

• Imitator strategy -Best approach for a late entrant is to imitate and improve. Pure imitations, blatant knock-offs do not work well. Lower price matters if market can also be expanded like in Micro ovens. Innovation is all about finding new ways to do things and to obtain strategic advantage, so there will be room for new ways

of gaining and retaining advantage.

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Value drivers

• Product-performance, quality, features, brand, selection, search, ease to use, safe

• Price-fair, visible, consistent, reasonable

• Access-convenient, location, nearby, at-hand, easy to find

• Services- ordering, delivery, return, check-in

• Experience-emotional, respect, ambience, fun, intimacy, relationship, community

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Value creation from technology license

• Technology Acquisition

• technology absorption Including Adoption

• targeted learning

• Creative adaptation

• Value added innovation

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Value creation from lab technologies-Triple helix model

• The triple helix comprises universities and other knowledge producing institutions, industry including high tech start-ups, MNCs and government at various levels.

• In-house absorption capacity

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VALUE CAPTURE with IPR

• PROTECTION OF IDEAS AND INFORMATION-Innovative Ideas are protected under Patents, confidential information is protected under Trade Secrets.

• PROTECTION OF FORM AND APPERANCE-Copyright, Industrial Designs and IC layout

• PROTECTING IMAGE AND REPUTATION-• Trademark and Geographical Indications

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VALUE DELIVERY

• VALUE DELIVERY THROUGH PRODUCT INNOVATIONS

• Value delivery with organizational innovations

• Technology fort

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When markets tip

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Dealing with front end fuzziness

• Quality Function Deployment (QFD)

• How to spot a winner

• Stage-gate model of innovation

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Timing

• Late entry does not postpone earnings

• 6 months delay-1/3rd reduction

• 12months delay-market disappears

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Value proposition delivered

• Product, price, access, service, experience

• One value is selected to dominate the value proposition offered to the customer

• A second value differentiates the offering

• And remaining 3 must meet the industry norms

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Examples

• Google- primary value is product with fast , relevant results. Secondary value is access-easy online. Service is secondary for Intel.

• Wal mart, Deccan primary value is price. Spice jet in addition offers experience.

• McDonald primary offer is access and secondary service.

• Dell computer-primary service, secondary access.

• Harley motor bikes primary offer is experience, which is secondary for Mercedes.

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Thank U

• Questions please?