Enhance your innovation by tapping your product's value-creation web

In the continuous search for innovation and creating more value for your customers and shareholders (and hopefully for society too), it's important that you have a good understanding of your product's value-creation web (aka "value web").

A product's value web is simply an assessment of all of those people, services, products, companies and institutions that have the potential to derive value from the sale of your products or services. This assessment should importantly capture additional customer needs that are generated when a customer purchases your product (e.g., the need for plant food that is generated from the purchasing of a plant).

The Value Web in action
To provide a brief example of a product's value web, let's consider the purchase of a pair of tickets for a jazz club in the city by a suburban couple. Several possible beneficiaries ("web nodes") come to mind. First, there are the restaurants near the theater which may benefit from the couple's desire to grab dinner before the show. Second, we have the garages near the theater because the couple will want a convenient & safe place to park their car. Third we have the babysitter who lives down the block from the couple, who will no doubt earn a few dollars looking after the couples' new born while they are in the city. Fourth we have the city government, which will garner tax revenues via the couple's car tolls (to enter the city) and the sales taxes collected from the couples spending (tickets, garage, dinner, etc.)... and the list could go on.

After you have gone through the important exercise of mapping out your service's value web, you then want to ask some key questions, including:

• Can I bundle my service with one or more of the nodes in a way that would be compelling to my customers? (e.g., bundling tickets, dinner & garage into a single offering at a discounted price)
  
• Can I share costs with any of the nodes - marketing costs, operating costs, etc.? (e.g., including a mini-ad for the garage or restaurant within your bigger ad for the concert)
  
• Can I "exchange" the value created by the sale of my product with other nodes in return for something that I value? (e.g., providing a % of ticket sales to the garage in exchange for the garage providing discounts and valet parking to folks attending the concert)
  

Now, of course, as part of doing due diligence for any of the ideas that you generate, you have to understand the economics behind the different ideas, and ensure that the value created for both you and your partner(s) is worth the effort required.

More to come on value innovation & the value web in future posts. As always, feel free to contact me via email.