This edition of the Agile Innovating TM Newsletter is for Innovators, Entrepreneurs, and Business Leaders who are depending upon innovations to achieve their business growth goals.
A new solution becomes an innovation when it has more perceived value to the user than an existing solution, leading to adoption. More value, in its simplest conception, means the new solution is better. But offering a better solution can be more difficult than it seems. The new solution must be better in the User Experience, the Business Experience, and the Market Experience combined.
In this newsletter, we explore what it means for a new solution to be better in all three areas of experience, and how to ensure your new solution becomes an innovation.
Solutions compete for adoption by customers in three different but related contexts. These three contexts are:
- Market Context, which includes the customers who acquire solutions and the jobs the solutions are intended to do.
- Solution Context, which includes all competing solution specifications and the differentiation on which they compete.
- Business Context, which includes all competitors involved in providing solutions, their individualized business architectures, and their distinctive capabilities.
The intersection of the Market and Solution Contexts yields the User Experience, based upon the Job-Being-Done and the particular solution specification.
The intersection of the Solution and Business Contexts yields the Business Experience, based upon the Basis of Competition and individual business capabilities.
The intersection of the Business and Market Contexts yields the Market Experience, based upon the Customer Segments and the individual business architectures.
Innovation is based upon the premise that, in a customer’s particular situation, your new solution will provide a better User, Business, and Market Experience than existing solutions. The new solution must create new value for the User, capture new value for the Business, and deliver new value to the Market.
The User Experience and Value Creation
The User Experience is a consequence of utilizing a particular solution to do a specific job. You need to understand the User Experience with getting a job done with the existing solution before you start to create new value with new solutions.
The User Experience comprises four dependent factors:
- The constraints encountered with acquiring and utilizing a specific solution.
Constraints encountered include time, performance limitations, availability, accessibility, price, and solution complexity. - The performance delivered by the solution in the job situation
Performance delivered includes conformance to specification for the primary function and secondary features, and ease of use. - The utility derived from using the solution to complete a job
Utility derived includes the quality of the job being done, and the reliability, durability, and serviceability of the solution employed. - The outcomes achieved when the job is done.
Outcomes achieved include; saving time, money or effort; providing novelty, assurance, or protection; yielding a psychological reward by making you feel special, appreciated, or connected.
Solutions that create new value and improve the User Experience can take the form of improving how well the existing job is being done, or defining a new Job-to-be-Done.
The Business Experience and Value Capture
The Business Experience is a consequence of deploying your unique business capabilities to provide a differentiated solution that has competitive distinction. You need to understand the Business Experience with existing solutions before you can capture new value with a new solution.
The Business Experience also comprises four dependent factors for a particular solution:
- The Revenues generated = (Unit Price) x (Quantity)
- The number of customers who buy a particular solution
- The Gross Margins realized by providing the solution
- The Profits attributed to the solution
Solutions that capture new value and improve the Business Experience can take the form of changing your business capabilities or your solution differentiation, or both.
The Market Experience and Value Delivery
The Market Experience of customers is a consequence of aligning your business architecture (i.e. Strategic Intent, Business Model, and Purpose) with the Customer Segments you are targeting for growth. You need to understand the Market Experience of existing customers before you can deliver new value with a new solution.
The Market Experience of existing Customers can be segmented according to the situations they are dealing with when acquiring solutions.
- Over-served customers are buying solutions that have more capability than the customer can effectively utilize. Customer satisfaction could increase with a decrease in solution capability, and presumably, a decrease in price.
- Nominally served customers are buying solutions where the solution capability and customer wants are aligned.
These customers are the most satisfied of all customers and have little motivation to change solutions. - Under-served customers are buying solutions that have less capability than they desire, but will continue to buy the unsatisfying solutions until the situational factors that are the source of dissatisfaction change.
- Customers who develop “work-around” solutions have their own solution configurations, either because common solutions are not available, they have extreme dissatisfaction with available solutions, or because they are doing different jobs for which an acceptable solution is not available.
Solutions that deliver new value and improve the Market Experience for customers can take the form of changing your Strategic Intent, Business Model, or Purpose, to create better alignment with your target customer segment.
Conclusion
Your Value Proposition is more than just a statement of the solution benefits you are offering to customers. Your Value Proposition includes:
- The value you are creating with a solution through improvements in the User Experience
- The value you are capturing in a solution through improvements in the Business Experience
- The value you are delivering with a solution through improvements in the Market Experience.
Your Value Proposition is the headline for your brand strategy and positioning. It is a shorthand method to tell people what makes you different and better than the competition. Its true purpose is to get you noticed. Behind the Value Proposition is the hard work of making your offering distinctive through providing better User, Business, and Market experiences.
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Define new value
Create, capture, deliver
Launch innovation
-Innovation Haiku, Kevin A Fee, March 15, 2024