Thursday, September 30, 2010

The Overview Model: towards a (consumer) value theory of innovation

An overview model, linking the grounded theory concepts into one overview construct. The Chapter 7 draft is available as pdf (9.5Mb; here). Innovation in this thesis is defined as "something new (novelty, a value meaning) which adds value" (consistent with Schumpeter 1934, Drucker 1999, 2007, Porter 1999, Vargo and Lusch 2008). To create value, innovators need to understand what value is to consumers and how value works (the processes and practices of value) for the benefit of consumers. Thus value is addressed always and only from the consumer perspective. All references to value are to consumer value, rather than shareholder value. The top diagram shows the value structure from simple beginnings.

Key aspects of (Consumer) Value:

  • Value structure analysed through several dimensions: as three value conversations (individual, social and telco); three phases (pre purchase, post purchase, and consequences of value); and value interactions (between value meaning, value practices and context).

  • Valuing continues pre and post purchase (iterative, dynamic).

  • Value meanings, Value practices (12 each) interact and reconstruct one another (dynamic, constructionist, complex, paradoxical).

  • Social, Individual and telco practices (socially constructed, experiential).

  • Value stored as attitude (significantly emotional), so valuing largely not based on rational goals (Woodruff 1997) and decisions.

  • Model is not generalisable, since interpretive (grounded theory; derived from consumer experience).

  • Loss of value stronger driver to action than value (problem solving).

  • Model is too complex but close to and grounded in consumer experience with 3G mobile phones. Need several layers to explain model.

  • Model combines and compared to elements of innovation models; Bass (1969) individual, social practices, Bijker (1995) problem solving, Rogers (2003) linear adoption, Christensen (1997) adoption dynamics, Ryan and Gross (1943) knowledge intensive and social. Value Model built to examine, and analyse Kim and Mauborgne's (2005) Value Innovation; which hypothesises adoption when leap in value.

  • Model value meanings tested against consumer value literature; fruit drinks (Zeithaml 1988), auto business to business (Flint, Woodruff and Gardial 2002), value typologies (Richins 1995, Holbrook 1996, Woodruff 1997)

This chapter has presented a value model of innovation, developed from the grounded theory practices in this thesis. The model is complex but offers a dynamic, subjective, contextual, and interpretive view of how consumers (at least in a 3G mobile phone context) understand value in a new technology. In the next chapter, I conclude and consider limitations, recommendations and further work to extend and improve the value model.

Comments welcome...!

Layer 1: Value structure:

Three value conversations (individual, social and telco)

Three value phases (pre purchase, post purchase, consequences of value)

Layer 2: Value Practices:

Pre: Post: Consequences:

Social: Individual: Telco:

Layer 3: Value Meanings:

Pre: Post: Underlying

Monday, September 6, 2010

How to sell the sizzle of the NBN?

Proposed Poster for IBES Symposium 21 Sept,
(Institute for a Broadband Enabled Society, University of Melbourne)

NBN: faster, simpler, cheaper broadband.
Get more…. Do more… on the NBN.

What is the NBN? Liberal Coalition view
Final Poster a4 print (1Mb) | a1 print (9Mb) | Draft (1.2Mb)| Value Model (170k)


Why do consumers adopt new technology? What holds them back? How much will they pay? Past innovation theory focuses on early and later adopters, the young and high income earners (Rogers 2003). Value theory suggests consumer goals drive consumer choices (Woodruff 1997). Co-construction of value (Vargo and Lusch 2008) is a new perspective suggesting consumer value drives successful innovation (Kim and Mauborgne 2005). Innovation succeeds when it creates consumer and shareholder value. Innovation fails when it fails to create value.


This project aims to understand how consumers understand value in a new technology. Using grounded theory, I am seeking how consumers differ in their needs rather than what they have in common. Understanding value dynamics and building a theory that explains how value shifts over time and why is a focus.

Technology Findings

Approach: 3G mobile broadband is the site for this research as a proxy for understanding the slower moving broadband sector. I interviewed consumers and telecoms analysts to discover how the consumers came to have a 3G mobile phone, what their experience was, and what if anything they would change about their experience. Telecoms analysts were interviewed, since the telcos were reticent to particiate. The analysts described how the 3G telcos were going to make a return from their 3G investment, who they were targetting and how they were going o capture consumers and revenue in the marketplace. 3G telco annual reports and brochures were also sources of telco intentions, to contrast with consumers.

Results: Consumers assess value in new technology, such as 3G mobile broadband, through a number of processes (exploring, comparing, recommending) and by aggregating competing value meanings, such as novelty, beauty, power, simplicity, service, reliability against price. Valuing takes place both before and after purchase, and positive value outcomes are important for ongoing social recommending. Bargain hunting is an important driver of new technology adoption. Consumer love bargains, because bargains are gains in value.

Consumers avoid (filtering) low value messages, and reject uninteresting technology approaches (closing). The NBN must cut through these value construction processes to engage consumers. Social construction value construction processes are important (observing, inquiring, recommending). Therefore, IBES should set up connected demonstration kiosks (in cinemas, libraries and the NGV) to show consumers what NBN performance is like. Video services, and play is a key to consumers getting the message that NBN is good value, but pricing is critical too.


To sell the sizzle of the NBN, we need to talk about how the NBN creates value for consumers. The focus should become how the NBN is cheaper ($ per GB), faster, and ideally simpler in pricing, choice, and usage. We should forget the $43 billion headline price, and 1 Gbps headline speed and talk in terms consumers understand: price per month.
NBN: Do more, Get more…. On the NBN. Faster, cheaper, simpler. Easy…!

Poster contains three Use Cases, with image to follow....