Tuesday, April 22, 2014

What consumers value: lessons from ten years of smartphones (Draft for Comment)

A draft for comment... Value 101, targetted at Managers, introducing a value perspective of innovation, for the Sloan Management Review.

Your comments are appreciated to achieve the below aim.... either to blog post, or to @valuemgmt or by email. Your assistance is appreciated.

Brief aim: Sloan want "the most potent, useful and directly applicable management insights... on innovation". Can you help me with comments to achieve this aim....? First para and links below.

pdf version at Google here; (Active) iCloud version here (Not currently active; Oct '14). Now also available at SSRN here (Oct '14), for wider review.

Better by Apple
Innovation means more than doing new, but doing better.

Target Innovation Reviewers:
Jorge Barba  @jorgebarba
Seth Godin @ThisisSethsblog
Matt McFarland @mattmcfarland innovation@washpost.com
Stewart Harker  Global Retail & Consumer Advisory Lead Partner at PwC.
Christian Behrenbruch CEO ImaginAB

AIM: Sloan Management Review seeks "the most potent, useful and directly applicable management insights developed by researchers... and translate these new ideas for business executives and management teams who can put them to work... we seek manuscripts... that offer new research and insights about the most imporant and transformative management topics (today and in the future) with a focus on innovation."

Title: What consumers value: learning from ten years of smartphones
Subtitle: Value is a new and (potentially) better way for Managers to understand innovation

Alternate title: The Problem of Value: Creating and Innovating 3G

Value is a potentially better way to think about innovation, now nearly 15 years, since its proposal in this journal (Sloan Management Review). Value is still incompletely **understood by Managers, even though consumers value every time they buy or try something new, because value is subtle in its complexity. Value, I discovered in consumers’ experience of smartphones, is both a process (an assessment; ‘value the doing’, using what I call value practices) and an outcome of that process (‘value the result’, I call overall value) aggregating a group of attitudes against potentially many meanings of value (I call value dimensions). I introduce these value concepts below. Value answers recent **calls to focus beyond short term profits, beyond shareholders, towards something more worthy and more sustainable. Value creation “delights customers” and “inspires employees” but value thinking requires Managers to take responsibility for *consumer’s value experience in a process I call ‘Value Management’, or more boldly as ‘Value Leadership’.

NB: asterisks indicate references in footnotes.
pdf version at Google here; iCloud version here (iTunes login required)

1. Kim, W. and R. Mauborgne (1999) Strategy, Value Innovation and the Knowledge Economy. Sloan Management Review, 40, 3, 41-54.
2. Gummerus, J (2013) Value Creation Processes and Value Outcomes in Marketing Theory: Strangers or Siblings. Marketing Theory, 13,  1, 19-46.
3. Gronroos, C (2011) Value Co-creation in Service Logic: A Critical Analysis. Marketing Theory, 11, 3, 279-301.
4. Porter, M. and Kramer (2011) Creating Shared Value: How to Reinvent Capitalism and Unleash a Wave of Innovation and Growth. Harvard Business Review, 1, 62-77.
5.  Tata, R et al (2012) Why Making Money is Not Enough. Sloan Management Review, 54, 4, 95-6.
6. For work on value as related to business customers, see Flint, D., Woodruff, F. and S. Gardial (2002) in the Journal of Marketing, 66, October, 102-117. My work examines consumers rather than business buyers.


Anonymous said...

Completely reasonable; need to define your capital M managers, who they are and why you are writing this (for them?).

If the sample size is sufficient, would like to see a factor analysis done on the data, to confirm your claimed main factors (value etc).

Dr Richard Ferrers said...

Good idea on defining managers...

... as for Factor Analysis... one of the assumptions in FA is the factors are stable. But I would imagine value is highly unstable... i.e. slippery, hence no statistical approach... But it would be interesting to re-invisage the study or reproduce the study with this approach to confirm the slippery/stable nature of value.

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Anonymous said...

CEO respondent:

Cool! have you had good feedback so far?

"Tech" is about out of my league to be truthful but I liked the article very much.

Thank you for sharing!

Anonymous said...

Professor of Economics comments:

Just had a quick read of the piece and my immediate reaction is “when (and why) are profit-maximisation and consumer value creation in conflict?” In other words, is it always the case that the value creation approach will produce better firm performance? The answer to this isn’t obvious to me. Moreover, it’s not clear to me that Apple were following a ‘value creation’ strategy as opposed to a ‘profit maximisation’ strategy. I think I could tell the Apple story through a profit-maximisation lens which would be quite convincing.

Perhaps we need to discuss these more fundamental issues before I wold be convinced of the story you are telling!

[shortened piece Dec 2014]