Value innovation vs Tech innovation

Value Innovation is core to opening new markets

As the entire world is reeling under the fear of a global economic slowdown companies are looking at value innovation to entering into new business services. Let us look at major challenges companies are facing globally.
The immediate challenges are stiff competition, shrinking demand and lower margins.This has resulted in many companies closing their divisions, letting people go and even consolidating their business with the competitors.
At the same time, global stock markets are still performing well. The valuations of companies are still high.The tech sector is performing well especially the FAANG stocks.This has led analysts and investors to believe that tech innovation is the panacea for all challenges companies are facing today.Analysts believe digital technologies will help create new markets and achieve rapid growth.

Value innovation vs. Tech innovation

  • Technology innovations does not create new markets.They might enable the new way of doing a process or address major pain points, but they do not assure commercial success.
  • To substantiate the above point, let us look at Personal computer market which revolutionized our life.Personal computer was invented by MITS.This company is no longer in existence.Many people think it is IBM or Microsoft which invented Personal computers.
  • Though MITS invented Personal computers, it was IBM and Microsoft that dominated the PC market by adapting the technology to deliver value to customers.
  • In essence IBM and Microsoft was able to convert a technology innovation to Value innovation – To bring value to customers at affordable cost.
  • At the same time, Apple capitalised on its own innovations with its iTunes, iPad, iPhone and app store.Apple is an exception here and in majority of the cases, technology innovation and value innovation are done by different companies.
  • Hence the lesson we can learn from the above examples are that for a company to shift its strategy from Red Ocean to Blue Ocean, it needs to focus on value innovation and not Tech innovation.

Where value innovation scores

  • A success or failure of a business does not rely on the quality of the technology. When a company thinks that new market creation hinges on break through technology, then it comes up with a product that is far ahead of it’s time or too complicated.
  • Hence many technology innovations fail to create and capture new markets even though they do win lots of accolades.

How to get value innovation right?

Value innovation focuses on adding value to the customers and is a cornerstone to creating new markets for profitable growth.
Value innovation should address three important questions.

  1. How does the offering make the customer life easy, simple, productive, convenient and stylish?
  2. How does the offering reduce buyer risks – financial, physical, emotional or reputational?
  3. How does the offering improve social consciousness, something which customers deeply value?

Companies need to get compelling answer to atleast one question. After that they need to price the offerings in such a way that majority of the buyers should not only want but also should be able to afford it.


  • In order to shift from high competition and low margin business, companies need to change their business strategy from Red Ocean to Blue Ocean.
  • In order to make a seamless shift from Red Ocean strategy to Blue Ocean strategy to charter new areas of explosive growth, companies need to focus on Value innovation rather than Technology Innovation.

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