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Innovating User Value - The Interrelations of Business Model Innovation, Design (Thinking) and the Production of Meaning – A Status-quo of the Current State of Research

Innovating User Value - The Interrelations of Business Model Innovation, Design (Thinking) and the Production of Meaning – A Status-quo of the Current State of Research

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Published by Jan Schmiedgen
We live in a hyper-competitive world where whole industries either shift towards services or become obsolete due to new market entrants, technologies or even social practices. A world, where permanent interactions with customers, fast time-to-market, and the ability to innovate »right« (e.g. the right thing or value) are the key to corporate success. On that score the business world isn't getting tired of emphasizing the need for strategic innovation (which means »creating superior customer value«, business model innovations or even the disruption and creation of new markets).

Through the lens of »customer value« this paper uncovers some of the often overlooked links of design (design thinking, design-driven innovation and service design) to strategic innovation. It will do so by ... 1) Disenchanting the big corporate rhetoric on above claims by showing that prevailing and too one-sided understandings of strategy and innovation, rather reinforce than escape old industry paradigms. 2) Examining designs still undervalued contributions to strategy-making by approaching business challenges with a user-centric and radical service logic. 3) Showing that every dimension of strategic innovation culminates in the concept of perceived user value and meaning, which gets reviewed in detail (dimensions, forms, properties), especially with regards to constructing value propositions. 4) Arguing that the current service design and business model innovation discourses cannot be negotiated separately, as they may be good methodological complements.

So when speaking about the innovation of value for the customer, the paper argues, the above stated and seemingly separated fields intersect. Therefore their most apparent systemic connections and the facilitation of value creation by design are outlined and discussed.
We live in a hyper-competitive world where whole industries either shift towards services or become obsolete due to new market entrants, technologies or even social practices. A world, where permanent interactions with customers, fast time-to-market, and the ability to innovate »right« (e.g. the right thing or value) are the key to corporate success. On that score the business world isn't getting tired of emphasizing the need for strategic innovation (which means »creating superior customer value«, business model innovations or even the disruption and creation of new markets).

Through the lens of »customer value« this paper uncovers some of the often overlooked links of design (design thinking, design-driven innovation and service design) to strategic innovation. It will do so by ... 1) Disenchanting the big corporate rhetoric on above claims by showing that prevailing and too one-sided understandings of strategy and innovation, rather reinforce than escape old industry paradigms. 2) Examining designs still undervalued contributions to strategy-making by approaching business challenges with a user-centric and radical service logic. 3) Showing that every dimension of strategic innovation culminates in the concept of perceived user value and meaning, which gets reviewed in detail (dimensions, forms, properties), especially with regards to constructing value propositions. 4) Arguing that the current service design and business model innovation discourses cannot be negotiated separately, as they may be good methodological complements.

So when speaking about the innovation of value for the customer, the paper argues, the above stated and seemingly separated fields intersect. Therefore their most apparent systemic connections and the facilitation of value creation by design are outlined and discussed.

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Categories:Types, Research
Published by: Jan Schmiedgen on Jan 07, 2012
Copyright:Attribution Non-commercial

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02/04/2015

Against this background I want to perform an interdisciplinary »sweeping blow« that points to
the often overlooked links to value creation by design, in the context of strategic innovation.
A notion of innovation that is seen too narrow, isn’t capable of delivering value configurations
that maximise both, value for the customer and value for the company. Chapter 2 will there-
fore examine the partly paradigmatic problems which explain why supplier-minded com-
panies may struggle in uncertain business environments and why they may also not be well
prepared for the services economy. I will further show, that strategic innovation should usu-
ally strive for three outcomes: 1) An increased value for the customer, which implies the need to
gain knowledge about who he is and what he values (in which context). 2) New business models,
that is knowing what value to create and how to profitably deliver it. And eventually 3) the
definition of new markets, being a function of answering what is being offered to whom. At best
strategic innovation is a holistic re-definition to all these fundamental and interdependent
questions.

Figure 1 displays them with some exemplary overlaps that already show that design (e.g. in
terms of service design (thinking)) may be a mediator or facilitator for creating value on all
those dimensions, especially in light of the to be criticised, lacklustered innovation ap-
proaches.

The three Outcomes of Strategic Innovation. A Re-definition of ...

Figure 1: The three outcomes of strategic innovation (Source: Author, adapted from Sniukas 2010)

M.A.-Thesis in Corporate Management & Economics

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Furthermore I want to show that in the end every dimension of strategic innovation either
culminates in the concept of user value, or needs to be informed by what actually constitutes
the latter. On that score I will take a close look at what actually (customer) value means
(Chapter 4) and how it relates to the redefinitions of markets, respectively the creation of new
customers (Chapter 3). Chapter 5 will then outline a contemporary notion of design and show
its value contributions to those dimensions in terms of its capability to not only uncover cus-
tomer value, but also to redefine and create it in meaningful ways. Finally I’d like to examine
in Chapter 6 how discovered/constructed value (propositions) have to be embedded into a
business model in order to not only efficiently deliver the defined value, but also to capture
some of it in terms of above mentioned equilibrium. In this discussion also the relations of
(service) design and business model innovation shall become apparent.

I am aware that the various and interdisciplinary research areas (e.g. operations research,
management, design, anthropology, etc.) I have to touch are huge and partly inconsistent in
itself. Seldomly they base on common theories or empirical ground what limits this work’s
aspiration right from the beginning. My goal is therefore to rather open up the field with the
help of a more general literature review and show apparent overlaps of previously isolated
areas which need future research. This may also be typical for any research that is concerned
with design as a meta-discipline, as it will always be concerned with »connecting floating
fields« (Jonas 1999).

However, I will also show every now and then that the sometimes claimed »design will save
the world« hype (cf. Peters 2005; Pink 2006, to name but a few) is perhaps slightly exagger-
ated. Design, especially in its strategic applications still has to learn as much from other disci-
plines as they can learn from design. A side-goal of this thesis from a designers POV therefore
is also to carve out the dimensions and key factors one should consider when creating new
user value with the intent to also capture some of it (Chapter 6).

M.A.-Thesis in Corporate Management & Economics

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