Value Innovation

The Strategic Logic of High

Growth
 Value Innovation
• Introduction: a case

• Conventional logic and value innovation logic

• Application of value innovation

• The fields to apply value innovation

• Face of rival’s imitation

• Conclusion
 Introduction
What separates high-growth companies
from others?

• The way to approach strategy

• The companies’ fundamental, implicit

assumptions about strategy

• Staying ahead of competition vs Making

competitor irrelevant
 A Case: Kinepolis
Background:

• The business was shrinking

• The competition was getting more fierce

• A lot of cinemas were forced to shut down

 A Case: Kinepolis
Kinepolis’ performance

• Win 50% of the market in

Brussels in the first year

• Expand the market by about 40%

 A Case: Kinepolis
The approach other companies adopted:

• Turn the cinemas into multiplexes with ten

screens

• Broad film offerings

• Expand food and drink services

• Increase showing times

 A Case: Kinepolis
Kinepolis’ Strategy

• Have up to 700 seats in a room, and ample legroom

• Install over-sized seats with individual armrests

• Steep slope in the floor for unobstructed viewing

• Have a screen of 29 meters by 10 meters

• Located off the ring road circling Brussels

• Have large well-lit parking lots & free parking

Differences Between Two
Strategic Logics
Value Innovation
 Application Of Value Innovation
Logic
Four questions to ask:

• Which factors that our industry has taken for granted?

• Which factors should be reduced well below the

industry’s standard?

• Which factors should be raised well above the industry’s

standard?

• Which factors should be created that the industry has

never offered?
Consider The Case of Accor.
 Face of Rival’s Imitation
What may happen once a company has
created a new value curve?
• Rival’s imitation

• Growth and profits under attack

• Fall into the trap of conventional strategic logic

• Performance just like the rivals

 Face of Rival’s Imitation

How to avoid the trap?

• View the value curve in a dynamic way

• Monitor the value curve

• Accumulate the differences

 The Platforms to Apply
Value Innovation
• Product

• Service

• Delivery
 Driving a company for High Growth

Despite the profound impact of a

company’s strategic logic, that logic is
often not articulated

it goes unstated and unexamined

a company does not necessarily apply a

consistent strategic logic across its
businesses
 Driving a Company for High Growth

For managers of diversified

corporations, the logic of value
innovation can be used to identify the
most promising possibilities for growth Pioneers
across a portfolio of businesses.

Businesses that
Migrators
offer
unprecedented
value.

Settlers Businesses with value

improvements

Businesses with value curves

that conform to the basic
shape of the industry’s.
 Point of Differentiation
If both the current portfolio and the planned offerings
consist mainly of settlers, the company has a low
growth trajectory and needs to push for value If current and
innovation. The company may well have fallen into planned offerings
the trap of competing. consist of migrators,
reasonable growth
can be expected. But
the company is not
exploiting its
potential for growth
and risks being
marginalized by a
value innovator.

Testing the
Growth Potential
of a Portfolio of
Businesses
 Conclusion

Comparing with Conventional Logic, Value Innovation Logic is much

better for the companies that want to get the higher share market
and larger customer segments.

High growth companies have been applying the concept of Value

Innovation and adopted the strategies in accordance with the
circumstance and environment of companies.

In order to apply this logic efficiently, managers should think

beyond their industry’s traditional boundaries in order to satisfy
customers’ needs.
 Conclusions
• The difference between a high-profit company
and others lies in value innovation

• Senior executives must ask four questions when

to create a new value curve: which to eliminate,
which to reduce, which raise and which to create

• Value innovation is the simultaneous pursuit of

radically superior value for buyers and lower
costs for companies

• We can pursuit it in the three fields: product,

service and delivery