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Value Creation

Value Creation, Crazy Ideas And Brand Leadership

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Brand Strategy Value Creation

The notion that the process of value creation and innovation can somehow be quantified as something predictable, with outcomes easily repeated, is a compelling one indeed. An entire consulting industry has been built around this premise. Unfortunately the magic of value creation doesn’t work that way. The source of value creation BEGINS with formless creative thought not data.

Crazy ideas.

Everything that ever was, is now, and ever will be is at first a formless thought seed in the creative mind. Many of the products we can’t live without today started out as crazy ideas – automobiles, airplanes, personal computing, digital music and entertainment, smartphones, the internet and social media – stuff nobody needed or was asking for, but once realized was just the thing they were waiting for. All the stuff that has changed how we live in the world begins as formless crazy ideas.

Crazy ideas are always more richly embedded with game changing opportunity than safe ideas. A safe idea is the one you can “prove will work” before it takes form in the world.

As early humans, we learned and adapted within the context of our surroundings. When humans first learned that fire makes life easier (like cooking meat and keeping warm) the idea of fire was eagerly embraced as necessary for survival. I’ll bet before people figured out the “use value” of fire, it probably was a very frightening thing to experience–and not perceived as very useful.

Crazy ideas are like ancient fire – feared until proven useful.

The music industry fought tooth and nail to avoid the firestorm crazy idea of digitally produced, reproduced and distributed music. Looking back, it’s hard to imagine the days of vinyl records and CDs. If you were a creator of music, you had very little power in how you received economic reward for your creative output. If you were a consumer, someone made the decision for you about what music would be available for you to listen to. It was a closed system unable to accept and utilize a crazy idea.

Consumer’s were not demanding the crazy idea of digital music be created out of their unmet need for digital music. Yet once its use value was realized, the crazy idea changed an industry and the world.

The same is true for more commonplace crazy ideas like the Swiffer, which changed how people clean their homes. Dreyer’s Slow Churned Ice Cream, which enabled consumers to enjoy more healthful desserts. And Digiorrno Pizza, which elevated frozen pizza to delivered pizza status. Nobody was asking for these crazy ideas, yet each one proved massively successful.

Crazy ideas propose new meanings and create competitive advantage.

In a me-too world of abundant choice, it’s far better to create new value (propose new meanings) than compete for the value created by others. If your product is competitively ranked number three or four in a category, you may want to be thinking about a “crazy idea that won’t work” that will create a new meaning around your product that puts it in a league all its own. 

That’s what Swatch did. When their bigger competitors Seiko and Casio were closely monitoring consumer needs for technical precision then inventing Quartz technology, Swatch had the crazy idea that people valued self-expression more and created a new category and untouchable competitive advantage in a class by themselves for over a decade.

The key ingredient to competitive advantage for brands is to provide people with more “use value” than they pay in cash value. Although you could buy a high-quality, precision quartz watch from Casio for under $50, it didn’t provide the perceived use value of self expression available for $100 from Swatch. This is the power of crazy ideas in creating new value even when it’s not driven by known user needs. 

Two choices: the creative plane or the competitive plane. 

If your business is to thrive in the new economy driven by crazy ideas, you’ll have to choose between operating from the creative plane or the competitive plane. 

When your organization operates on the competitive plane, it can only win when somebody else loses. You will only bring products to market that are based in incremental user needs, and abundantly available from other sources. You’ll be forced to compete at the lowest price. Crazy ideas that are without form and unproven will be discounted in favor of the status quo. Your enterprise will be managed based on control, competition and survival. 

On the other hand, if your organization creates value on the creative plane, there will be no shortage of supply or opportunity. You’ll bring products to market that redefine the category, delighting customers with the unexpected, making competition irrelevant. Your customers will experience more use value than they pay in cash value – making price irrelevant. Your teams will be focused on turning possibilities into realities. You will not count transactions but create experiences people love and build trust money can’t buy. 

Indeed, value creation is a crazy idea. Get crazy and move your brand up the value chain. 

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2 Comments

Jason Lim on November 25th, 2011 said

I completely agree. Of course, this is all easier said than done, especially for a company that has been relying on the competitive plane for most of its existence.

Do you have any suggestions on how to shift a company’s mindset from competitive to creative?

Thomson Dawson
Twitter:
on December 02nd, 2011 said

Thanks for your comment Jason. Indeed, you are correct in your observation that shifting a company culture to the creative plane from a transactional competitive mindset is a difficult process.

This can only be accomplished when the initiative is driven by enlightened leadership. It can only be accomplished from the top on down. Rarely will it work the other way.

When an organization’s reason for being is centered in creating new value rather than competing for exisiting value, the stage is set for market leadership.

This requires executive management to have vision for how value creation becomes a creative process embedded throughout the organization.

If an organization is straddled with a mindset that focuses on me-too incremental innovation and lowest price positioning, it’ll be next to impossible to make the leap.

Thompson

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