Value innovation is a process in which a company introduces new technologies or upgrades that are designed to achieve both product differentiation and low costs.
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The changes implemented through value innovation create new or improved elements for the product or service, but also result in cost savings by eliminating or reducing unnecessary aspects during the product lifecycle.
Value innovation does not necessarily create a completely new product or technology. This type of innovation can improve on existing services and lowers the costs of that service for both the company and their customers.
Value innovation was first outlined in a 1997 article in Harvard Business Review by W. Chan Kim and Renée Mauborgne, who would later write the book Blue Ocean Strategy in 2005. Value innovation is a key principle of "blue ocean strategy," a business approach that focuses on creating new market spaces instead of fighting competitors existing market share.
Instead of competing for market share, value innovation is designed to create new markets.
The goal of value innovation is to create new demand and change the market enough to render the competition irrelevant in that market.