Trap 3: Confusing Technology Innovation with Market-Creating Strategies

Look to Value Innovation to Unlock a Blue Ocean

R&D and technology innovation are widely recognized as key drivers of market development and industry growth, so managers would be forgiven for assuming that both are key drivers in the discovery of new markets. But market creation is not inevitably about technological innovation. Starbucks turned the coffee industry on its head by shifting its focus from commodity coffee sales to the customer experience. Or consider JCDecaux, which unlocked a blue ocean in outdoor advertising by providing and maintaining “street furniture” for municipalities in exchange for prime stationary downtown locations for ad displays. These strategic moves opened new markets without any bleeding-edge technology.

Segway failed to create a new market because it didn’t link technology to value.

Even when technology is involved, however, it is not the reason that new offerings like Google’s search engine, Intuit’s Quicken, Wikipedia, or Uber are successful. Such products and services succeed because they offer buyers a leap in value — they are so simple to use, fun, and productive that people fall in love with them.

This trap is one that Google Glass fell into. Google Glass may have represented a technology innovation. However, it was not a value innovation. It was too conspicuously high-tech to provide real style and fashion and it set off alarm bells of privacy violation, causing bars, movie theaters, hospitals, locker rooms, classrooms and more to ban its use. To get out of this trap Google should aim to rejuvenate Glass by focusing on value innovation, not technology innovation. Unless it makes buyers’ lives more productive, less risky, more stylish and fun, and easy to use it won’t unlock a blue ocean the way Google’s search engine did.

Value innovation, not tech innovation, is what launches commercially compelling new markets. Successful new products or services open market spaces by offering a leap in productivity, simplicity, ease of use, convenience, fun and fashion, or environmental friendliness.

Up next — Trap 4: Equating Creative Destruction with Market Creation

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