Value Innovation The Strategic Logic of High Growth

1
Value InnovationThe Strategic Logic of High
Growth

• Presented by Icebreak team
• 2006 3.23

2
Value Innovation

• Introduction a case
• Conventional logic and value innovation logic
• Application of value innovation
• The fields to apply value innovation
• Face of rivals imitation
• Conclusion

3
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

4
A Case Kinepolis

• Background
• The business was shrinking
• The competition was getting more fierce
• A lot of cinemas were forced to shut down

5
A Case Kinepolis

• Kinepolis performance
• Win 50 of the market in Brussels in the first
  year
• Expand the market by about 40

6
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

7
A Case Kinepolis

• Kinepolis Strategy
• Have up to 700 seats in a room, and no legroom
• Install over-sized seats with individual armrests
• Design a steep slop in the floor
• Have a screen of 29 meters by 10 meters
• Locate off the ring road circling Brussels
• Have a large well-lit lots where patrons can park
  for free

8
Differences Between Two Strategic Logics
9
Value Innovation
10
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
  industrys standard?
• Which factors should be raised well above the
  industrys standard?
• Which factors should be created that the industry
  has never offered?

11
Consider The Case of Accor.
12
Face of Rivals Imitation

• What may happen once a company has created a new
  value curve?
• Rivals imitation
• Growth and profits under attack
• Fall into the trap of conventional strategic
  logic
• Performance just like the rivals

13
Face of Rivals Imitation

• How to avoid the trap?
• View the value curve in a dynamic way
• Monitor the value curve
• Accumulate the differences

14
The Platforms to Apply Value Innovation

• Product
• Service
• Delivery

15
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

16
Resource Barriers and Sustained Competitive
Advantage

• Presented by icebreak team
• 2006 3.23

17
Resource barrier
All assets controlled by a firm which can enable
the firm to conceive of and implement strategies
to improve efficiency and effectiveness. It can
be divided into three parts physical capital
resource, human capital resource and
organizational capital resource.
Whats resource?
Whats sustained competitive advantage?
A firm is implementing a value creating strategy
not simultaneously being implemented by any
current or potential competitors and when these
other firms are unable to duplicate the benefits
of this strategy.
18
Resource barrier
Two assumptions
Firm resource heterogeneity
The firms may be heterogeneous with respect to
the strategic resources they control.
Firm resource immobility
Resource may be perfectly mobile across firms,
and thus heterogeneity can be long lasting.
19
Resource barrier
Functions
20
Resource barrier
21
Resource Barriers and Sustained Competitive
Advantage
theory
Sustained Competitive advantage
22
Resource Barriers and Sustained Competitive
Advantage
A method
23
Thanks