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January 18, 2024, vizologi

Value Innovation: The 4 Frames Made Simple

Value innovation is a powerful idea. It can transform businesses and industries. We will simplify the 4 frames of value innovation in this article. Our goal is to make it easier to understand and apply in your own business. We aim to empower you to harness the power of value innovation and achieve sustainable growth and success by breaking down this complex concept into easy-to-digest pieces.

Whether you are a business owner, entrepreneur, or aspiring innovator, this article will provide you with the tools you need to thrive in today’s competitive marketplace.

What’s the 4-Step Innovation Model?

The 4-Step Innovation Model was developed by Chan Kim and Renee Mauborgne. This model helps companies challenge an industry’s strategic logic and business model, leading to blue ocean moves. These moves break the trade-off between differentiation and low cost.

The model consists of four key questions:

1. Eliminate

  • Identify factors that the industry takes for granted
  • Eliminate those that no longer provide value or may even detract from it.

2. Reduce

  • Determine which factors should be reduced well below the industry’s standard
  • Decrease costs and streamline operations.

3. Raise

  • Uncover and eliminate the compromises buyers are forced to make
  • Increase buyer value.

4. Create

  • Discover new sources of value for buyers
  • Create new demand by converting noncustomers into customers

By collectively exploring these questions, companies can reconstruct buyer value elements across alternative industries.

This allows them to offer an entirely new experience while simultaneously keeping cost structures low.

Who Came Up With the 4-Step Innovation Idea?

The 4-Step Innovation Idea was created by Chan Kim and Renee Mauborgne. They developed the 4 Actions Framework to help businesses challenge an industry’s strategic logic and arrive at blue ocean moves. These moves break the trade-off between differentiation and low cost.

They developed the 4-Step Innovation Model to translate insights into well-constructed strategies. Their background and experiences have influenced the idea by offering a comprehensive approach to identifying key value elements and providing customers with a new experience, while keeping costs low.

Their model has had a significant impact on the business world. It encourages organizations to explore how to reconstruct buyer value elements across alternative industries. This creates new demand and improves buyer value.

Good Things About Using the 4-Step Innovation Plan

The 4-Step Innovation Plan has specific benefits for generating new ideas and improving processes. It uses the ELIMINATE, REDUCE, RAISE, and CREATE framework. This helps identify unnecessary elements and make room for innovative solutions. By challenging industry standards, companies can arrive at unique blue ocean moves that break the trade-off between differentiation and low cost. The plan contributes to developing and implementing new and improved strategies.

It pushes organizations to uncover and eliminate compromises that buyers are forced to make, create new sources of value for buyers, and convert noncustomers into customers. This allows companies to explore reconstructing buyer value elements across industries to offer a new experience while keeping their cost low.

Best Time to Use the 4-Step Innovation Strategy

The 4-Step Innovation Strategy is best used when businesses or individuals face industry challenges like increased competition or declining customer satisfaction. Understanding the four frames of value innovation provides insight into improving offerings.

Factors such as industry shifts, changing customer preferences, and technological advancements should be considered when deciding on the best time to use this strategy.

Identifying opportunities to apply the 4-Step Innovation Strategy involves a strategic approach to addressing four key questions:

  1. Eliminate factors taken for granted in the industry.
  2. Reduce factors below the industry’s standard.
  3. Raise factors above the industry’s standard.
  4. Create new sources of value for buyers.

Exploring these questions systematically allows businesses and individuals to reconstruct buyer value elements across industries, offering a completely new experience while maintaining low cost structures.

Guide to the 4 Steps of Making Fresh Ideas Work

First Move: Get Rid of Stuff

The “First Move: Get Rid of Stuff” strategy involves four key steps:

  • Eliminate
  • Reduce
  • Raise
  • Create

In the first step, Eliminate, challenge the status quo and consider what factors in the industry should be eliminated. This includes identifying outdated or unnecessary components of products or services.

In the second step, Reduce, determine which factors in the industry should be reduced well below the standard. This encourages organizations to streamline their offerings and eliminate unnecessary complexities.

The third step, Raise, prompts the exploration of factors that should be raised well above the industry’s standard. This entails identifying areas where the industry is currently falling short in meeting customer demands.

The final step, Create, encourages the discovery of factors that the industry has never offered before. By applying this method, individuals can effectively simplify their surroundings by decluttering and eliminating unnecessary items.

Second Move: Use Less of Some Things

One way to implement the second move of the 4-Step Innovation Model is by reducing certain factors below the industry’s standard. This helps organizations question if products or services have been overdesigned to beat the competition. By reducing these factors, companies can avoid increasing costs without gaining valuable benefits, improving operational efficiency, and creating added value for the customer.

This strategy can benefit organizations by enhancing cost efficiency and streamlining operational processes. By using fewer resources and eliminating non-value adding elements, organizations can focus on the most critical aspects of the product or service and create a more relevant and cost-effective value proposition for customers.

However, a potential challenge is the resistance to change within the organization. Employees and stakeholders may be reluctant to let go of certain elements they are used to, which could hinder successful implementation of the strategy.

Third Move: Improve What’s Left

Improving the innovation process involves a few key moves. One is to explore and rethink buyer value elements across different industries to offer a new and better experience. This helps keep costs down while enhancing the value for buyers.

Reducing and eliminating strategies help in cutting costs compared to competitors. Raising and creating strategies lift buyer value and create new demand. When these strategies are combined, they enhance and refine existing ideas.

Using the 4-step innovation model, companies can improve their innovation strategy. This ensures they not only reduce costs and optimize value but also find new ways to deliver value to customers. This keeps them at the forefront of their industry.

Fourth Move: Add Something New

The fourth move in the 4-Step Innovation Model is to create something new. This could be a new source of value for buyers or creating new demand by turning noncustomers into customers.

By strategically incorporating this move, companies can revamp buyer value across different industries to offer a completely new experience while still maintaining a low cost structure.

Introducing something new enhances the overall innovation strategy. It provides insight into how to improve buyer value and create new demand, which is important for staying ahead of the competition and meeting changing customer needs.

This can be accomplished by identifying factors that the industry has never offered before, thus establishing a new standard of value that sets the company apart from the competition.

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