The Big Picture…
Typically, we believe value is created/embedded by manufacturers and then exchanged at the point of sale. This is known as value-in-exchange and is the main basis of what we call goods-dominant logic. Once the buyer owns the Value, they set about destroying or using it up.
It is a simple view of value. drives our view of innovation to be one of adding/improving features of products.
A better view of value creation is to observe that it is based around an ecosystem of actors offering to help beneficiaries make progress they are seeking.
We observe a number of the foundational premises of service-dominant logic emerge. Notably that value is co-created. And it is done so during the use of the service. That the ecosystem can only offer to help create value (a value proposition). And that beneficiaries determine the value created (which equates to the progress they feel they have achieved using the ecosystem’s offering)
The ecosystem needs to
- deeply understand the progress sought by beneficiaries
- be able to adapt to evolving progress sought by beneficiaries
- understand the value being co-created in use
- minimise opportunity for value co-destruction
Is there a lifecycle of value
Osterwald and Pigneur expand on the basic create/destroy notion of value we see above. They identify a lifecycle of value (predominantly based on value ownership) in their 2003 paper “Modelling value propositions in eBusiness“. And it covers:
- Appropriation – where the value is created
- Consumption – ownership/usage of created value
- Renewal – sometimes value can be renewed, for example, when an enterprise upgrades the firmware of electronic devices, giving them new functionality
- Transfer – customers may be able to gain additional value even when the original value has been used up by transferring ownership (e.g. 2nd hand sales)
Creating, consuming, renewing, value in exchange etc imply that value should be easy to measure.