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Value Innovation At the heart of Blue Ocean Strategy, we have concept of Value Innovation. Value without innovation tends to focus on value creation on an incremental scale, i.e. something that improves value but is not sufficient to make us really stand out in the marketplace. Innovation without value tends to be technology-driven, market pioneering, or futuristic, often shooting beyond what buyers are ready to accept and pay for. Value innovation occurs only if we align innovation with utility, price, and cost positions. The focus here is not time-to-market, bleeding-edge technology or best practices. It is the ambition to break one of the most commonly accepted dogmas of competitionbased strategy: the value-cost trade-off.
It is conventionally believed that companies can either create greater value to customers at a higher cost, or create reasonable value at a lower cost. Here strategy is seen as making a choice between differentiation and cost. In contrast, to create blue oceans, we need to pursue differentiation and low cost simultaneously, by looking within and beyond our industry boundaries and redefining a market altogether. Instead of focusing on beating the competition, value innovation focuses on making the competition irrelevant by creating a leap in value for buyers and our company, thereby opening up new and uncontested market space. The objective here is not to increase our competitiveness in the market as we know it. Rather, it is to create a whole new market where the rules of the games are yet to be created, by us!