Improving Perceived Customer Value Is The Key To Innovation

Managers used to believe that improving product value was the key to innovation. Today’s best managers know that altering value as defined by the customer is the new key to innovation. For example, recognize that when customers buy new software, they are taking home a CD, but what they are really getting is a new way to perform a desired task. Today’s best managers focus on improving customer value of performing the task and not on improving the value of the CD itself. Find new ways to identify and co-solve customer problems. Customer value is realized, or brought out, in the use of the product.

Source: Michel, S., Brown, S. W., & Gallan, A. S. 2008, Spring. Service-logic innovations: How to innovate customers, not products. California Management Review, 50, 49-64.