The single most important mandate of innovation is to create new value. Similarly, one of the mandates of entrepreneurialism is to deliver value. Yet, innovation and entrepreneurialism are not necessarily the same.
As a matter of fact, they are two different subject areas that require distinctive mindsets, skills, passions, and behaviors. One of the biggest limiting beliefs is that if we have the idea (the innovation), we must also be entrepreneurs. This is incorrect value thinking. In fact, very few people play both roles well because they require different things. Therefore, you must separate the two, and evaluate your talents against those needed to be a successful innovator or a successful entrepreneur. After doing this, you can begin to identify and spend your time where you perform best.
The entrepreneur may see the problem, but he may not have identified the way to solve it: the innovation. Or he may see the problem and know how to solve it, but not how to deliver that solution. During delivery is where innovation comes into play. At the end of the day, how well you solve a problem and how well you deliver on the solution defines the value you will create.
Whether you are an innovator or an entrepreneur, you exist because there is a problem or opportunity that, if solved, produces satisfaction for a specific population. Your customers are the people who accept the solutions and are willing to pay for them. With that in mind, you cannot say you have customers if they do not accept (and adopt) the solution you have provided.
This is the fundamental problem for entrepreneurs: We have very creative innovators coming up with solutions every day, but those solutions are not serving potential populations and are not adopted. This is because we do a poor job of understanding the customers and the contexts of their decision-making every day. You might create the solution, but at the end of the day, the customer identifies and defines the value.
You must start with value, which is demonstrated in five ways:
Value of Convenience
You create convenience when your solution makes your customers’ lives easier, whether it is opening a store close to their home, streamlining delivery service for items they want to send or receive, or combining one product with another.
Value of Function
You create functional value, for example, when you provide a solution that transforms a manual labor task into one that can be automated. The value occurs when a task that used to take five hours now takes a few minutes, or when a job that used to require full attention now requires only supervision.
Value of Form/Design
You create value in form or design when you take a complex problem and make it easy to understand and solve. For example, an architect takes your ideas and creates a blueprint, or a consultant creates a coaching program that is designed to achieve your goals.
Value of Economy
You create economic value when you are able to offer a better price or a superior value for goods or services that are already on the market. For example, distributing a product or service in a way that makes it available for retailers and other value chain players.
Value of Social
You create social value when your solution has impact on individual people or on society as a whole. This can take many forms, such as aiding underprivileged people, improving the environment, or even helping leaders amplify their positive influence and reach.
Creating sustainable organizations doesn’t start with financials and big economic goals. It doesn’t even start with operational plans. It starts with a clear definition and identification of the value you are going to provide. If your value equation is never designed, you are guaranteed to have problems developing the right customer base and likely never get returns.
Ask yourself this question: What value are you presenting? Based on that answer, determine what should you create and who should help you create it?
The temptation is to try to establish and sell all five values to your target population. You don’t need them all; you only need one. In fact, your company will not necessarily be stronger if you have all five. We advise all entrepreneurs to start with one because it takes a while to get scalable adoption of anything. It takes learning and investment to be successful in delivering more than one value. The truth is most of your customers do not care about multiple value dimensions if the main value you create is strong enough. Every customer cares about one value as primary and the rest as secondary. You should concentrate on what your target population values most.
If you are starting a new business, you should take the following three actions:
- Identify yourself: Are you an innovator or an entrepreneur?
- Identify a clear problem that your target customers have that, if solved, they are willing to pay for if resolved.
- Identify the right message and positioning of the value you are providing so it is clear and your target customers can easily make a decision to adopt your solution.
