Value Creation
The Value Creation Model is a further elaboration of the Value Proposition. The Value Creation Model is based on two types of value concepts:
1. The Value Proposition Architecture, and
2. The Value Process Concept.
Value Proposition Architecture
The Value Proposition Architecture not only defines the creation of value through the proposition, it also enables the creation of many strategic advantages. Based on the Value Proposition Architecture, the organization-specific operating model is designed.
The value proposition model, and the operating model are relevant not only for marketing and sales: they deliver competitive advantage on eight value creation areas by ensuring strategic advantages in different business units:
1. Improved Proposition Development Lifecycle - using a component based value proposition aligns R&D and helps it to interactively cooperate with other parts of the organization
2. The Time-to-Market is drastically reduced - the Proposition catalogue is quickly adaptable and extendable
3. Price changes can be established instantly - the prices can quickly be adapted to price movements of the competitor
4. The Production or Delivery process can be optimized further - a component based approach reduces production & delivery efforts significantly, reducing reconfiguration time, slack time, etc.
5. Delivery Improvement is easier - by streamlining the supply and demand chains
6. Logistical Information Systems are easier adaptable - a component based information system is easier to change & adapt
7. Less adjustments to MIS reporting are necessary - component based reports hardly change
8. Value creation control systems become more flexible - value creation of each component can be viewed from many different angles
Value Process Concept
The Value Proposition Architecture is based not only based on components of the Value Proposition, called, Value Components but also based on Activities of Business Processes, especially but not exclusively, where Business Process Activities use or maintain these Value Components. Therefore it is necessary to develop an approach for Value Management in processes:
1. How each Activity creates business value in general in which case the value effectivity and efficiency of the Activity are relevant
2. How each Activity creates business value through the Value Proposition in which case the value generation of the Activity through the Value Component is relevant
How this is done is explained – on a very high level – when discussing our own Proposition.