Last year I was in Singapore and met Israel’s former economic minister. When I asked why he was there he said, “Like Singapore, Israel is a small country. Most of the world’s important opportunities, talent, and resources are somewhere else. I am here to discuss how to make the world transparent for us.” That is an important idea. This objective is also being pursued by companies and universities around the world. (more…)
Products, Services, and Prospect Theory
Behavioral science is now an influential part of economics. It needs to become a more important part of the discipline of innovation. Although the discussion below is somewhat speculative, it highlights important perceptual attributes of “customer value.” Prospect Theory inspired this discussion, but the focus is quite different. Therefore I call it “Customer Value Analysis,” a model to help better evaluate the relative merits of different forms and amounts of customer value. (more…)
Kern Entrepreneurial Engineering Network (KEEN)
The KEEN annual conference is sponsored by the Kern Family Foundation. It is one of America’s most important foundations, helping students across America learn how to be successful value creators and entrepreneurs. These are increasingly critical skills for all professionals in the global innovation economy. (more…)
Peter Drucker famously said, “Because the purpose of business is to create a customer, the business enterprise has two – and only two – basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.” Few companies have a thoughtful value-creation process and even fewer are truly customer focused. Achieving that starts by employees understanding the meaning of “customer value” The attached viewgraphs (below) address some of customer value’s most basic features. This presentation was developed with Harry Cook when we were on the GM Science and Technology Advisory Board. The applied examples are all due to Harry. Any additional thoughts or comments are greatly appreciated.
Amazon, Facebook, and Google (AFG) and other social networks are collecting information on us to increase the value of the advertisements and products they sell. Some worry in a vague way about how this is reducing our personal privacy. Others increasingly worry that our personal information is being used to manipulate us and to control the flow of information across society.
In a previous post, I described how behavioral economics (specifically Prospect Theory) applies to products and why Steve Jobs’s fanatical dedication to perfection was so unique and valuable for Apple. The same basic ideas from the behavioral sciences apply to other areas, like giving bonuses a bit at a time or why bad news should be confronted all at once. (more…)
Focus on Value Creation
Summary: Today’s innovative performance is generally poor, but it can be greatly improved. Entrepreneurship is the driving force of an innovative economy, but most professionals are value creators, not entrepreneurs. The initial stages of value creation are where much of the failure resides. More effort must be placed on the core concepts and processes of effective value creation, which is the precursor to all major innovations. Value creation is a discipline that can be learned and applied. It is a discipline that all professionals, and all would be entrepreneurs, should master. Doing so would have a large positive impact on America’s growth and the creation of additional meaningful jobs. (more…)
Everywhere I go around the world, people ask me to “explain” the magic of the Valley. You probably know the elements: great universities, billions of dollars of smart money, a comprehensive industrial cluster, a culture of achievement, abundant support facilities, a magnet for smart and diverse professionals, numerous mentors and domain experts, a global perspective, terrific food and other amenities, and great weather and stunning scenery. At the same time, the transportation infrastructure is marginal and government policies and regulations are only tolerable. There is no “affordable” housing. It is not perfect, but it is still the most exciting place for systematically creating innovations that change the world. (more…)