Call It Value Creation
I was in a meeting with a number of people responsible for R&D and innovation funding. We were discussing how industry and university collaborations might be made more successful. Today most agreed, results are poor.
Many of the participants kept on referring to the “Valley of Death.” That is the conceptual Sahara Desert to be crossed on foot to take R&D into the commercial world. It is 3,000 miles across, it is hot and dry, there are no watering holes or maps, bandits are everywhere, and few make it across alive.
Who wants to go on that journey? The Valley of Death was killing our conversation.
If you look on the web there are endless articles about the Valley of Death. Because the metaphor is wrong, many of those articles are wrong too. It is a problem.
Eventually it occurred to me that in my mind there is no Valley of Death. Rather, there is a continuum from R&D to value creation to innovation (commercialization).
To improve our innovative performance, the Valley of Death must go. Let’s call it value creation, because that is what it is. Value creation is the process of taking knowledge, such as R&D, and converting it into a new innovation in the marketplace. In the process new knowledge is created. For example, none of us knew what a smart phone was ten years ago. Now we do. That is a huge amount of new knowledge.
Value creation is a discipline with its own specialized language, processes, and conceptual frameworks. It is also a practice. To become an expert one’s work must be continuously applied, tested, and reviewed in the marketplace. In that sense, it is like music.
To be an expert in music one must learn to read scores, understand scales, and know how to play the instrument. It is also experiential. Only by practicing, playing in groups, and learning from others can one become an artist. Becoming a value creator is similar — there are concepts that must be learned and then practiced to become a master.
Few professionals call either R&D or commercialization a name like the Valley of Death. I suspect that is because people who do R&D feel they know what they are doing (or don’t want to admit it if they don’t). Commercial people feel the same way.
In reality all three activities, R&D, value creation, and launching a new innovation in the marketplace (commercialization) have endless risks. Failure is common and people who stick to the fundamental are rare.
Language matters. Calling something the Valley of Death is an admission that we don’t know how to think about it, never mind execute against it. Calling it value creation demands that we understand what that phrase means and how we can improve. For example, what is the definition of “value” and how do we measure it? How do we “create” faster? We discuss many of these issues in detail in our book, Innovation.
What is missing today is a common language between researchers of different disciplines, value creators, and business professionals. There is only one language that can serve that purpose and it is based on “customer value.”
For industry and university collaborations, experience shows that when these groups share a common language focused on the customer, all are much more successful. Once you think this way then the Valley of Death goes away.
The biggest surprise from this approach is typically for the researchers, who have been taught that these ideas do not apply to them. But they do. Their R&D results greatly improve too.
Bottom line: Don’t be caught dead saying the Valley of Death. It is value creation.
