Value Management: Innovation 2.0

Unlocking Value; Macro value shift

2012-01-04T04:20:00.000-08:00

There are days or moments when what you value shifts dramatically. Perhaps more specifically the priority of value shifts. Today our first child, a son was born, and the possible became the actual.

Welcome Mackenzie. Our lives and our value will never be the same.

I submitted my PhD on 01.12.11: Now to family....

2011-12-20T23:12:00.000-08:00

In the race to submit my PhD or become a father, the PhD won by six weeks. We are due to have our first child on 14.01.12.

My supervisor asked me to write journal articles now. The Academy of Management papers are due 10 Jan, and the 2012 theme is The Informal Economy. The Informal Economy is that part of the economy which is not taxed, not legal, not controlled by the Government, and not included in GDP.

I am thinking about how value might be relevant, and how my new job at the Australian National Data Service (ANDS) might be relevant. ANDS is a Dept of Innovation (Aust) project to encourage researchers to share, find and reuse each others' data. ANDS works with all the Australian Universities, and public sector agencies to encourage data management, data sharing and reuse. Current ANDS funding (about $70 million) is up to June 2013. Our database of shared data collections is at about 40,000.

I am thinking about a paper called: ANDS, Innovation and Value: an Informal analysis.
The idea being that value captures much that is not in GDP, and that ANDS is building value through knowledge and relationship creation, both of which are part of the Informal Economy. The Informal Economy is not just illegal, black market, and third world commerce. The Informal Economy is innovating without promise of revenue, volunteering for social rather than financial benefit, unpaid family work such as parenting, caring and other volunteering. The informal economy that I am interested in is not an illegal black economy but a virtuous black, white or rainbow value economy.

Thus I argue that:
1. we all (or nearly all) participate in the informal value-creating volunteering economy
2. $ are not the only goal of the informal economy, but also value creation.
3. Value drives activity where there are no $ drivers. For instance, artists, musicians, family work, non-profit associations, volunteers and other unpaid work.
4. The informal economy is not all about $, law and tax. It's about value.

Where does value fit in innovation?

2011-10-15T15:15:00.000-07:00

Figure 1 shows the black box of value in the context of innovation theory. Value sits between the innovators creation of an innovation, and the process of diffusion of innovation. I argue consumer value acts as a hurdle to diffusion (see Section 6.3, Proposition 1).

Proposition 1. Value drives consumer action. Consumers adopt new technology when they see value.

Figure 1: What is consumer value? This thesis opens the black box of consumer value.

Complex Value Model

2011-09-18T16:41:00.000-07:00

I have produced a complex value model, indicating all the grounded concepts developed in the thesis. The thesis emphasises a more simple value model in the text.

The simple model abstracts from the complex model, reducing the number of dimensions considered. Value meanings are reduced to a single element, rather than 12 meanings, and Value practices are reduced to a social and physical split. The Telco and Social Value Conversations are combined into Social Practices.

The Simple model emphasises Value at the centre of innovation, and emotion at the centre of value. As always, comments welcome.

Defining Value

2011-08-26T20:14:00.000-07:00

Tim Cook rallies the troops as Steve Jobs steps down as Apple CEO, just as Apple passes Exxon (XOM) as the most valuable company in the world (again). Tim says,

Team:

I am looking forward to the amazing opportunity of serving as CEO of the most innovative company in the world. Joining Apple was the best decision I’ve ever made and it’s been the privilege of a lifetime to work for Apple and Steve for over 13 years. I share Steve’s optimism for Apple’s bright future.

Steve has been an incredible leader and mentor to me, as well as to the entire executive team and our amazing employees. We are really looking forward to Steve’s ongoing guidance and inspiration as our Chairman.

I want you to be confident that Apple is not going to change. I cherish and celebrate Apple’s unique principles and values. Steve built a company and culture that is unlike any other in the world and we are going to stay true to that—it is in our DNA. We are going to continue to make the best products in the world that delight our customers and make our employees incredibly proud of what they do.

I love Apple and I am looking forward to diving into my new role. All of the incredible support from the Board, the executive team and many of you has been inspiring. I am confident our best years lie ahead of us and that together we will continue to make Apple the magical place that it is.

Tim

From: http://mashable.com/2011/08/25/tim-cook-apple-emai/

The underlined passage is about as close to defining value as we are going to get.

Value is "what delights customer and makes employees proud of what they do".

Strategyn gets value

2011-06-22T23:16:00.000-07:00

See recent presentation from Strategyn's Tony Ulwick, as cited in Christensen's The Innovator's Solution. For Value Consulting on these issues, contact me at www.thejoie.com.

Ulwick suggests:

- not listening to the voice of the customer
- customers have 50 to 150 needs per task they are performing. I call these value elements.
- his approach increases new product development success from 17% to 86%. Sign up here to see the research.

See his slides from his recent April webcast below. See his blog post here.

Silence the Voice of the Customer (VOC)

View more presentations from Strategyn.

Who is doing Value Management?

2011-05-26T23:41:00.001-07:00

Three Value Managers came to my attention today:

1. Following the Port Phillip Council : Have your Say page, lead me to Bang the Table, a private group building community engagement websites. Partly driven by Dr Crispin Butteriss PhD New England (Stakeholder engagement in public policy 1997 - 2003)

2. Bang the Table had created an interest group on Linked In (Online Community Engagement), which lead to NCDD.org (no not the North Dallas Chamber of Commerce, but) National Centre for Dialogue and Deliberation, established 2002, and now in 39 countries.

3. Lastly, the Victorian Churchill Club described one of their recent sessions (28 April) as Member Value Management. Collingwood membership manager described Value management processes. See a couple of quotes on the ValueMgmt twitter feed for details.

On a separate note, some Telstra / broadband problem / solution notes:

BAG 2002 Report: Broadband Advisory Group Report to Govt broadband Goals and Vision:
(see also background info at: Intro to FTTH)

Australia should adopt the following national vision for broadband:
"Australia will be a world leader in the availability and effective use of broadband, to deliver enhanced outcomes in health, education, commerce and government and to capture the economic and social benefits of broadband connectivity."

Goals (Section 3)
"2. Australia should adopt the following national goals for broadband:
(a) Broadband should be available to all Australians at fair and reasonable prices."

Encouraging Take-up
"17. The Government, in cooperation with state and territory governments and industry stakeholders, should develop and provide detailed information to key sectors about the benefits of broadband applications, such as educational opportunities, improved health care, business process improvement, productivity gains and better government services."

So far, so good. What's the problem?

The problem comes from Paul Fletcher's (2009) book Wired Brown Land which suggests:

"Telstra was able to suppress the take-up of broadband in Australia for many years…. Telstra said that Australia's low broadband penetration was a symptom of an over-regulated industry.... In fact, Australia's low broadband take-up had a much simpler explanation. Telstra kept prices sky high. Once they fell, take-up rocketed." Fletcher 2009, p.227

Are Telstra doing Value Management? Well yes and no. Telstra were protecting their $8B annual landline revenue. SO Telstra were protecting their SHV (shareholder value), but unfortunately it came at the price of consumer/customer revenue, through delay, and higher prices. This thesis argues consumers adopt new technology when consumers see value, but high prices will delay adoption. Telstra provides evidence of this.

Final Thesis Review presentations

2011-05-17T03:39:00.000-07:00

Title: A consumer value theory of innovation: a grounded theory approach

Find links to the PDF presentations:

Final thesis presentation 2.7Mb

Fourth draft, focussing on results 2.1Mb

http://www.mediafire.com/file/1w6xn386vab49lk/thesisReview2011A.pdf (few pics) 2.5Mb

http://www.mediafire.com/file/i8l5xuxy5jikwh1/thesisReview2011B.pdf (more pics) 4.5Mb

A third briefer simpler version follows:..... here (fewer slides and pics) 2.4Mb

For completeness, older presentations:

To follow: DRUID 2008, HBS 2008, UQBS Colloquium 2008...
Confirmation presentation Mar 2007 0.1Mb, 5 pages.
Nov 2006 - pre-confirmation musing 0.4Mb, 11 pages, B&W
May 2005: Academic methods class 0.1Mb, 2 page, colour
STEPS conference 2004 (Science, Technology and Economic Progress) PhD students 1.2Mb, 9 pages
Prior PhD home page 2004 - 2007

References Draft 4.

Advisory Committee on Measuring Innovation in the 21st Century Economy. [ACIMO] (2008). Innovation Measurement: tracking the state of innovation in the American economy. Viewed 28.02.2008 at: http://www.innovationmetrics.gov/Innovation%20Measurement%2001-08.pdf .
McKinsey & Company. [McKinsey] (2010). National Broadband Network Implementation Study. Viewed 06.05.2010 at: http://data.dbcde.gov.au/nbn/NBN-Implementation-Study-complete-report.pdf
Rogers, E. M. (2003). Diffusion of innovations (5th ed.). New York: Free Press. (Earlier editions in 1962, 1971, 1983, 1995).
Woodruff R., & Flint, D. (2006). Marketing’s Service-Dominant Logic And Customer Value. In R. F. Lusch, & S. L. Vargo (Eds.), The Service Dominant Logic of Marketing: Dialog, Debate, And Directions (pp. 183–195). New York: M.E. Sharpe

References early draft:

Advisory Committee on Measuring Innovation in the 21st Century Economy. [ACIMO] (2008). Innovation Measurement: tracking the state of innovation in the American economy. Viewed 28.02.2008 at: http://www.innovationmetrics.gov/Innovation%20Measurement%2001-08.pdf .
Bass, F. (1969). A new product growth model for consumer durables. Management Science, 15, January, 215-227.
Bijker, W. (1995). Of Bicycles, Bakelites, and Bulbs: Toward a Theory of Sociotechnical Change. Cambridge, Mass.: MIT Press.
Christensen, C. (1997). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston, Mass.: Harvard Business School Press.
Drucker, P. (1999). Management Challenges for the 21st Century. Harper Business: New York, NY.
Fagerburg, J. (2005). Innovation: a guide to the literature, in Fagerburg, J, Mowery DC, & Nelson, RR (eds.) The Oxford Handbook of Innovation, Oxford University Press, Oxford.
Flint, D., Woodruff, R., & Gardial, S. (2002). Exploring the phenomenon of customers' desired value changes in a business to business context. Journal of Marketing, 66, (October) 102-117.
Glaser, B. (1978). Theoretical Sensitivity: Advances in the Methodology of Grounded Theory. Mill Valley CA: Sociology Press.
Glaser, B. (1992). Emergence vs Forcing: Basics of Grounded Theory Analysis. Mill Valley CA: Sociology Press.
Glaser, B. (2001). The Grounded Theory Perspective: Conceptualization Contrasted with Description. Mill Valley CA: Sociology Press.
Glaser, B. & Strauss, A. (1967). The Discovery of Grounded Theory: Strategies for Qualitative Research. New York: Aldine De Gruyter.
Hamel, G. & Prahalad, C.K. (1994). Competing for the Future. Harvard Business School Press: Boston MA.
Holbrook, M. (1996). Customer Value - A framework for analysis and research (Special Session Summary). Advances in Consumer Research, 23, 138-142.
Kim, W. & Mauborgne, R. (1997). Value Innovation : The Strategic Logic of High Growth. Harvard Business Review, 75, 1, 103-112.
Kim, W. & Mauborgne, R. (1999). Strategy, Value Innovation, and the Knowledge Economy. Sloan Management Review, 40, 3, 41-54.
Kim, W. & Mauborgne, R. (2005). Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Boston, MA: Harvard Business School Press.
Moore, G. (1991/2002). Crossing The Chasm : Marketing and Selling High-Tech Products to Mainstream Customers. (Rev. ed.). New York: Harperbusiness Essentials.
McKinsey & Company. [McKinsey] (2010). National Broadband Network Implementation Study. Viewed 06.05.2010 at: http://data.dbcde.gov.au/nbn/NBN-Implementation-Study-complete-report.pdf
Porter, M. (1990). The Competitive Advantage of Nations. Free Press: New York.
Porter, M. & Kramer, M. (2011). Creating Shared Value: How to Reinvent Capitalism and Unleash a Wave of Innovation and Growth. Harvard Business Review, 1, 62-77.
Prahalad, C.K., Ramaswamy, V. (2004). The future of competition: Co-creating unique value with customers. Boston, MA: Harvard Business School Press.
Prahalad, C.K. & Krishnan, M. (2008). The New Age of Innovation: Driving Co-created Value through Global Networks. McGraw-Hill: New York.
Rogers, E. M. (2003). Diffusion of innovations (5th ed.). New York: Free Press. (Earlier editions in 1962, 1971, 1983, 1995).
Schumpeter, J. (1934). The Theory of Economic Development: an Enquiry into Profits, Capital, Credit, Interest and the Business Cycle. Cambridge MA: Harvard University Press.
Woodruff, R. (1997). Customer Value: the next source for competitive advantage. Journal of the Academy of Marketing Science, 25, 2, 139-153.
Woodruff R., & Flint, D. (2006). Marketing’s Service-Dominant Logic And Customer Value. In R. F. Lusch, & S. L. Vargo (Eds.), The Service Dominant Logic of Marketing: Dialog, Debate, And Directions (pp. 183–195). New York: M.E. Sharpe
Zeithaml, V.A. (1988). Consumer perceptions of price, quality and value: a means-end model and synthesis of evidence. Journal of Marketing, 52, (July) 2-22.
Zuboff, S. & Maxmin, J. (2002). The Support Economy: why corporations are failing individuals and the next episode of capitalism. New York: Viking.

Value as a resolution of forces

2011-05-15T01:21:00.000-07:00

Value can be considered the process and outcome of three value concepts (forces), resolving as action. Dynamic tension between and within the concepts drives the process. The currency of the process is emotion and the outcome emotion and action.

Metaphors. I use three metaphors: (1) the infinity symbols, (2) the rose, and (3) the rose window. I use the infinity symbol to represent the dynamic tension within a value concept with the consumer at the centre, the subject of the tension.

The infinity symbol represents dynamic tension between aspects of a value concept focussed on a consumer.

I use the rose as a second metaphor to indicate the multiple forces affecting value. The multiple forces I visualise as multiple overlapping infinity signs (slightly turned), forming an eight petalled rose. I therefore use a rose window (though a flower could be used) to visualise multiple forces acting on the consumer at the centre (the stamen) of the rose. I use four colours to distinguish the forces: red (action), blue (value meanings), green (value practices), and yellow (value conversations). As an aside, the flower metaphor contrasts the petals and the stamen. The petals collect energy (information and emotion) to channel to the consumer (the stamen and the stem).

The three value concepts in the rose are: (1) the value conversation, (2) the value practices and (3) the value meanings.

Dynamic Tension
The value conversation reflects tension between sources of information; telco or social information, external (power) and internal (beauty) information.

Value practices reflect tension in accepting new value information for consideration. Value practices gather or reject new value information in a process of filtering.

Value meanings reflect tension in the importance, weight or value consumers give collected value information. Value Meanings reflect tension in what consumers value.

These three sets of tension are resolved as action. But action is itself a tension between waiting (inaction) and action.

Thus value is four forces, powered by the dynamic tension (emotion), resolved as action.

However, inherent or within this model are two further, if not forces then dimensions. Firstly, value(ing) occurs in relation to a value target of which we have many. Rokeach (1973) for instance says consumers have dozens of values (value meanings), but thousands of attitudes (value targets). Attention is a tension between competing value targets. Secondly, the whole value process also takes place through time. It is currently unclear (at least to me from my data) to what extent value (or attitude) can change spontaneously without new value information. The fading of grief ("time heals all wounds") is one colloquial expression of spontaneous change in value (attitude) over time at consumer level. Over a broader time scale, new value meanings emerge. Examples are equal rights (1960s), and more recently concern about global warming.

I visualise all six forces (calling time and value target forces for ease) as the rose window moving through space and time to a value target.

Conclusion. Thus I see value as the resolution of forces on the consumer, driven by dynamic (emotional) tension, expressed and resolved as action (buying, waiting; even recommending), as consumers navigate their contextual world.

Contrasting Figure 8 from my thesis (below) with the rose window model shows strong similarity. The value conversations are split between internal and external, while the telco and social conversation are merged. Figure 8 shows a strong cyclical nature to show the dynamics, while the rose window model emphasises the centrality of the consumer, with multiple forces acting upon them. Both models have emotion (attitude) as an important central aspect of value.

Figure 8:A value theory of innovation. An emotional theory of value. Value is at the core of innovation. Emotion is at the core of value.p.156

Surprising absences. Absent from this model (of value), and missing from the data are two things. Firstly, consumers are not goal-driven. Secondly, consumers do not talk about decisions in my data. Action arises more spontaneously from accumulated emotional tension.

As an observation, since value is emotional, the value process is significantly individual. Though Collins (1999) cites shared emotion as an important driver and sustainer of group action. For instance, church groups and separated work groups use ritual to bind and motivate group members separated by distance and time. Families and partners are also likely affected by such rituals. Workgroups, religious groups, families and partners are likely to have different levels of goal importance, shared and communicated. Workgroups and churches will have stronger shared goals which bind their groups and give them value. Families and partners have value without goals.

For completeness, the value meanings as a rose window are shown below.

References:
Rokeach, M. (1973). The Nature of Human Values. Free Press: New York.
Collins, R. (1999). The Sociology of Philosophies: A Global Theory of Intellectual Change. Belknap Press: Cambridge, MA.

Defining Value Meanings

2011-02-21T16:14:00.001-08:00

I am working on definitions for the Value Meanings. The meanings are cluster names from value elements mentioned by 3G consumers during the course of their interviews. The definitions are not saturated in a grounded theory sense, but do come from 2000 data points, of which 60% were about value meanings. Meanings are more inclusive (X includes A, B, C) than definitional (X means Y), and include oppositions (X contrasts with Y). Saturation is recommended in future work for emotion as a central concept and driver of value, and need, which seems particularly atomic. The diagram lines are not meaningful, but indicate primary and secondary colours. Connection between value meanings is unsubstantiated, though value elements combine value meanings to form new instances of value. For instance, safety combines duty, power, time, fun, community. Particularly difficult value elements are sexy and cool. Though I tend to think cool is just colloquial for good. Updates on the meanings to follow...

Draft definitions include:

1.Function: benefits as of a tool, something useful, with potential, including accessories, and contrasted with more frivolous use like fun.

2.Price: benefits and costs relating to payments, credit, bonus or free offers, including tax deductions.

3.Time: benefits and costs relating to convenience, quickness or timely service, and contrasted with delay, interruptions or lack of time.

4.Service/reliability: benefits including personalise, solutions, warranty, phone coverage and contrasted with problems.

5.Newness: including not previously known or used, something learned, or of interest, something important, relevant and with potential, and contrasted with the known, past, and the old.

6.Emotion: feeling or state derived from internal, external or social context, distinct from thoughts, including stress, love, surprise, trust, or excitement.

7.Need: including wants, desires, necessity, or necessary evil.

8.Simplicity; valuable benefits including something easy, with clarity, or certainty, lack of doubt or uncertainty.

9.Duty: including parental or familial, contractual commitments, and contrasted with choice, or own interests.

10.Power: includes control, potential, flexible, freedom and unlimited access to functions, while contrasted with limits.

11.Beauty: sensual benefits including aesthetics, colours, size, style, and looks.

12. Connection/community: social benefits of inclusion, including brand, status symbol, and contrasted with privacy.

What is Richard Ferrers up to?!

2011-02-11T20:22:00.000-08:00

Does anyone on planet Earth...apart from Richie himself, actually know what Richie is up to??? In fact...does Richie even know?????

Measuring Innovation in the Fortune 500

2011-02-08T16:12:00.000-08:00

I have been examining movement in the Fortune 500, to identify innovation.

Looking at the Fortune 500 shows several groups of companies, including:

Steady performers:
IBM, Bank of America, Exxon, Microsoft, Boeing

Fast Fallers:
Lehman Brothers, Merrill Lynch, Halliburton, Altria

Fast Risers:
Apple, Amazon, L-3 Comms, CVS, Rite Aid, Murphy Oil

Slow Risers:
Nike

What this graph doesn't show is growth through acquisition. Such acquisitions would show as strong growth, when it is purchased rather than innovated growth. Apple is a standout for its growth, and Amazon seems two years behind. At&T has also grown significantly into the top 10, from the same time the iPhone came to market.

See Data Table.

See Graph below. The Graph shows the changing ranking of companies within the Fortune 500 (measured by revenue), and just some from each type of movement in the Top 200.
(1)Fast growers are diagonal downward lines to the right, while many companies especially big companies are steady.
Nike and Apple start at about the same place in 2006 (around 160) and Nike (in Pink) grows slowly, while Apple (in Orange) grows quickly. (2) Merrill Lynch (in dark blue) drops 100 spots in 2009 before disappearing. Lehman Bros dies while in the Top 50. (3) Amazon catches Google in 2010.

Thesis at a glance: Wordle.net

2011-01-30T15:57:00.001-08:00

Two word pictures of the thesis (wordle.net) text.

Also pictures by chapter....here.

Removing: value, 3G, consumer/s, innovation.

Removing: phone, technology, grounded, theory, meanings...
leaves words describing value meanings, and value in practice. Click to expand picture in new window.

A birthday Newton Ferrers Wordle montage from muchfoolishness

NBN Value Management

2011-01-13T15:58:00.000-08:00

The Australian is reporting that Brunswick, Melbourne residents don't know enough about the NBN to sign up yet.

"In reality, people aren't going to sign up until they know how much this is going to cost them," said Ms Ratnakar, whose association represents 544 businesses on the Sydney Road strip. "Getting together with service providers and mapping out what's going to be available and how much it's going to cost is really at the end of the day going to swing it."

In response, I have created a sample flyer for NBN Brunswick residents to compare NBN prices in Tasmania, to indicate prices in Melbourne. These are subject to change, and not yet available. Yet this information is important to allow residents to decide whether to sign up for the NBN.

Sample flyer below. Revised copy now with Telstra and Internode prices here (109k pdf). Now revised with logo here (240k pdf). Comments appreciated.

Is Cisco UMI (you-me) the NBN killer app?

2010-12-10T16:22:00.000-08:00

CNN has a video story today showing Cisco's Umi 1080P hi-def videoconferencing application that sits on your TV.

(this CNN link might expire, since there is no permalink on the video)

Cost:$600, plus $25 per month
Uses: HDMI in/out
Needs: 3.5 mbps bandwidth (seems low for hidef, but the NBN will mean everyone can use it, including satellite and wireless...)
Needs: unlimited Gbs (sigh.... I am on 4Gb per month... student...)

This could be a killer app for the NBN, if the price was right. I think this price is too high, but if it got down to Apple TV price ($129) and $10 per month, there could be a stampede....

See also the Cisco website: Umi website
This might also be a good way to demo the speed of the NBN. Cisco has demonstration centres around the US: New York, Boston, Dallas, Chicago. Might be fun to have in the city malls where people can interact between cities eg Melb vs Syd, Bris vs Perth, Adel vs Darwin, Newc vs Geel.... just for fun....

Meet Umi

Video on Youtube... too HD to even fit on a blog....(sigh)...

NBN Sensitivity Analysis: Cost Benefit Part II

2010-11-18T22:51:00.000-08:00

I reworked the figures (spreadsheet) in my costs benefit analysis spreadsheet with new assumptions. Four new scenarios show impact of changing assumptions. From low to high takeup adds $10 billion to NPV. But from low to high GDP impact adds $30 billion to NPV. More than 1% growth in GDP then NBN is a no brainer. Less than 0.5% then NBN is too expensive for the benefit it provides. Takeup has much less impact than GDP effect.

See spreadsheet here. Originally posted on Whirlpool NBN forum. Original Cost Benefit Analysis: July 2010 | April 2009.

Assumptions:
1a.Takeup high: Business 90%, Consumer 70%
1b.Takeup low: Business 65%, Consumer 50%
2a.GDP high: 1% impact (to year 15, pro rata to % built)
2b.GDP low: 0.5% impact

Scenarios:
1.High takeup, High GDP: NPV $10 billion
2.Low takeup, High GDP: NPV $nil
3.High takeup, Low GDP: NPV negative $21 billion
4.Low takeup, Low GDP: NPV negative $32 billion

With low takeup but high GDP impact, the NPV of the NBN is around $zero. Therefore, the NBN is positive, when business takeup exceeds 65%, AND consumer takeup exceeds 50% and GDP impact is 1% (per annum pro rata to year 15 from build start).

With high takeup, and 1% GDP growth (high GDP impact), NPV is positive $10.66 billion.

With low takeup (business 65%, consumer 50%) and 0.5% growth (low GDP impact), NPV is negative $32.5 billion.

If GDP growth only reaches 0.5% per annum (to year 15) from NBN, then NPV is negative $21 billion. This is with high takeup (business 90%, consumer 70%).

Therefore impact on GDP has the greater impact on NPV of NBN. From low to high takeup adds $10 billion to NPV. But from low to high GDP impact adds $30 billion to NPV. Sounds like we need to be arguing about how much impact the NBN will have on GDP. More than 1% growth in GDP then NBN is a no brainer. Less than 0.5% then NBN is too expensive for the benefit it provides. Takeup has much less impact than GDP effect.

Research on broadband impact on GDP.

1. Access Economics in their recent report for IBM, suggest 1.5% increase in GDP "within a few years" (p.37) for Transport, E-Health, Water, Electricity

However this is for FTTN (for $10-20 billion investment). Access Economics, The Economic Benefits of Intelligent Technologies, May 2009. Would be interesting to try to back out the costs. Though I don't think the 1.5% includes the cost of the network (p.ii), but depending on the degree of spare capacity in the economy (??jobs impact of building network??).

2. The World Bank considers there is a expectation of 1.2% increase in GDP for every 10% increase in broadband (Qiang 2009 pdf). This cites an earlier Qiang working paper of 2008. See picture above from Qiang 2009.

Australia in contrast has much high speed broadband. But many Australians do not use broadband. The ABS 8153.0 (June 2010) cites 9.6M internet services (3.2M over 8mbps; 8.2M over 500kbps). Of these 9.6M, 4.2M are DSL, 3.45M are wireless 0.8M dialup. Therefore there are at least 1.3M with dialup or slow broadband (less than 500kbps). These numbers relate to accounts rather than persons, so in our house one connection is used by me and my wife. Other houses may share a single connection with a family of five. Work and home connections might count twice. Still with 9M households and 2M businesses, there is still some scope for probably another 20% penetration of broadband from nothing, let alone those households with no computer. Malcolm Turnbull cited this week only 43% of homes with income $40,000 or less have internet.

Overall we have 9M households and 7.0M household broadband connections. But with only 4.3M DSL connections, there must be at least 2.7M wireless broadband connections, maybe iPhones and other 3G phones. At least 2M households don't have wireline broadband. Possibly as many as 4M households. Thus there is plenty of scope on the World Bank numbers for GDP growth in excess of 1%. However, the Cost benefit model needs a 1% GDP rise (about $7B per year) to run for about 8 years (from the end of the NBN build until the model ends at year 15).

The community needs to have a conversation about whether we think 1% growth in GDP is viable under the NBN. The NBN if spent in one year is about 3.5% of GDP. A 1% return increasing GDP is then around 30% return on investment. In these terms, the return seems quite high. Yet I am optimistic. Your comments are as always appreciated.

Value Management for Government

2010-11-09T15:28:00.000-08:00

The Victorian Election is due on 27 November, and I just examined the Victoria Innovation policy (DIIRD). The focus is on businesses and innovation capability, roadmapping and foresighting (p.26), and establishing a new peak Innovation Advisory Forum (VIC DIIRD 2009-12 Corporate Plan). Innovation goals are about increasing innovation capability, such as increasing R&D to 29.3% of Australia's R&D (p.27). Focus is on the big job sectors: Auto, Aviation, Biotech, Energy, Financial Services, ICT, International Education, Tourism.

Victoria has admirable Innovation goals: to be Australia's leading economy - innovative, dynamic and sustainable (DIIRD 2010 Annual Report, p.12), and specific goals including:
150,000 new jobs by 2010, $8 billion infrastructure by 2011, and $35 billion exports by 2015. (All good measureable, actionable, simple, achievable goals).

Value Management suggests a greater focus on consumers and consumer value. My suggestion on the ALP Victoria website Get Involved is a voter facing portal for Victoria Government, myVic.

Title: myVictoria (myVic, myGovt) portal for Voters (an Innovation)

Tags: web 2.0, facebook, "social media", community, "building community", volunteering, "car pooling"

Many voters feel cut off from the Government and not listened to. We are separated often from our neighbours (See Softbank 30 year plan 10Mb pdf). Government is organised to suit their processes rather than voters' needs. Let's use the internet to make a better connection between voters and government.

Goal: every Victorian has a myVictoria webpage by 2013.
Estimated cost: $1 per Victorian operating costs, plus $0.50 per Victorian development.
Tagline: ALP: We Listen, We listen to Victoria

What does myVictoria do?
- share voter problems and likes, including strength (agree, strongly agree, disagree, strongly disagree)
- aggregate community concerns (a Victoria page shows all the problems and likes combined with number of voters, and strength rating on issue)
- share the good as well as the bad
- volunteering? Solve local problems. How can I help? Helping others in your local community (limited to 1-2km) by electoral roll
- car pooling. Get cars off our roads by finding nearby commuters who are going the same way.
- energising communities. Connecting Victoria.
- local problems, local solutions. Cutting costs. For instance, local volunteers to pick up rubbish off the street or beach. Local give advice to where problem can be directed in Government.
- reputation system, tracks volunteering, tracks politician performance (happy, not happy) for MPs, Premier, Govt Departments, Issues
- privacy. Only locals can see your (identified) issues, problems. Within 1-2km. Government and everybody can see aggregate issues (de-identified), by councillor, by electorate, by region, across State.
- donate. Benficiaries of volunteer work can donate to myVic website offsetting costs.

STEPS
- Pilot project with 1000 homes, plus 1000 volunteers (groups of ten in community, over 100 communities). Find functions communities want to use. Test and estimate costs.
- Expand to include more communities. Roll out in line with NBN.
- Can expand to include local and national government. Cost sharing across three levels of government reduce costs.
- Can expand to school children (babyVic).

Benefits:
Labor is the party of Innovation. Labor: we listen. Labor: building communities. Like Facebook for Victoria (based on location you live and connecting with local community). Trending issues. Live real time ongoing feedback from voters. Not just at election. Not just a sample. Everyone has a voice. Cutting costs. Getting volunteer work recognised and organised. Intersects with NBN benefits, and focuses on enabling everyone to participate.

Fairly low cost at $1 per voter per year. Offset by across government contribution. Offset by donations from volunteering.

Risks:
World first, so may be privacy, regulatory and transparency issues. Cost a risk, but offset by pilot. Reputation at risk since project government sponsored. Technology risk if system goes offline.

What's important (and brief) in a (consumer) value model of innovation?

2010-10-17T21:09:00.001-07:00

I express my PhD contribution (to the innovation and consumer value literature) as a list of propositions:

Proposition 1. Value drives consumer action. Consumers adopt new technology when they see good value.

Proposition 1a. Loss of value is a stronger drive to action (problem solving) than value.

Proposition 2. Value (when complex) has multiple, conflicting meanings.

Proposition 3. Consumers express value memories as attitude.

Proposition 3a. Attitude occurs at two value levels; by value meaning and overall.

Proposition 4. Closing and simplicity emerged as the most unusual and unexpected value practice and value meaning.

Proposition 5: Value is driven more by emotion than goals.
As Steve Jobs said "Don't let the noise of other's opinions drown out your own inner voice, heart and intuition. They somehow already know what you truly want to become." Stanford Commencement Address 2005.

My what's important thinking crystallises from the more longwinded post from a few days ago.

If the NBN is the solution, what is the problem?

2010-10-14T21:42:00.000-07:00

I suggest three problems the NBN addresses:
1. High per Gb prices, compared to overseas
2. Capped Gb per month, compared to overseas
3. Price per month measured taking incomes and currency into account (ie affordability)

Also, I sent Minister of Broadband a note referring to my poster on the NBN

Senator Stephen Conroy,
Minister for Broadband, Communications and the Digital Economy
re: How to sell the sizzle of the NBN? .... to non technical Australians....

Dear Sir,

I recently produced this poster for the Melb Uni, IBES (Institute for a Broadband enabled Society) on how to portray the benefits of the NBN in a way that, I believe, is more appropriate (and more oriented) to consumers. The focus of NBN discussion on $43 billion and headline speed (100Mbps, 1Gbps) are all well and good for techies and IT professionals, but don't speak to the needs of more ordinary Australians, such as retirees who use broadband mainly for email, working mothers who manage a household budget, and other non-technical people. The NBN also needs to be sold to (well informed) non-technical people, but with language more in keeping with their interests and concerns. The poster provides a sample of three ordinary Australian and how the NBN will be better value for them.

Headline:
NBN: faster, simpler, cheaper broadband.
Get more…. Do more… on the NBN.

Poster Summary
Why do consumers adopt new technology? What holds them back? How much will they pay? Past innovation theory focuses on early and later adopters, the young and high income earners (Rogers 2003). Value theory suggests consumer goals drive consumer choices (Woodruff 1997). Co-construction of value (Vargo and Lusch 2008) is a new perspective suggesting consumer value drives successful innovation (Kim and Mauborgne 2005). Innovation succeeds when it creates consumer and shareholder value. Innovation fails when it fails to create value.

Conclusion
To sell the sizzle of the NBN, we need to talk about how the NBN creates value for consumers. The focus should become how the NBN is cheaper ($ per GB), faster, and ideally simpler in pricing, choice, and usage. We should forget the $43 billion headline price, and 1 Gbps headline speed and talk in terms consumers understand: price per month.

Poster Image at: here(9Mb)

Blogpost on my PhD blog here.

I am researching how consumers understand value in a new technology, looking at 3G mobile phones.

The focus I recommend for the NBN (price per month) is difficult while the NBN is providing a wholesale only service, but focus could be made on the current Tasmanian NBN retail offerings, especially where they are priced lower than current ADSL2+ pricing. I have a blogpost on this comparison too, I call NBN ValueWatch here .

Kind regards
Richard Ferrers
Innovation and Value analyst
University of Qld

What's important: in a (consumer) value theory of innovation

2010-10-10T15:38:00.000-07:00

A Phd needs an academic contribution. The 'so what' was that research all about. Why was that research worth doing?

This post reprioritises the (consumer) value model. The Value Model focuses on the consumer aspect of Innovation: what do consumers value in a new technology?

What's Important with consumer value:

1. Consumers intimately describe value (meanings and practices) in connection with their actions (buying without waiting; waiting). Consumers' problem solving actions protect their existing value, while value reconfiguring (buying, exploring, comparing) seeks to grow new value. Consumers express their emotional response to value far more than any goals they might have, which are almost completely absent in descriptions of their experience.

2. Loss of value is a stronger drive to action (problem solving) than value.

3. Value actions include value practices: individual - exploring; comparing; filtering/closing; social - observing; inquiring; recommending; value consequences - buying; using; waiting.

4. Loss of Value actions (problem solving) include: seeking seller (innovator, telco) assistance; seeking alternatives; closing; doing nothing.

5. Pre purchase Value meanings include: connecting; bargain hunting; novelty; power, beauty, duty. Post purchase Value meanings include: service, reliability, simplicity. Underlying Value meanings include: function, need, emotion and time.

6. Consumers express Value memories as attitude; "brilliant", "fabulous", "amazed", "fantastic"; "happy", "better", "good", "prefer"; "problems", "don't want", "annoy", "dislike"; "total crap", "pissed off", "shits me", "totally unsatisfied". Attitude is positive or negative, strong or weak. Attitudes attach to (value meanings in and overall to) a value object. Simple valuing, where one thing is better than another in all aspects, is rational. Where one thing is compared to another thing; the first better in some ways, the second better in other ways, then valuing is complex.

7. Value meanings (and their creation) interact with and reconstruct Value practices (collecting and sorting value information). The interaction makes value dynamic, constructionist, complex (multi-meanings) and paradoxical (different meanings pull us to different actions).

8. Valuing takes place as a series of value conversations: social, individual and telco (innovator, promoter, contextual), so value is socially constructed and experiential.

9. Valuing continues pre and post purchase, so value is iterative and dynamic. I call this the Value phases.

Limits:
The Value Model is based on interviews of consumers about their 3G mobile phones. I asked consumers:
-how did you come to have your 3G mobile phone? how do you find it now you have got it?
-is there anything you would change? how do you find the telco?
-what does your 3G mobile phone mean to you?
The grounded theory methodology assumes a world in constant motion, where consumers' actions are based on the meanings they make out of their experiences in the world. This type of research is called interpretive, as I interpret the meanings consumers make, and as such is not generalisable in the way statistical research is.

The Value Model is complex but close to and grounded in consumer experience with 3G mobile phones.

Comparing:
The Value Model has been compared to the major innovation literature theories of technology adoption (diffusion of innovation) and major consumer value literature (see below)

Updated NBN Pricing: iiNet breaks $1/Gb barrier

2010-10-05T23:57:00.001-07:00

Value Watch (Sept 2010)

Headline: iiNet, in new pricing, breaks the $1 per Gb barrier on $60 plan and above... iiNet substantially lowers its NBN pricing with September price release, and until June 2011, provides speed at fastest rate. iiNet leads lowest NBN pricing, below Exetel's $2/Gb pricing towards $0.20 per Gb ($110/mth), and $0.60 per Gb ($60 /
mth).

See Value Watch here.

The Overview Model: towards a (consumer) value theory of innovation

2010-09-30T19:01:00.000-07:00

An overview model, linking the grounded theory concepts into one overview construct. The Chapter 7 draft is available as pdf (9.5Mb; here). Innovation in this thesis is defined as "something new (novelty, a value meaning) which adds value" (consistent with Schumpeter 1934, Drucker 1999, 2007, Porter 1999, Vargo and Lusch 2008). To create value, innovators need to understand what value is to consumers and how value works (the processes and practices of value) for the benefit of consumers. Thus value is addressed always and only from the consumer perspective. All references to value are to consumer value, rather than shareholder value. The top diagram shows the value structure from simple beginnings.

Key aspects of (Consumer) Value:

Value structure analysed through several dimensions: as three value conversations (individual, social and telco); three phases (pre purchase, post purchase, and consequences of value); and value interactions (between value meaning, value practices and context).
Valuing continues pre and post purchase (iterative, dynamic).

Value meanings, Value practices (12 each) interact and reconstruct one another (dynamic, constructionist, complex, paradoxical).

Social, Individual and telco practices (socially constructed, experiential).

Value stored as attitude (significantly emotional), so valuing largely not based on rational goals (Woodruff 1997) and decisions.

Model is not generalisable, since interpretive (grounded theory; derived from consumer experience).

Loss of value stronger driver to action than value (problem solving).

Model is too complex but close to and grounded in consumer experience with 3G mobile phones. Need several layers to explain model.

Model combines and compared to elements of innovation models; Bass (1969) individual, social practices, Bijker (1995) problem solving, Rogers (2003) linear adoption, Christensen (1997) adoption dynamics, Ryan and Gross (1943) knowledge intensive and social. Value Model built to examine, and analyse Kim and Mauborgne's (2005) Value Innovation; which hypothesises adoption when leap in value.

Model value meanings tested against consumer value literature; fruit drinks (Zeithaml 1988), auto business to business (Flint, Woodruff and Gardial 2002), value typologies (Richins 1995, Holbrook 1996, Woodruff 1997)

This chapter has presented a value model of innovation, developed from the grounded theory practices in this thesis. The model is complex but offers a dynamic, subjective, contextual, and interpretive view of how consumers (at least in a 3G mobile phone context) understand value in a new technology. In the next chapter, I conclude and consider limitations, recommendations and further work to extend and improve the value model.

Comments welcome...!

Layer 1: Value structure:

Three value conversations (individual, social and telco)

Three value phases (pre purchase, post purchase, consequences of value)

Layer 2: Value Practices:

Pre: Post: Consequences:

Social: Individual: Telco:

Layer 3: Value Meanings:

Pre: Post: Underlying

How to sell the sizzle of the NBN?

2010-09-06T18:34:00.000-07:00

Proposed Poster for IBES Symposium 21 Sept,
(Institute for a Broadband Enabled Society, University of Melbourne)

NBN: faster, simpler, cheaper broadband.
Get more…. Do more… on the NBN.

What is the NBN? Liberal Coalition view
Final Poster a4 print (1Mb) | a1 print (9Mb) | Draft (1.2Mb)| Value Model (170k)

Background

Why do consumers adopt new technology? What holds them back? How much will they pay? Past innovation theory focuses on early and later adopters, the young and high income earners (Rogers 2003). Value theory suggests consumer goals drive consumer choices (Woodruff 1997). Co-construction of value (Vargo and Lusch 2008) is a new perspective suggesting consumer value drives successful innovation (Kim and Mauborgne 2005). Innovation succeeds when it creates consumer and shareholder value. Innovation fails when it fails to create value.

Aim

This project aims to understand how consumers understand value in a new technology. Using grounded theory, I am seeking how consumers differ in their needs rather than what they have in common. Understanding value dynamics and building a theory that explains how value shifts over time and why is a focus.

Technology Findings

Approach: 3G mobile broadband is the site for this research as a proxy for understanding the slower moving broadband sector. I interviewed consumers and telecoms analysts to discover how the consumers came to have a 3G mobile phone, what their experience was, and what if anything they would change about their experience. Telecoms analysts were interviewed, since the telcos were reticent to particiate. The analysts described how the 3G telcos were going to make a return from their 3G investment, who they were targetting and how they were going o capture consumers and revenue in the marketplace. 3G telco annual reports and brochures were also sources of telco intentions, to contrast with consumers.

Results: Consumers assess value in new technology, such as 3G mobile broadband, through a number of processes (exploring, comparing, recommending) and by aggregating competing value meanings, such as novelty, beauty, power, simplicity, service, reliability against price. Valuing takes place both before and after purchase, and positive value outcomes are important for ongoing social recommending. Bargain hunting is an important driver of new technology adoption. Consumer love bargains, because bargains are gains in value.

Consumers avoid (filtering) low value messages, and reject uninteresting technology approaches (closing). The NBN must cut through these value construction processes to engage consumers. Social construction value construction processes are important (observing, inquiring, recommending). Therefore, IBES should set up connected demonstration kiosks (in cinemas, libraries and the NGV) to show consumers what NBN performance is like. Video services, and play is a key to consumers getting the message that NBN is good value, but pricing is critical too.

Conclusion

To sell the sizzle of the NBN, we need to talk about how the NBN creates value for consumers. The focus should become how the NBN is cheaper ($ per GB), faster, and ideally simpler in pricing, choice, and usage. We should forget the $43 billion headline price, and 1 Gbps headline speed and talk in terms consumers understand: price per month.
NBN: Do more, Get more…. On the NBN. Faster, cheaper, simpler. Easy…!

Poster contains three Use Cases, with image to follow....

Ten things I would do with 1Gbps NBN...

2010-08-11T21:37:00.000-07:00

NBN (National Broadband Network) CEO Quigley announces Gb network test successful, today. Given unlimited download (as proposed by the McKinsey NBN implementation advice, what would I use GB NBN for?

* - possible with my internet now

** - not possible now

43 yo Phd student
skype my nephew 2000km away in HD**
lecture my innovation class from rural town**
watch HD Stanford/Harvard webcasts and interact**
talk to the doctor without travel*
watch Aegean sunset in HD**
interview for job 1000km away from home**
Jam with sister in Germany, she on violin, me on trumpet**
watch my nephews school play live**
give English lesson with an Asian English learner*
watch webcast of NBN AIIA lunch talk*
My internet: 4Gb 3G VirginBroadband at 500k inc local/std calls $60/mth

80 yo father
skype my 2000km away son*
talk to doctor online*
watch Andre Rieu concert live*
borrow library books*
record video memoirs and store online**
watch Parliament*
chat to overseas daughter (skype)*
browse family photos online*
train young lawyers*
keep an eye on Arsenal football games live*
My internet: 2Gb ADSL2 $30/mth

What is not possible now is to do these things all at once, or within our download limits.

Comparing VM with the literature

2010-08-09T19:16:00.000-07:00

In June 2008, I wrote a results paper for the DRUID conference at Copenhagen Business School. An earlier version of the paper compared Value Management with the innovation and consumer value literature.

Innovation lit compared:

Christensen (1997) The innovator's dilemma

Bass (1969) A new product growth model for consumer durables, Management Science

Ryan and Gross (1943) The diffusion of hybrid seed corn

Bijker (1995) Of bicycles, bakelites and bulbs: toward a theory of sociotechnical change

Rogers (1962, 2003) Diffusion of innovations

Consumer value lit compared:

Holbrook (1996) Customer value ACR

Zeithaml (1988) Consumer perceptions of price, quality and value. Journal of Marketing

Woodruff (1997) Customer value: the next source of competitive advantage. JAMS

Flint, Woodruff and Gardial (2002) Eploring the phenomenon of customers' desired value change. Journal of Marketing

Not included here, ut to include in thesis: Richins 1994 Valuing things. JCR

Pdf 24 pages of comparison: http://depositfiles.com/files/rbhxe5tn9
For your reading pleasure, and any comments welcome. This is a draft. See final DRUID paper here.

Resistance to innovation: a value perspective

2010-07-11T17:00:00.000-07:00

The connecting value that holds society together resists the novelty seeking value of explorers. A dynamic tension exists between these two social forces; to change and to remain, which is destabilised by innovation and entrepreneur's effort. A community, society, club, association or family is an aggregation of community shared values. These values are ongoing connections and connecting. Novelty emphasises and values newness, while community (resistance) emphasises shared ongoing practices that constitute the identity of the community.

From the perspective of the Innovator, shared ongoing community practices (tradition) look like resistance. From the perspective of the Community, novelty (change, innovation) looks like distraction from ongoing community constituting practices. Community resists Innovation to the extent the change disrupts community identity. Rogers compatibility factor of speed of adoption captures this idea. Innovation unravels Community by changing constituting practices.

Thus innovation and resistance are two alternate value perspectives, valuing the new, and the known, those practices that constitute the community.

---
Innovation Poster Quote: "Imagination is more important than knowledge". Albert Einstein Quote $24.70 at M100 Plus Posters.

Innovation: for profit or value?

2010-07-11T16:16:00.001-07:00

A new results chapter, brings me to further reflect on what innovation is? My review of the innovation literature, and finding recent exponents of the two perspectives encourages me to document the difference I found, and my argument of its impact.

Supranormal profits are the reward for successful innovation (Nelson and Winter 1982*, p.409).

Innovation is the successful commercial exploitation of new ideas… The eventual aim of [innovation] is the delivery of value and the process of commercialisation – that is obtaining returns from innovation investments – is a central element of MTI (management of technological innovation). (Dodgson, Gann and Salter 2008*, p.4).

[Managers] confuse novelty with innovation. The test of an innovation is that it creates value. A novelty only creates amusement. Managements decide to innovate for no other reason than they are bored doing the same thing or making the same product day in and day out. The test of an innovation – as is also the test of quality – is not ‘Do we like it?’ It is: ‘Do customers want it and will they pay for it?’ (Drucker 1999, p.85).

Two perspectives contest what innovation means. Is innovation profit oriented (Dogson et al 2008), or is innovation consumer and value oriented (Drucker 1999)? This chapter examines value from a consumer’s perspective and seeks to understand innovation through understanding consumer value. Management simplifying of innovation theory to a profit focus has reoriented innovation away from value creation. A single word dropped has caused the problem. The strategic management catch cry is “innovate or die” (Dess, Lumpkin and Eisner 2006, p.400) because supranormal profits are the reward of the innovator. By dropping ‘successful’ from the Nelson and Winter quote (see above), the need for value creation disappears. Innovation without a requirement of success, becomes novelty, and results in definitions in Strategic Management such as Innovation involves introducing or changing to something new (Dess et al 2006, p.397). They go on, saying Innovation is essential to sustaining competitive advantage (p.400). Now, anything ‘new’ will lead to sustained competitive advantage, and value has been lost in the wilderness. Such slight simplifying of what innovation is, by removing value creation as a focus, makes innovation easier because consumer’s input is no longer essential. Consumer needs, the focus of value, are no longer relevant, since value creation is no longer required. Yet management is mystified when such innovations fail, blaming the resistance of consumers (rather than their poor understanding of what consumers want or need). This thesis seeks to put value back in the centre of our understanding of what innovation is. Better understanding value, will help management to better understand innovation. Innovation becomes ‘something new that creates value’. <image source>

---

All quotes:

A cynic knows the price of everything and the value of nothing (Oscar Wilde in Green 2009).

Supranormal profits are the reward for successful innovation (Nelson and Winter 1982*, p.409).

Profit is not the explanation, cause or rationale of business behaviour and business decisions, but rather the test of their validity (Drucker in Green 2009).

Innovation is the successful commercial exploitation of new ideas… monopoly power is useful in providing incentives to technological research (Schumpeterian rent). (Dodgson, Gann and Salter 2008*, p.4, 9)

The eventual aim of MTI is the delivery of value and the process of commercialisation – that is obtaining returns from innovation investments – is a central element of MTI (management of technological innovation) (Dodgson et al 2008*, p.4).

Innovation is the search for and exploitation of new opportunities for satisfying human wants and needs… Entrepreneurship create[s] a new market and a new customer… Customers only pay for what is of use to them and gives them value. Nothing else constitutes quality. (Drucker 2007, p13, 20, 206).

[Managers] confuse novelty with innovation. The test of an innovation is that it creates value. A novelty only creates amusement. Managements decide to innovate for no other reason than they are bored doing the same thing or making the same product day in and day out. The test of an innovation – as is also the test of quality – is not ‘Do we like it?’ It is: ‘Do customers want it and will they pay for it?’ (Drucker 1999, p.85).

The starting point [of management] has to be what customers consider value (Drucker 1999, p.29).

References:
Dess, G., Lumpkin, G., & Eisner, A. (2006). Strategic Management: text and cases. Mc-Graw Hill Irwin: New York, NY.

Dodgson, M., Gann, D., & Salter, A. (2008). The Management of Technological Innovation: Strategy and Practice. Oxford: Oxford University Press.

Drucker, P. (1999). Management challenges for the 21st Century. Harper Business: New York, NY.

Drucker, P. (2007). Innovation and Entrepreneurshio: practices and principles. Elsevier: Oxford.

Green, S. (2009). Good Value: reflections on money, morality and an uncertain world. Allen Lane: London

Green, S. (2009). Good value in Banking. Available online at: http://www.hsbc.com/1/PA_1_1_S5/content/assets/newsroom/090908_speech_frankfurt.pdf

My Cost Benefit Analysis on the NBN

2010-07-05T19:38:00.001-07:00

The Senate report ( process here, final report here, pdf (327k) here) on the viability of the NBN asked for a cost benefit analysis. Several have been done already, including:

* Ergas and Robson (2009) here, found $13 - 20 billion loss, based on all revenue generated from usage fees (reported here, pdf here)

* Gans (2009), found overall social benefits, using a month consumer payments and surplus analysis here, and pdf here.

* My previous attempt on this blog (Apr 2009), which suggested an operating shortfall of $40 million per month: available here.

I have updated my Cost benefit analysis of the NBN and attach it for your information (here). Given the recent Senate Report calling for a cost benefit analysis, and media talk, I thought I would have a go at putting one together. About three hours work.

I found that to achieve a positive NPV, the NBN needs to add between 0.5 and 1.0% to GDP per annum. Approx $7 billion per annum, proportional to % build complete from network 50% complete. I add NPV for NBN Co, including projected revenue, depreciation, operating costs, but no interest.

This model assumes, funding/interest at 5%, consumer takeup maximum 70%, corporate takeup maximum 90% at year 8, pro rata over the course of the build, with accelerating takeup as the build passes 50% complete.

In the model I assume that the Federal Government pays interest on $43 billion invested at 5%. That Telstra loses 50% of its value over the network build (about $20 billion). That NBN Co earns profits, which pay down the $43 billion NBN investment, and NBN Operating expenses of 20% of depreciation (about $430 milllion after build). Depreciation straight line at 5% per annum.

Future adjustments to model could include: grossing Telstra loss up to future value (adds about $10 billion, and reduces NPV by $7 billion), adding other telco losses, eg Optus, AAPT, shaping GDP gains from high in mid term, and dropping over the longer term.

The spreadsheet allows all these variables to be manipulated and show the impact on NBN and National NPV. I look at cashflows for years 1-15, and discount at 5%, including debt outstanding at that point. If you have any questions about the model or would like to discuss it, please let me know.

NBN Early Pricing analysis - Value WATCH (June 2010)

2010-06-21T15:44:00.001-07:00

I have analysed the early NBN pricing between Exetel, iiNet and Primus using my Value Watch methodology.

The McKinsey Report (https://wiki.dbcde.gov.au/dashboard.action) advises pricing for penetration - see Exetel Tas NBN prices http://www.exetel.com.au/residential-fibre-pricing-tasmania.php starting at $0 plus $2/Gb for basic (25mbps) to $50 plus $0.75/Gb for fast (100mbps). Mckinsey advise wholesale price around $30 for entry level broadband (25mbps; unlimited Gb) plus $5 for unlimited calls. Equates to about $55-60 retail entry level. But three other ISPs are pricing NBN like a premium service: iiNet, Primus $50 for 5Gb; $90 for 15 Gb. I know who I would prefer. I will attach my comparison of the initial NBN prices below.

See graphical comparison here.... http://www.mediafire.com/file/wdyj0qkzmbe/NBNvalueWatchJun2010.pdf...

Comments welcome below. The Value Watch compares Price per month and Price per Gb. Greater value is when both these indicators are minimised. Exetel shows a clear value lead over iiNet and Primus in these early stages.

Update: Exetel revised their prices up from $1.50 / Gb to $2/Gb and monthly access down from $10 to $0. Faster plans had no changes. Will have to update analysis.... Revised graphs with updated Exetel prices here - http://www.mediafire.com/file/htfdqy3m4j2/nbnJune2010b.pdf

iPad ergonomics poor? How about a lap stand?

2010-05-29T21:44:00.000-07:00

A recent youtube video shows a 99 year old getting her first computer, but the ergonomics look bad, because she is bent so far over her lap to use the screen.

Concerned that iPad users might be hurting their back, by using the iPad on their lap, we are prototyping a Lap Stand. We want your feedback. Please treat this prototype as work in progress, and durability has not been proven.

When innovation is bad...?!?!

2010-05-11T21:14:00.000-07:00

I have been invited to attend the Hanken School of Economics, Helsinki Finland to discuss the downsides of innovation.

A workshop called "Beyond the pro-innovation bias" is being run by Prof Karl-Erik Sveiby, in May 2010. Profs Jan Fagerburg, and Nancy Harding are making keynotes. The format is interesting because of the small group involved, the focus on brainstorming and problem solving, and the output of publishing the results as a book or special issue. UQ however prefers funding when a paper is presented at the gathering.

"The objective of the workshop is to bring together a group of 15-30 innovation researchers to explore alternatives to mainstream innovation research by addressing how unintended and undesirable consequences of innovation could be brought into the research agenda of the innovation research field. We want to go beyond the 'pro-innovation bias'." - Hanken website

My suggestion of a new term to indicate loss of value - 'denovation' (Jan 09) caught Prof Sveiby's interest and led to the invitation.

If innovation is something new, the result can be good or bad. If innovation is something new that adds value (as I argue in my thesis), then what is something new, which decreases value - I call this denovation. The trick is to work out if your action creates or destroys value or both. For instance, a price rise decreases value unless there is compensating change in product features.

Firms raise prices and think there is no effect on customers. I argue customers notice and remember, and include such information in ongoing value assessments. Price rises means customers lose value, and while customer response may not be immediate in action, an immediate response to the shift in value is a shift in attitude; increasing negative or decreasing positive sentiment towards the firm. Hence the need for ongoing measurement of customer attitudes towards firms as a measure of ongoing value provided.

Revising results - AJETS vs now

2010-04-15T17:20:00.000-07:00

As my supervisors ask me to add more data into my results chapter, I look again at the first draft of results from Oct 2007.

I attach the latest draft, and the Oct 2007 draft for your comparison.

The first draft was written, but not submitted to the AJETS - Australian Journal of Emerging Technologies and Society.

Here is the AJETS file Oct 2007. ( attached 459k pdf)

Here is the latest draft Results file April 2010. (attached 1.5M pdf)

Institute of Value Management

2010-04-14T18:38:00.000-07:00

I have been discussing my thesis with some Value practitioners from the UK. They raise some interesting questions which I will deal with shortly, when I find the time. I have posted them here to consider, and to share.

Richard

Good to find someone being so rigorous. I'm intrigued by your findings and the way that you present them, as far as I've been able to understand them from your blog. The outlines for HBR make good sense and it is time they paid proper attention to customer value as opposed to their usual cursory nod. I hope they take them.

I have few questions and observations which I hope might stimulate a dialogue:

1.I wondered about the impact of experience with similar or competing products - or from product trials - is that embodied in attitude in your model or am I looking in the wrong place?

2.In my non-rigorous work on this I have found it useful to separate strictly social (family and peer group interactions) from network enablement (community, society) as very different motivations seem to apply. Do you make such a distinction?

3.Further I have found that fit with complementary products and services is a strong driver. I tend to refer to systemic values when exploring these issues. Your research does not seem to have thrown up this concern (or am I missing something?)

4.You identify context, or relevance, as an influence but not narrative integrity (by which I mean the story I have about myself - does this product fit with my self-perception? will it help me build the story of me?) Again anecdotally I have found this to be significant and I usually try to explore this dimension with clients. Do you accommodate such a concept?

Finally I have found it useful to categorise items like necessary tasks and complexity as costs (usually in terms such as effort and cognitive load)/. This allows me to place them on the cost side of the value equation along with price, social exposure, status risk etc. I'm not clear how you envisage the benefit / cost trade-off working. Or is this too analytical for your model?

As a further aid to my understanding I wondered how your values compare with the set of universal values identified by Schwartz and summarised in the rather fuzzy image I attach.

Great work! I'd love to read the thesis.

Best wishes
D@IVM

Earlier comment from KS@IVM:

The origins of the IVM lie in the promotion of value analysis/value
engineering as originally developed by L.Miles. VM has however developed
from those origins where the focus was on manufactured products to encompass
all types of "products" and organisations. It is argued that QFD,
benchmarking and lean are all developments from VM approaches. More recently
VM has encompassed soft systems methodology and has considerable affinity
with systems thinking and concepts of the learning organisation. It is not
directly associated with earned value. I assume from your reference that
you are referring to what in the UK we call earned value analysis (EVA)which
looks at the ratio between percentage costs incurred and percentage
activities complete; as opposed to economic value added(also EVA!)as
proposed by Stern. I would argue that the latter involves a narrow
definition of value, while the former is only related to value if planned
activities can be shown to be relevant to achieving organisational
objectives whose achievement at an organisational level underpin value.

There is in Australia an equivalent organisation to the IVM
(www.value-management.com.au), and there is an Australian standard on VM.
The leading VM academic in Australia is Roy Barton(RTBarton@aol.com).

Institute of Value Management

1-3 Birdcage Walk | London | SW1H 9JJ

Tel/Mobile: 07919 470566

Our mission is to enable our members to develop and promote the professional
practice of managing sustainable value to secure and ensure economic and
social wellbeing for organisations and citizens in the UK and
internationally.

Find out more at ivm.org.uk

Further academic discussion of Value Management from this perspective can be found at:

Managing value as a management style for projects
International Journal of Project Management, Volume 25, Issue 2, Pages 107-114
S. Male, J. Kelly, M. Gronqvist, D. Graham

The Economist debates Innovation

2010-03-26T00:11:00.000-07:00

The Economist is hosting a debate on the proposition:

that innovation works best when Government does least.

See here - http://www.economist.com/debate/overview/168/Innovation.

FCC tests broadband barriers in America

2010-02-25T16:39:00.000-08:00

CNN reports 'Cost is a major barrier to broadband adoption'.

The FCC conducted a survey (pdf) of 5000 landline and mobile users "in an effort to understand the state of broadband adoption and use, as well as barriers facing those who do not have broadband at home". The report found 67% of American households have broadband, with only 6% have dialup. Interestingly 13% of households earning over $75,000 do not have broadband, suggesting greatest internet problems were: pornography and other inappropriate material, and identity theft.

FCC define broadband as 200k up or down. See more at FCC Broadband home here.

I have found cost or price to be a universal value dimension, but one of twelve. Other universal value dimensions include function, service/reliability and time. Other value dimensions include beauty, emotion, simplicity, newness, duty, power, community and need.

Tipping Point found in Value model: Attitude counts

2010-02-01T18:14:00.000-08:00

It's been a big january with the target rewrite. With the tight deadline, I had to dramatically shrink and focus the Ch3 results, with surprising result.

I focussed on two things.
1. The properties of Value.
2. A single value connection between Value and Attitude.
This connection is the simplest two concept model of value. I excluded the other six value concepts (social network, consumer strategy, innovator strategy, value assessment, action and context) and will include this as a complex value model in an Appendix.

I analysed the Value attitude connection through three propositions.
P1: Value is stored as attitude
P2: Value is stored as a single result.
P2a: Value is stored as a multiple result.
P3: Value shifts with new relevant value information. ie Attitude endures
P3a: Attitude degrades over time.

This has meant some reanalysis (of interviews, and other tech consumer comments), and complete (part 3.2) rewrite, which is almost but not quite done. ANother few days.

Significant new results:
1. Attitude exists at two levels: general, and specific (or sub-attitude). The latter linked to value dimensions, and the former not.
2. Attitude is mainly a single result ie general attitude, but some people have a multiple general attitudes - simultaneous opposing general attitude eg 'necessary evil'
3. The connection between sub and general attitude is the key to the 'tipping point'. General attitude tips or flips between positive and negative, while multiple sub-attitudes are possible against multiple value dimensions ie happy with price, unhappy with reliability, happy with service, unhappy with convenience etc etc etc overall either happy or not. Have excluded from thesis scope the link between sub and overall attitude. Think this is a whole thesis on its own.

Prefer not to have to cover attitude literature ie whole new lit review but may have to, subject to your feedback.
Att lit eg cognitive dissonance Festinger 1957, theory of reasoned action (multi attribute ie multiple attitudes) Fishbein and Ajzen 1975, balance theory Heider 1946, congruity theory Osgood, Suci and Tannenbaum 1957. From Lawson, Tidwell et al Consumer Behaviour in Aust/NZ 1996.

4. General attitude would include tacit knowledge, while sub-attitude is explicit knowledge. if space/time would like to link to Polanyi. Perhaps in conclusion.
5. Attitude endures over time. No disconfirming evidence found. Though hard to prove a negative ie Popper.

I am conscious of my supervisor's need for quality, and my wife is cracking the time whip. I am in the middle.

I hope that now I have sufficient results for a significant contribution, while being simple (and tight) enough for the examiners to follow. And it will all fit in 80k words.

Revised Value Models: Properties and relationships

2009-09-30T00:14:00.000-07:00

Value Model: Concepts / Properties:
(percentages represent how often the concept was found in consumers' experiences with 3G mobile phones; N=75,000 words).

Value Model: Concepts / Relationships:

Comments gratefully accepted....

Community vs Function: value dimensions contesting

2009-09-29T23:14:00.001-07:00

'Monks', Apple loving fans, put off a Windows user, who prefers an inferior product 'I know Windows is awful' to being part of their community.

Good value leads to recommendations, but recommendations steal time and push one community's perspective onto outsiders, who may prefer to be outside, not inside that community.

Guardian writer, Charlie Brooker, explores his feelings towards the Mac evangelists, and towards Windows here. And covered on Fortune's Apple 2.0 blog here. Emotions sometimes trumps reason, so better products do not always make better sales (in the short term at least).

Simplicity: a value dimension

2009-09-27T17:27:00.000-07:00

Da Vinci, 500 years ago said,
"Simplicity is the ultimate sophistication."

Simplicity is one of twelve value dimensions.

Who says value can't sell t-shirts. Buy t-shirt at link above ($18). Is the t-shirt good value? Did the price change your attitude? Stronger/weaker, positive/negative?

Attitude has two dimensions - strong/weak, positive/negative. New information creates a value assessment which shifts attitude. Attitude also endures, until new relevant information comes along.

Value model: 2D or 3D?

2009-09-25T19:46:00.000-07:00

Which number of dimensions do you prefer? The value concepts have been scaled in 2D so the relative size of circles relates to the relative frequency of the value concepts in the transcript data (first 2000 data points). In the 3D graph, the size of the spheres relative to each other shows relative frequency of concepts to each other, and to the unit cube (which shows 100%). Which do you prefer? I think the 2D version is simpler but less evocative. The 2D version shows a greater disparity between the central value concept and the lesser non-core concepts. Both are accurate in their own degree of dimensions.

Youtube monetises free value

2009-09-24T19:30:00.000-07:00

When the videos are free, but you can download the tune from iTunes, it looks like a win win.

Now you only have to find some music you like.....

France searches for value replacement for GDP

2009-09-18T19:04:00.000-07:00

The French Government has released a report on how to improve GDP to include wider social benefit, which I argue is a need to measure value. The report can be found here (pdf 3.2Mb), and the project home here. The Project Group is called “The Commission on the Measurement of Economic Performance and Social Progress”.

See the Economist article here. My comment on the Economist article - a value summary is below.

The Economist says "GDP was designed to measure only the value of goods and services produced in a country, and it does not even do that precisely". The problem with GDP is that value measured is only monetary, and does not include subjective value measures. Measuring innovation faces similar challenges, because an Innovation adds value - monetary and non-monetary. And value includes as your commenter's note: time, service, and your article mentions, protecting the environment, happiness. I am currently writing my PhD on Value and Innovation, from a subjective perspective, and note that defining value as a problem goes back to Aristotle. Aristotle states the problem as how does a builder and shoe maker come to an agreement on a fair exchange, given they are so different. Yet we do. We act on value all the time. Every time we choose something to buy, or give our support to, we are making value decisions. Value is complex, multi-dimensional, personal, contextual, dynamic, social and personal. No wonder a simple measure is not yet at hand (especially if Aristotle couldn't come up with one). Price and GDP are an estimate of value, but I look forward to a time when we solve our value measurement problem. I hope to write a book on the history of value, and examine how our ideas about value changed through the ages, and why are we interested in value now. See my blog on value at http://www.valman.blogspot.com for my findings to date, including my twelve dimensions of value, and value model of consumer behaviour.

Apple: 'great' 'amazing' - but variety spices life

2009-09-15T18:13:00.000-07:00

Some commentators of the latest Apple iPod presentation noted too much repetition of their strongly positive value language:

- easy, great, amazing, incredible.

But one clever character edited their video and left just these adjectives in. Pretty entertaining.

Amazing is one thing, but we value variety (newness) as well as amazing.
Apple will likely have to rescript their presentations now, or become the butt of this joke.

500 Human Values

2009-09-13T21:04:00.000-07:00

Humanity Quest has a portal of 500 Human Values. I reformatted the list into columns so you can read them more easily here - What do you value?

A few examples from S: shyness, sarcasm, sin, sincerity, sadness, snobbery.

And some great other models of visualing sustainability here. I guess there are about 100-150 models on this page. Wow!

The Value of Information

2009-09-01T00:24:00.000-07:00

Interesting link from publishers - http://informationarchitects.jp/the-value-of-information/

They identify five dimensions of information value:
- monetary
- artistic
- academic/scientific
- practical eg maps, manuals
- entertaining

therefore you should be prepared to pay.....?

Yes, information has value, but it depends on the context and the individual, need etc etc etc.
Interesting though....

Worse is better, Less is more

2009-08-31T18:58:00.001-07:00

1.The Economist (When less is more 14.08.09) and Wired Magazine (The good enough revolution: when cheap and simple is just fine 24.08.09) have recent articles showing consumers preferring less to more - where less means less function and lower price, rather than high price and high quality.

Wired cites MP3, Skype, Google text ads and Flip handycams as examples.

The Economist cites the Eee PC, and Flip cam corder.

A Value interpretation: - do more for less $$: get 80% function at 20% price. New value dimensions offer new value elements, superseding old.

Examples:

- Wikipedia: (new) 24/7 convenience, good enough > (old) big, leather, reliability

- iPhone apps: (new) small, cheap, portable, easy, good enough > heavy, big, feature laden laptops, desktops

Summary: Power, price, potential, convenience > size, weight, function, brand.

2.The Economist also cites a 1991 paper on Lisp programming which focuses on simplicity from the MIT/Stanford style of design: simplicity, correctness, consistency, completeness.

A great quote, which could have something to say about PhD complexity....

The big complex system scenario goes like this:

First, the right thing needs to be designed. Then its implementation needs to be designed. Finally it is implemented. Because it is the right thing, it has nearly 100% of desired functionality, and implementation simplicity was never a concern so it takes a long time to implement. It is large and complex. It requires complex tools to use properly. The last 20% takes 80% of the effort, and so the right thing takes a long time to get out, and it only runs satisfactorily on the most sophisticated hardware.

The diamond-like jewel scenario goes like this:

The right thing takes forever to design, but it is quite small at every point along the way. To implement it to run fast is either impossible or beyond the capabilities of most implementors.

…

The right thing is frequently a monolithic piece of software, but for no reason other than that the right thing is often designed monolithically. That is, this characteristic is a happenstance.

The lesson to be learned from this is that it is often undesirable to go for the right thing first. It is better to get half of the right thing available so that it spreads like a virus. Once people are hooked on it, take the time to improve it to 90% of the right thing.

Gabriel, R.P. 1991 Lisp: Good News, Bad News, How to Win Big, http://dreamsongs.com/WIB.html, viewed 01.09.09

Substitute PhD for software, and you have an indictment of the high quality, but very slow.... PhD process. ouch!

Simon de Beauvoir - value in words, truth

2009-08-30T18:38:00.000-07:00

Reading Holland (2002) introduction to de Beauvoir. She quotes - "I am an intellectual. I take words and truth to be of value." Force of Circumstance, p.378.

Truth is part of the new/learning Value Dimension. Truth is a community and socially constructed concept (Berger & Luckmann 1967). Words and truth relate to 'power', 'community' - both social value dimensions.

BrandIndex

2009-08-30T18:31:00.000-07:00

BrandIndex tracks 1,100 consumer brands over 32 sectors on a 7 point profile - ("Buzz", General Impression, Quality, Recommend, Satisfaction, Corporate Reputation & Value). About 2,000 British adults are interviewed daily. They say "BrandIndex takes high-quality, high-relevance data and puts it straight into the hands of decision-makers, so the reporting tool has been designed to suit the style of decision-makers: it’s clear, it’s easy and it’s instant. "

This is close to Value Management, but more like Image Management.

Their best brand booklet from 2007 (UK) is available here.

Community Value: OpenStreetMaps (OSM)

2009-08-17T19:20:00.000-07:00

A terrific example of a community creating value, I came across yesterday, in looking for a way to use maps on my iPod Touch, while out and about.

I found the iPhone app (Cost: AUD4), OffMaps, which uses, Cloudmade route checking free protocols, on top of Open mapping system - OpenStreetMaps. A company which provides support (Itoworld.com) made a video showing how much data has been added to OpenStreetMaps in 2008. See below.

OSM 2008: A Year of Edits from ItoWorld on Vimeo.

Enjoy, and contribute.
Cheers
rf

iPhone 3Gs - price analysis - Australian Phone companies

2009-07-30T01:32:00.000-07:00

I have analysed the iPhone 3GS against several price dimensions, including Provider, Monthly price, and Price per GB (gigabyte) of data (as at July 2009). A separation appears between the five phone companies, charging either low monthly price, and high data costs or high monthly price and low data costs.

A Value Frontier appears, that I have graphed.

The analysis has been distributed to a few phone companies, and iPhone retailers for comment. Feel free to comment below.

The summary analysis can be found here (link). Cost $500. Free to download (Donate requested). A fuller report can be obtained by donating $500.

A similar analysis of 3G Mobile broadband from 2005 - 2008 is also available, comparing 3G Australia prices to fixed broadband, and International Mobile broadband prices. Cost $500. Free to download (Donate requested). The mobile broadband analysis can be found here (link).

Updating thesis - What is value? How does value work?

2009-06-16T20:19:00.001-07:00

Jun 09 - Valuing is a process of examining our changing environment and circumstances, in conjunction with others, to drive our actions, strategies and attitudes, including innovator offers of new technology. Valuing involves making a value assessment, based on aggregating 12 value dimensions, which is stored and remembered as strong to weak, positive or negative attitudes. Consumers determine shifting coping strategies, based on their ongoing experiences, such as trusting, doubting and minimising. Value assessment strategies, include exploring, comparing, recommending, filtering and closing. Value elements are balanced in making a value assessment. Value elements are potentially limitless combinations of value dimensions, in a particular instance. A complex value assessment may typically balance between 20 and 30 value elements. Value dimensions are:

individual (simplicity, new/known, emotion, beauty),
social (duty, power, community/privacy, need/pleasure) and
universal (price, function/fun, service/reliability, time).

Value dimensions are polar, and consumers may value either end of a pole, for instance - high price/low price, fast/slow, new or known.

Nov 06 -
Value explains consumers decision to adopt new technology. A successful technology, or innovation adds value. A failed innovation fails to add value.

What is value? We define value as :
the personal, individual, unique assessment
of costs, benefits and risks reflecting individual circumstances
that leads to a purchase decision / choice or attitude.

Value Propositions:

P1: Value is dynamic

P2: Value changes on the assessment of new information

P3: Value is different for different people

P4: The time to make an assessment affects value

P5: Value degrades over time

P6: Value is not measured in dollars; includes time, effort, hassle and pleasure and is measured in attitude, and purchase decisions

P7: Value is path dependent

P8: Value may involve input from others

P9: Value causes purchasing

Assessing the Value of the Australian NBN (National Broadband Network)

2009-04-13T18:43:00.000-07:00

Malcolm Turnbull (Leader of the Opposition)comments on the economics of the NBN today in the Australian - http://www.theaustralian.news.com.au/story/0,25197,25329883-5015664,00.html
Since no comments seem to be making it in, here is my comment on the Opposition leaders assumptions.

Prime Minister Rudd, and Opposition Leader Turnbull.

----
My assumptions are online at : http://www.thejoie.com/welcome/docs/NBNcosts.xls

Background: Investment $43B, fibre to the home to 90% of homes, plus wireless to rest, giving 100Mbps to fibre homes, and 12 Mbps to rest. Prices, and consumer takeup unknown. Business case not provided. Announced here
---
Mr Turnbull makes some good commercial sense in his article. I have made some estimates on prices and takeup, as well as costing the investment with interest and depreciation, and make the following comments.

MT assumptions:
Operating expenses 50%, depreciation 5%
Takeup of homes 50%, rest with competition
ISP $100pm, NBN (Ruddnet) 70% of $100pm : gives no economic return on investment

My assumptions:
Spreadsheet is online at: http://www.thejoie.com/welcome/docs/NBNcosts.xls.
Depreciation same, Interest as for depreciation
Takeup $200pm 10%, $150 20%, $100 30%, $75 40%, $50 60%, $30 80%

On these assumptions, even with no operating costs (and I think 50% is very high), interest and depreciation (5%) at $180m per month each, swallow the revenue of max $240M, leaving a shortfall per month of $120M plus operating costs, and excluding competition, and ISP profit.

Other benefits accrue to businesses, who also use the network. Looking at small, medium and large, I guess small might pay $200 20% takeup, $150 30%, $100 40%, and medium $2,000pm 10%, $1,000pm 20% and $500 30%, large $20,000pm 10%, $15,000 20%, $10,000 30%.

Even with business cost savings on Telstra prices of 50% for large, and 20% for small, and revenue expansion for large 5%, Medium 10% and Small 20%, the most extra revenue and benefit I can get to is about $80M per month.

Still a shortfall of $40M per month, plus operating costs, plus competition, plus ISP share.

So, there are a lot of variables here, and it is worthwhile to think through what they are, and what they are worth to us individually, as a family, and as a nation.

If a national project is worth $40M of national fervour (per month) then maybe it is worth it. If we can find another $40M of benefit elsewhere eg international reputation, proactive problem solving, then maybe there is value in the NBN.

Other downsides would include potential impact on other telecoms share value, to shareholders.

Long ago, Pliny once said: fortuna fortem favet, not long after Mt. Vesuvius erupted. Sometimes life is for living, and doing the big important things to make the world a better place. Fortune favours the brave. The NBN might cost us $40M a month ($2 per person per month), but setting an example to the world - PRICELESS.

Google : function vs aesthetics

2009-03-22T16:14:00.000-07:00

Wired reports a clash in value dimensions - function vs aesthetics. A Google designer is leaving because the engineering data driven culture at Google is driving him mad.

Title: Google data culture drives designer crazy - and out here.

The comments are especially interesting showing the ongoing dimension clash between what works and what looks good. Google wants proof of what looks good, from user testing - the average best. Their data driven culture is good at answering what works fastest, but not so good at aesthetics. They tested 41 shades of blue to see which one had the best response from users.

Value dimensions are individual, and aesthetics perhaps more individual than function.

We are all equal, but some are more equal than others.

Fast Company 2009 Top 50 Most Innovative

2009-02-25T17:06:00.000-08:00

Fast Company name Team Obama as the most innovative company in its 2009 list, beating out last years winner, Google #1, and Apple #2.

Team Obama is a value management case study - listen, respond, engage with your customers to deliver value to them. In return, they delivered their votes.

Team Obama is not a corporation, but an organisation, and value delivery does not need to be necessarily about profit, but it is all about delivering value. For Obama, this probably means - hope, the new, fresh thinking and approach. An ongoing example is the community consultation (see image top right) at www.whitehouse.gov, and the transition website at www.change.gov, and initiaitive like" Join the Discussion" - see here. See more on this in the NESTA Measuring Innovation Blog post.

Fast Company list is online here - here.

Measuring Innovation - UK Style

2009-01-19T16:33:00.000-08:00

NESTA has nearly $2M (USD - 1M GBP) for measuring innovation projects. I tendered for the Measuring User innovation subproject.

There are four projects:
- measuring corporate innovation 500k GBP
- innovation growth accounting 250k GBP
- framework conditions for innovation 75k GBP
- measurng user led innovation 100k GBP

See details at Innovation Index, with Research Notes, and Guidelines for tendering.

Look at my tender for a value approach to measuring innovation, at a national level.
The key is engaging consumers to vote for which innovations create value for them, using a website, built for that purpose. Obama's change.gov website, and tools therein is a model for this approach.

Happy inauguration day!

Imagine. Create. Innovate.

2009-01-09T19:37:00.000-08:00

Europe has decided 2009 is their year of Creativity and Innovation.

The goals are taken from their website www.create2009.europe.eu:

The European Year of Creativity and Innovation has the objective to raise awareness of importance of creativity and innovation for personal, social and economic development, to disseminate good practices, stimulate education and research, and promote policy debate and development.

The Year addresses a wide spectrum of related themes such as:

fostering artistic and other forms of creativity through pre-school, primary and secondary education including vocational streams, as well as non-formal and informal education

maintaining engagement with creative forms of self-expression throughout adult life

cultural diversity as a source of creativity and innovation

information and communication technologies as media for creative self-expression

ensuring that mathematics, science and technological studies promote an active, innovative mindset

developing a wider understanding of the innovation process and a more entrepreneurial attitude as prerequisites for continued prosperity

promoting innovation as the route to sustainable development

regional and local development strategies based on creativity and innovation

cultural and creative industries including design – where the aesthetic and the economic coincide.

For your consideration.

Upside Down-novation (Denovation)

2009-01-09T19:13:00.000-08:00

Innovation has traditionally defined around something ‘new’. Schumpeter talked of new products, services, business models (Schumpeter 1934), and indeed the ‘nova’ in innovation is Latin for ‘new’. Recent definitions of innovation have included the related concept of value and value creation. For instance, the Innovation Metrics project, sponsored by the US Department of Commerce, and whose board includes elite business and academics define innovation as ‘something new that creates value’. The 2008 Australian National Innovation Review uses a similar definition (Cutler 2008).

However, by linking innovation and value some terminology issues have arisen. I have been writing my PhD about how consumer understand value in a new technology. This research aims to better understand innovation from a consumer perspective, and uses consumer interviews and a grounded theory methodology (see Ferrers(2008)). Some terminology issues have arisen.

The first issue builds from Schumpeter’s idea of creative destruction. When innovation creates, it builds upon the destruction of the old ways. As innovation creates value, so it destroys value. But we seem to lack a word to indicate this destruction. If innovation is something new, which creates value, what do we call – something new which destroys value. My suggestion in this note is that we need a new term for this idea. Such a word emphasises the value impact of the new. We have innovation for a positive impact, and we need a word for a negative impact.

A few possibilities have come to mind. These words use negative prefixes to indicate destruction. Prefixes such as ‘un’, ‘contra’, ‘min’, ‘anti’, or ‘de’ could be used, and connected with innovation. Thus possibilities are un-novation, contra-vation, min-novation, anti-innovation and de-novation.

Value similarly suffers from a lack of negativity. This is a second terminology issue, Value can be a noun or a verb. Something has value or we may value something. Both meanings are positive. However, we seem to lack a word which means loss of value, or negative value. Elsewhere I have argued that value moves either up or down, with new information and relates to several dimensions such as price, time and function (Ferrers 2008). What I now argue for is a new terminology to capture this negative action and movement. A price rise or something that wastes our time destroys value, yet we would not call the change and innovation or new value. I propose that we call a loss of value event, a ‘devalue’ or ‘devaluation’.

In short, I portpose two new words to complement innovation and value. I suggest we use ‘denovation’ to be the opposite of innovation and use this word to denote something new which destroys value. Also, I suggest we use ‘devalue’ as the noun related to a loss of value. I look forward to you comments.

References:
Schumpeter, JS 1934, Theory of Economic Development (per http://en.wikipedia.org/wiki/Innovation)
Cutler T 2008, Australian National Innovation Review, available online at www.innovation.gov.au
Ferrers R 2008, Towards a value theory of innovation, DRUID conference, Copenhagen (online here).

Measuring Innovation - Some 2008 reports

2008-11-10T22:02:00.000-08:00

Here are some recent Innovation Measurement web pages I have come across recently:

Boston Consulting Group (Aug. 2008)
Innovation 2008: Is the Tide Turning?
A survey of 3000 executives say they are less happy with their return on innovation (2008 43% happy, 2006 52% happy), and will spend less on innovation in 2008 (2008 63% spend more, 2006 72% spend more). 28 pages
http://www.bcg.com/impact_expertise/publications/files/Innovation_Aug_2008.pdf

Measuring Innovation 2008: Squandered Opportunities
Firm level recommendations of measuring innovation. N=332 executives.
http://www.bcg.com/impact_expertise/publications/files/Measuring_Innovation_Aug_2008.pdf

Australian Bureau of Statistics - Tasmania (March 2008)
Measuring Innovation: Towards developing a scorecard
Surveys definitions and other measurement projects, including Schumpeter, Oslo Manual, output, outcome and input based measures, linkages and knowledge diffusion approaches. Assesses scorecards from OECD, European Innovation Scorecard, Canadian Scoreboard, Massachusetts, Progressive Policy Institute (WA.), Global Creativity Index. Creates Tasmanian scorecard with six categories: knowledge creation, human resources, finance, knowledge diffusion, collaboration in R&D, Market Outcomes.
http://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/8163.6Main+Features12008?OpenDocument
or

Innovation and the Environment - Economist Debate

2008-08-21T19:04:00.000-07:00

Economist debate: (Join in 19-29 Aug - link below)

My response...

As an innovation researcher, from my perspective the debate is whether the solution is in incremental or radical solutions. Unfortunately as a postmodernist, the debate moves past technology to political will. Entrenched interests will resist any measures which destroy their businesses (of course). And politics are slaves to responding to powerful community interests. Consumers, usually powerless when divergent, have converged in Australia to replace a climate change sceptical government with a Kyoto affirming, green government. This is our hope for the future. That consumers converge to dislodge the winners under the old system, and the reason they do this is that consumers have responded to the climate crisis stories. What can happen in one country, may (or may not) be repeated in the US. If the US gets onboard, then we are likely to get much closer to a tipping point of strong action, next pressuring India and China to move. Power to the People.
Richard Ferrers, Innovation Researcher, University of Melbourne/Qld, www.valman.blogspot.com

Join the debate: 19 Aug - 29 Aug here

iPhone Pricing (Out of this world) - Australia

2008-07-09T22:35:00.000-07:00

Iphone launches tomorrow in Australia. And the deals are attractive, except for the data prices.

Optus, Telstra, and Vodafone are the carriers. I prefer the Optus deal, $39/mth, including 500Mb data, and a few calls. But the killer is the data pricing....

Be careful with data prices (Optus) in the fine print.

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After the included data, prices are: $350 per Gb (ie $0.35 per Mb)

which equates to about one or two youtube music videos per day (10Mb) on the Optus $39 = 500Mb monthly plan. You could burn through that download with an hour or two of youtube viewing on the tram. I think a few parents of teenagers are going to be quite surprised when they get a bill for 20 hours of youtube viewing = approx. $70 per hour (10Mb/3min*20). Look forward to the Today Tonight stories on that.....

Other prices, once using up monthly limit are: Movie 350Mb ($100), Youtube music video 10Mb ($3.50), Large photo 1Mb ($0.35), Skype 150k/min ($0.06/min), Internet radio 1Mb/min ($0.35/min), software downloads 10Mb ($3.50) / 100Mb ($35), GPS similar to radio or skype prices.

However, 500Mb probably equates to unlimited text, and small photo downloads, so browsing, without large photos is effectively unlimited.

I'll be waiting until - either the download limit is shaped with no excess fees - or there is more like 1-2Gb included. At home I (my wife and I) use Virgin 4Gb/500k for $60 with local, and STD calls included (for comparison). I have Ipod Touch with no monthly fees, and free (ok $60) wifi at home.

DRUID poster, Copenhagen Business School (17-20 June)

2008-06-05T00:55:00.000-07:00

Full paper, including references here.

It's June (2008) and time for the DRUID conference on Innovation and Entrepreneurship.

Here are the summaries of the thesis in Poster form:

One is in A1, and the second in A2.

See the full images at Flickr here. (download A1 [0.5Mb], download A2 [0.5Mb])

These posters focus on (A1) the top level analysis: the value dimensions, the top level concepts, the value assessment strategies, the implications and tools of 'Value Management'.

The A2 poster, compares 'Value Management' with two pieces of literature, one from Innovation (Christensen 1997), and one from Customer Value (Zeithaml 1988), and outlines the interviewees, and shows the major references.

User Innovation Conference Invitation - Aug '08

2008-05-26T22:41:00.000-07:00

You might be interested...! I was invited this week to attend a workshop on Open and User Innovation, hosted jointly by MIT, and Harvard Business School in Boston, 4-6 August.

See link to workshop - http://userinnovation.mit.edu/conf08/attendee/new

These workshops have been held on an invitation only basis since 2003, and about 50 academics attend annually who are pursuing research in this area. Application required writing on my research interests, PhD progress to date, and providing a CV. I am hoping to present a paper there too - still waiting to hear.

Three PhDs are going, including me, and two others - one from Zurich, and one from Holland.

Pretty cool hey! Now trying to squeeze the last dollars out of the budget allocated to me...to get me there...

2% GST to fund - Low Carbon Incentive Scheme - Your say

2008-04-04T18:51:00.000-07:00

Would you support:

2% extra GST to pay for and encourage clean transport and clean green power produced, or
a carbon tax on petrol / new cars / electricity to encourage green power and transport.

Add your comments below (or here), to add to our Garnaut review submission - due 11.04.2008.

Please add demographic [eg age, sex, location, income], and contact (if you wish).

1 page summary of proposal (pdf) [Update 11/4]: Final Garnaut Submission (pdf) [Update: 18/4] Included in The Australian Top 50 Ideas for 2020 Summit here #28

1 page Petition flyer (pdf) Full petition to print (pdf)

Thank you.

Richard Ferrers

Innovation Researcher

University of Queensland

Research Fellow, Centre for Global Innovation and Entrepreneurship

University of Melbourne

Low Carbon Incentive Scheme

2008-04-03T17:35:00.000-07:00

I have been reviewing the Garnaut Emission Trading Scheme (ETS) Discussions paper, and am concerned of the potential failure of this policy to encourge low carbon (C) technology development as part of writing my Implications chapter of my PhD thesis (www.valman.blogspot.com).

I would encourage you to comment on my DRAFT submission (brief) below, and the attached key documents, from Garnaut, Foxon (Imperial College) which is excellent [technological lock in, technology trajectory], and Rayner (Nature - thanks ANDREW).

While the submissions are not due until next week, I am seeking comments from industry (Holden, Toyota, Electric vehicles mfger), consumers (my PhD interviewees), Govt (Vic summit 04.04.08, and QG), and academia (yourselves). This is an early draft, and I will insert innovation references, from my thesis in the next few days and recirculate. But thought a brief, but early draft would give you more time to comment.

I am sure you will be all very busy, and hence PhD students can give such matters more time, but I would encourage you to participate in this important process. Each generation has its problems to address, and I believe, for now, ours is climate change.

Any time and comments you could contribute would be much appreciated.
Thanks and regards
Richard Ferrers
University of Qld/Melbourne

Here are the four problems I see with the ETS, encouraging low C technology (also below):

Firstly, the ETS will encourage incremental innovation in power stations, and transfer from coal to gas, however it will not encourage radical or disruptive innovation, which is likely to come from small firms operating outside of the power and car/oil industries. Disruptors who do not hold C certificates have less incentive from the ETS to innovate.

Secondly, disruptive innovation can decrease the value of C certificates, giving certificate holders an incentive to resist such technology to protect the value of their investment in C certificates.

Thirdly, oil companies who purchase certificates, rather than petrol consumers, to keep the ETS simple, are more likely to pass C prices onto consumers, than to create or buy low C technology, which is outside their competencies, and would reduce their profits.

Fourthly, to protect their C lock in, the coal and oil industries have incentive to undermine the processes, and distract funding away from other low C technologies eg QLD $900M clean coal investments vs $26M Centre for Low Emission Technology, VIC $187M Energy technology innovation strategy (including $103.5M clean coal) vs $12M for renewable energy support fund,

Please see my suggested solution, a Low Carbon Incentive Scheme outlined below.
Thank you...

-----Original Message-----
From: Premier of Victoria [mailto:no-reply@premier.vic.gov.au]
Sent: Wed 02/04/2008 15:23
To: Richard Ferrers
Subject: Share Your Ideas

Thank you for your email to the Premier. A response will be sent to you as soon as possible.
Richard Ferrers
5/83 Park St
St Kilda West 3182
r.ferrers@business.uq.edu.au
03 9534 4830
0422 268 061

Idea:
Goals to transition to a low Carbon (C) economy:
- low C transport
- low C power
- low C exports
- low C workforce

The emission trading scheme (ETS) is a good start to get C prices into products, but greater incentive is needed to encourage success in low C technology, if we want to do so fast. The ETS is likely to take perhaps some 10-15 years to achieve this.

Some problems exist with the ETS encouraging low C technology. Firstly, the ETS will encourage incremental innovation in power stations, and transfer from coal to gas, however it will not encourage radical or disruptive innovation, which is likely to come from small firms operating outside of the power and car/oil industries. Disruptors who do not hold C certificates have less incentive from the ETS to innovate.

Secondly, disruptive innovation can decrease the value of C certificates, giving certificate holders an incentive to resist such technology to protect the value of their investment in C certificates.

Thirdly, oil companies who purchase certificates, rather than petrol consumers, to keep the ETS simple, are more likely to pass C prices onto consumers, than to create or buy low C technology, which is outside their competencies, and would reduce their profits.

Fourthly, to protect their C lock in, the coal and oil industries have incentive to undermine the processes, and distract funding away from other low C technologies eg QLD $900M clean coal investments vs $26M Centre for Low Emission Technology, VIC $187M Energy technology innovation strategy (including $103.5M clean coal) vs $12M for renewable energy support fund,

Therefore, to avoid these ETS problems, I suggest a Low C Incentive scheme, which collects funds and pays low C users and producers to encourage such use and production. Funding should be not at the expense of other government services (revenue neutral), and should encourage market solutions to low C needs. But the incentive should be paid 50% to producers and 50% to consumers to reward both parties.

Funds could be raised through a levy on petrol prices, and electricity bills. But consumers have told me, during a process of consultation, that this could place too heavy a burden on already stressed households. This could be a transitional arrangement (say two years) to be replaced by a broad ranging, but small, consumption tax. A level of 2%, added to GST, and collected in the same way, and with the same rules, could be collected by the ATO, then forwarded to the Carbon Bank (see Garnaut) for distribution to low C users and producers. Low income families would be protected as food would not be levied. And at a low 2% the impact would be slight on individual transactions. Also, business would not be levied, only consumers, reducing political issues, in selling the scheme to business. At 2%, funds of around $1B per month could be raised. Significantly ahead of Victoria\'s $200M action plan or Qld $900M investment in clean coal over ten years.

Payments should be made for results, not for R&D, so low C MWh of electricity would be paid from the fund, up to 50% of capital costs. Low C vehicles would be paid for out of the fund eg Toyota Prius, if they save 50% over normal vehicles.

Each month, receipts would be balanced with payments, so the fastest developers of low C technology were paid, starting a low C development race - a gold rush. Unspent receipts, would go to other C offset, such as planting trees, a portion could be saved (say 40%) for low C loans to buy solar heating, or fund low C R&D. A small proportion could fund R&D alone (say 20%), and administration (say 5%).

Funding could also come from sales of C certificates.

The fund should be spent on low C power (1/3), low C transport (1/3) and compensation to workers transitioning from high C to low C jobs(1/3). An incentive to leave high C jobs (say $10,000 per year of service, payable from fund in month of leaving or pro rata from funds available) and for employers to take on workers from high C jobs (say $10,000, payable half on hiring, and half on one year anniversary), into low C industries (ie receiving incentive payments).

See full details in submission to Garnaut review (April 11).
Richard Ferrers
Innovation Researcher
University of Queensland
Centre for Global Innovation and Entrpreneurship
University of Melbourne

DRUID Conference - Copenhagen, first Value Management Results paper

2008-03-10T18:38:00.000-07:00

Hello all,

The first results paper on Value Management has been submitted to the DRUID conference in Copenhagen (June 2008) - www.druid.dk .

See paper on related website - thejoie.com.

Any comments appreciated.
Richard

Draft results release Nov '07 - another brick in the wall

2008-01-29T16:20:00.000-08:00

See draft results (Release III) on Value Management:

Problem:
Generally, why do some innovations succeed and others fail?
Why the delay between invention and market acceptance of an innovation?
Specifically, and in depth - how do consumers understand the value in new technology?
And generally, how do consumers behave to assess, and communities make technology assessment decisions?

Recent Technology Impact - Explaining takeup of broadband, digital television, 3G mobile.
Practical Impact - Impact on marketing of technology, impact on understanding process of innovation.
Policy Impact - Australian election debate about political intervention in stimulating takeup of broadband by consumers.

Release II

Value supposed as explanation for innovation success, and spread of new technology.
Value defined as personal, subjective ascertainment of costs, benefits and risks.
Impact: Need for value management; tools: value trajectory, value conversation

Release III

What is value?
How does value work?
What should marketers, innovators, policy makers do about consumer value?
What is value?

Figure 1 - Value in action - the simplest view: Value as a black box.

In Figure 1, value is a mediator between information and consumer action. Action includes inaction or waiting, and value assessments are stored in attitudes, that can lead to future action.

Figure 2 - Opening the black box of value. Value comprises several interacting concepts.

Value was found to be very multi-faceted. Over 80 value elements were found that compete against each other to assess value. These were compressed into 12 value dimensions. Four of these dimensions were agreed by 100% of interviewees. The remaining eight dimensions, were noted by between 1/3 and 2/3 of interviewees.

Value Dimensions are a continuum of opposites, with one end of the dimension increasing value, and the other end decreasing value. Value is sensitive to new information, and new information is assessed as to its impact on value dimensions, leading to a new value assessment. Some people prefer one end of the dimension, while others may prefer the other end. For instance, some prefer new things, others prefer what they know already, and don't like to change. Some people may take different positions for different things. Some prefer simple, others complicated. But value dimensions compete with each other - simplicity and function, price and reliability, beauty and community, privacy and knowledge.

Key Dimensions:
Function Price Time / convenience Service / reliability
Other Value Dimensions: (from most to least common)
Learning / new Emotion Need Simplicity / Complexity
Duty Power / Freedom Connection / Community Beauty / aesthetics

Further questions:
How does value work? ... to follow

What should you do about value? ... to follow

Virgin Broadband I - Value assessment in action

2007-10-21T16:48:00.000-07:00

My Phd thesis results are in Draft 2, and will be released here shortly.

But, the technology I am studying 3G, I bought into last week Thursday. My wife picked up a Virgin Broadband 3G modem, to replace our home phone and give us 4Gb of broadband. This is our experience.

Product/Service: Virgin 3G $60 - all local and STD calls (not mobile), 4Gb broadband at 500k speed download, 300k upload, shaped to 128k thereafter. Includes wireless modem. No installation costs. 24 month contract. 30 day trial period, without contract. (www.virginbroadband.com.au)

The good.
-----------
1. Phone works fine. New number.
2. VBB gave us a free mobile sim, so we can call that mobile for free. Inserted into my phone and tested the phone no problems. Rang our family to let them know our new temporary number.
3. Left our old landline plugged into the answerphone. Have been getting calls there but no messages. I think it is screening sales calls. YAY!
4. Day 2 - Broadband worked fine on LAN. Downloaded 100Mb. No wireless set up yet.
5. Modem remembers all our calls.
6. Website where Virgin users talk about their experiences and help each other fix things. A Virgin rep is there too, gives his email out and fixes things. Might have to sign up.
7. This is a 30 day trial, so $60 for one month is low risk if completely bad.

The bad.
--------
1. Logging in on Day 1 - web page got stuck validating the sign in. It was only the email address, and I agree. How hard can that be.
Rang the helpline. No answer after 15 minutes- gave up. Emailed helpdesk.
2. Day 2 - Couldn't get wireless to work.
3. Day 2 - About 5pm Friday. Broadband stopped working, and for the rest of the weekend couldn't get it to connect. BOO!
4. Spent nearly an hour waiting for helpdesk to answer the phone. Gave up around an hour.
5. Stopped into Virgin shop, and guy said we are just sales. Call helpdesk. But might be too many people using broadband.
6. The manual says my mac needs 10.4 whereas the brochure says only MACOSX.
7. The manual only gives setup for MAC airport, not my USB wireless modem. Might have to ring the DLINK helpdesk.

The ugly
--------
1. No broadband from Fri 5pm to Mon. Only offpeak access ie during the day.
2. Can see wireless network, but can't get to internet through it. Complicated by no broadband.

Solutions
----------
1. Need faster access to helpdesk. An hour with no answer is too long to wait.
2. If outages, need to know about it eg text my free mobile.
3. Need troubleshooting guide. This can go wrong, and this fixes it.
4. Needs to work. A full network is no good. Need compensation when service not provided.
5. Maybe provide dialup as backup

Stay tuned as the story unfolds.
Richard

Beyond Innovation Management - towards Value Management (for MINT)

2007-01-24T19:03:00.000-08:00

Preliminary results from a PhD thesis on Innovation - Unlocking 3G Consumer Value - The Australian Opportunity - University of Queensland, and University of Melbourne
researcher.

Richard Ferrers (r.ferrers@business.uq.edu.au)

In searching for an answer to why does innovation fail, and why does an innovation take so long to become accepted generally, an initial focus was on the effect of pricing strategies. But an increasing focus on the individual consumer, led to a consideration of value, a subjective perception, rather than price, an objective measure. Initial data collection, and analysis has led to some preliminary findings to explain how consumers understand the value in a new technology - the current research question. The implications of the results has led to the concept of Value Management.

VALUE MANAGEMENT - treating consumers as individuals - beyond segmentation - a new
explanation for innovation adoption and success

The study of how innovations spread has been in progress for some sixty years, and some of the theories to explain innovation adoption are in their fourth decade, for instance, adopter categories was developed by Rogers in 1962, and the Bass model of technology adoption (1969) which models technology spread based on the percentage of innovators (normally around 3%), and the rate of imitators (around 30%).

Using more recent ideas, derived from postmodernism and phenomenology, which looks beyond scientific, one right answer, and based on a grounded theory study (Glaser and Strauss 1967), of how consumers understand the value a new technology, a new perspective has been developed called Value Management. The study involves in-depth interviews with Australian consumers of 3G mobile internet and phone technology. The theory is being tested with three case study companies - an innovative wine retailer, an electric vehicle designer and retailer, and a textual analysis software developer. The theory developed as part of this study, will be compared with major innovation theories including Rogers (2003), Bass (1969), Christensen (1997), Anderson & Tushman (1990), Moore (1991), Bijker (1995), Agarwal & Bayus (2002), Golder and Tellis (1997), Kim and Mauborgne (2005), and Gourville (2006).

What is value?

Value Management proposes that consumers adopt a new technology when individually they see value in making the change. That decision (defining value) is a personal, individual, unique assessment of costs, benefits and risks, reflecting individual circumstances that lead to the purchase decision, choice or attitude, or other action. Assessing value may not lead to a purchase, but it may, for instance lead to passing positive or negative messages on to the social network of the consumer. The assessment of value takes time and as such has a cost. This cost is part of the assessment of value. Value exists where the benefits and the risks that the benefits will be achieved amply exceed the total costs of acquiring the benefit, including the cost in time to make the assessment.

The implication of this definition of value is that value is a moving target. Value moves with new information and experiences, Value moves when our social network delivers that information or we encounter information in the media. Value also degrades over time. While we are continually showered with more information, older information becomes less valuable as it goes out of date. Value is affected by our past decisions. Value is not measured except in attitudes and action. Value causes purchasing.

Implications of Value

Only consumers assess value. Innovators make value offerings, but consumers decide in their individual situation, if value exists for that innovation, for them, there.

Thus, businesses, and innovators need to enter a dialogue with consumers to determine where value is created for the consumer. Customers need to brought metaphorically inside the business, to co-create valuable offerings. Greater dialogue needs to be undertaken with the consumer.

Consumers need to be able to make a value assessment before they will purchase.
The more complex is the pricing structure of a value offering, the more difficult it will be for a consumer to assess the value. Inability to assess the value, will often lead to not purchasing. Thus prices with fixed and variable components require consumers to estimate their usage, for instance call minutes, downloaded megabytes.

Value Management

A possible definition for Value Management is dealing with consumers, through communication, knowledge provision and strategic offerings, to maximise the value to individual consumers of value offerings, for the pursuit of acquiring value for shareholders. In a sense, consumers are seen to be within the boundary of the organisation, and thus their value is something to be managed. Rather than creating products to offer to consumers, management discovers what consumers value and delivers value offerings to consumers. It becomes important to make it easy for customers to assess the value of a value offering. Thus a business becomes more like a family, with the consumers within, than a castle with the consumers like peasants outside the castle walls.

Several business processes suggest themselves to manage the value relationship with a consumer -

The Value Conversation - getting close to customers;

The Value Trajectory - understanding customers don't act immediately on their value assessment, but that they remember their assessment, and as more information adds to the assessment, a threshold may be crossed leading to action - either a purchasing decision, or expressing a positive or negative comment to their social network;

The Value Lifecycle - value is continually assessed, even after purchase, and messages are still passed through to the consumers social network - positive and negative on the value experience, including repairing, replacement, alternate competitor offerings (or announced future offerings), and complementarity eg using a memory card in a digital camera and music player; and

The Value Management System - what would a coherent system look like? Future work is required here.

Implications of Value Management

Businesses will need to assess the value of Value Management. They will need to find the time to make this assessment, and will only adopt the innovation of Value Management if the benefits in their circumstances will justify the time to understand what Value Management is and means. Businesses will enquire of their social network to assist in making the assessment. A risk for business is that a competitor may see the Value of Value Management, where you do not.

More at http://www.thejoie.com.au/phd/
(now offline - see www.thejoie.com)

- Unlocking 3G Consumer Value - the Australian Opportunity.
Your comments are welcome by email or on http://www.valman.blogspot.com/.

References:

Agarwal, R. & Bayus, B. L. (2002). The market evolution and sales takeoff of product innovations. Management Science, 48, 8, 1024-1041.

Anderson, P. & Tushman, M. L. (1990). Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change. Administrative Science Quarterly, 35, 4, 604.

Bass, F. M. (1969). A new product growth model for consumer durables. Management Science, 15, January, 215-227.

Bijker, W. E. (1995). Of bicycles, bakelites, and bulbs : toward a theory of sociotechnical change. Cambridge, Mass.: MIT Press.

Christensen, C. M. (1997). The innovator's dilemma : when new technologies cause great firms to fail. Boston, Mass.: Harvard Business School Press.

Glaser, B. G. & Strauss, A. L. (1967). The discovery of grounded theory: strategies for qualitative research. New York: Aldine De Gruyter.

Gourville, J.T. (2006). Eager Sellers and Stony Buyers. Harvard Business Review, 84 (June), 6, xx-xx.

Golder, P. N. & Tellis, G. J. (1997). Will it ever fly? Modeling the takeoff of really new consumer durables. Marketing Science, 16, 3, 256-270.

Kim, W. & Mauborgne, R. (2005b). Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant Boston, MA: Harvard Business School Press.

Moore, G. A. (1991/2002). Crossing the chasm : marketing and selling high-tech products to mainstream customers (Rev. ed.). New York: Harperbusiness Essentials.

Rogers, E. M. (2003). Diffusion of innovations (5th ed.). New York: Free Press.

First industry Value Management document - released for comment

2006-11-26T22:20:00.000-08:00

Announcement:

WineShop short review of Value Management for industry comment released today.

Thank you WineShop (not their real name) for assisting with your comments.

This is the commencement of the value conversation about Value Management.

Can these ideas be helpful to industry?

I look forward to your comments.
Regards
Richard

Value Management not possible??? - bring on the impossible

2006-11-23T16:53:00.000-08:00

From my supervisor..... (email 22/11)

"That research question is getting sharper but I'm not sure if value management is really a good description. It is pushing it up hill for business to think it can manage the value constructions of individuals in markets (it is probably not a good idea even if it were possible). "

"Your RQ (research question) is about 'understanding' it. It is really about understanding and factoring in modes consumer evaluation in the innovation process."

There is definitely some possiblity that VALUE MANAGEMENT is completely impractical ie TOO EXPENSIVE.

Indeed there is some academic writing on this fact...

A very interesting book, called The Support Economy, by Harvard Management Professor (Retired), Shosanna Zuboff, and her husband, former Volvo Europe CEO, James Maxmin.
Subtitled - why corporations are failing individuals and the next episode of capitalism

They argue that there is an inherent disconnect between corporations, who are driven by a profit maximising motive to produce, lowest cost identical products, while customers want highly tailored, (value maximising??) unique products and services.

This inherent disconnect they argue is impossible to overcome, and they predict the answer is a new type of delivery structure, they call a federation - a network of professionals providing highly tailored and personal services, paid by a kind of donation system, where the service recipient decides what the service will cost - almost like a gratuity, but quite like the donate button on websites like sourceforge.net where you can get free software, then donate if you want.

You can see the website for the book at http://www.thesupporteconomy.com/

Food for thought...

Richard

Question for readers - Is value management possible? practical? Please comment, and I shall be asking the case study companies this particularly.

ps It is a brilliant spring day in Melbourne, bright, sunny, 26*C. Perfect.

Anonymous comments = ON : building bridges

2006-11-22T16:28:00.000-08:00

Hello,

Have now turned on anonymous comments, which don't require a login.

For your ease and convenience.
However, it would be useful to me to know a little about who is commenting.

Cheers
Richard

ps the bridge represents crossing over between the author and the reader, the innovator and the consumer, the seller and the buyer...

Adding a comment - let's get our heads together

2006-11-22T15:51:00.000-08:00

This site requires you to have a username / password to add a comment.

I want to save you time (add value), so will create a guest account.

Username: guest@thejoie.com.au

Password: guest99

My aim is to make it easy for you - the essence of value management.

Maybe these ideas are just a reflection of my own style, or personality. Hmmm....

Richard

Cloudy in Melbourne today 19*C, quite still, and when the sun peaks through, very hot (about 30*C).

Let's put our heads together, like I'm doing here with my nephew, Robbie, who is at the Gold Coast. He has just turned six earlier this month.

Value Management - Welcome

2006-11-21T21:49:00.000-08:00

Hello and Welcome,

This is the first post to the Value Management Blog. This is a shared space, where the ideas I am developing for my thesis on innovation, understanding consumers, can be discussed, especially with the case study businesses, who will assist me in checking the practicality of my ideas.

Welcome!

I look forward to getting my thoughts down, and reading your feedback.

My thesis home page is http://www.thejoie.com.au/phd/. (now offline rf 04.08)

My Thesis title is "Understanding 3G Consumer Value: The Australian Opportunity."

My Research Question is : how do consumers understand the value in a new technology?

My tentative theory is that VALUE explains why people buy new technology, and how they respond to business innovations.

The response of business, based on this idea is called VALUE Management. And here is where I will outline my ideas, and provide a space for your feedback.
Thanks and regards
Richard Ferrers
Melbourne

The spring weather is sunny, bright, and warm today. About 25*C glorious degrees.