Value creation in the future

Old sources of advantage don’t matter much anymore

Old sources of advantage, like manufacturing power, distribution strength, even mastery of information flow, don’t matter much anymore.

The value of products and services today is based more and more on creativity – the innovative ways that they take advantage of new materials, technologies, and processes. Value creation in the past was a function of economies of industrial scale: mass production and the high efficiency of repeatable tasks. There’s no longer any barrier to potential entrants or substitutes — in a digital world, competition can come from anywhere.

Value creation in the future will be based on economies of creativity

Value creation in the future will be based on economies of creativity: mass customization and the high value of bringing a new product or service improvement to market; the ability to find a solution to a vexing customer problem; or, the way a new product or service is sold and delivered.

Creativity means we created more value: we sold X units of something that didn’t exist before; we increased the sales of Y not because we made it cheaper, but because we made it better or we increased our value to customers by servicing needs we hadn’t serviced before.

Think of how:

• Smartphones and tablet-PC have redefined the mobile market and the PC market
• Kindle redefined book reading – how the rise of eBooks have disrupted the publishing world
• Streaming services like Netflix is disrupting TV industry

and how disruptive change is sweeping traditional bricks and mortar.Organizational structure will have to change to meet the new reality of creativity as a core component of value and continuous innovation as the mechanism to sustain it. The new organization will include structures that support innovation and at increasing scale.

Massive disruption is coming, and the only question is whether your company is going to cause it or fall victim to it.

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Value creation in the future – creativity and continuous innovation — https://www.torbenrick.eu/t/r/ibt
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