Innovation as a Foundation for Creating Generic Value Propositions for Entrepreneurs

Introduction

In recent years, the term value proposition has become one of the most commonly used expressions in business in recent years (Anderson et al., 2006). However, as Lanning (2003) notes, the concept of value proposition is usually used in a very casual and trivial way, rather than being rigorously developed from a strategic standpoint. Most companies do not have clearly articulated value propositions. Frow and Payne (2012) studied more than 200 companies and found that while many companies use the term in their everyday conversations, less than 10 percent formally develop, communicate, and use value propositions. While all companies have some form of value proposition, whether implicit or explicit, they argue that the lack of specifically targeted formal activities involving the development of an overarching value proposition is likely to hinder the market success of many companies. (Frow and Payne, 2014)

Volvo cars can be considered as a traditional example of clearly defined value proposition. Volvo cars have been the first brand that comes to mind when it comes to “safe cars” for years. This is not because their vehicles are safer than other brands in the similar segments. Checking the vehicle safety tests carried out by the Euro NCAP organization will show that different brands are also awarded 5 Star out of 5. (Euro NCAP 2021) It makes sense to ask How come Volvo is the first thing that comes to mind when consumers say safety? Volvo’s history has lots of safety related innovations (Volvo, 2021) that eventually builds up a big story with the center theme of “safety”.

However, the aim of this study is not to show the importance of innovation. Innovation Value proposition may benefit from innovations so that a company can deliver new kind of solutions to customer problems and needs. In this way they can differentiate themselves much clearly which is a potential of getting better business results. We will try to show you how vital the difference is between an ambiguous value proposition and a clear value proposition developed using innovation.