Most innovation efforts are about creating new products and
services or improving existing ones. While the products and
services differ, the goal of the innovation effort is the
same—to find new and better ways of creating customer value.
More precisely, the goal is to provide more customer value than
competing companies. But what, exactly, does customer value
mean? And how does one go about creating it? When it comes to
innovating, a useful definition is to say that customer value
equals the benefits received by the customer minus the costs
that the customer incurs in obtaining the benefits. A simpler
way to put it is the equation: Value = Benefits – Costs. Other
ways of putting it are the get-give equation (value equals what
the customer gets minus what he gives), the positive-negative
equation (value equals the positives minus the negatives), and
the good-bad equation (value equals the good minus the bad).
Once you understand the meaning of customer value, the next
question is how to go about creating it.