value curve with_metrics_190914

Value Curves with Metrics

Low High

Performance (Nested Value Curve)

Driveability (Nested Value Curve)

DesignConsumer Survey

Quality (Nested Value Curve)Consumer Reports Ranking

Operating Cost (except fuel)cost/mile

ReliabilityConsumer Reports

Maintenance Schedule#/year

Maintenance CostAverage cost ($/event)

Range/tank (Range/charge)miles/tank; miles/charge

Supercharging stations# of statiions, Distance between stations, miles

Brand RecognitionConsumer Survey

SustainabilityConsumer Survey, C Footprint

Life expectancyK Miles

Purchase Price$K

Leasing OptionsYes/No

1.0 3.0 5.0 7.0 9.0

Tesla S Sedan Value Curve Value to Consumer1st Draft

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BMW 7 Series Tesla S

Copyright Value Innovations, Inc. 2004-2013. All rights reserved 2

Value Curve Genesis

First used by Accor in 1985

Kim, W.C. and Mauborgne, R. Value Innovation: The Strategic Logic of High Growth. HBR Jan-Feb, 1997. p. 103-112. Reprint #97108

Half million reprints

“House of Quality”?


Value Curves

Are actionable

As a result project goals are:

Quantified and

Very Clear


Value Curve with Metrics for the Tesla S

Most Important Customer: The Consumer


Our first Value Curve

Let’s take a look at it, then

We’ll break it down & explain it


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Purchase Price$K


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Purchase Price$K


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The Elements of Performance (define the product, service or offering)

On the left side:

Elements are listed in rank order


Left Hand Side

Let’s look at:1. What we mean by Elements

of Performance and then2. Rank Ordering


Element of Performance

Capability or characteristic of the product or service that it is important to the Most Important Customer that can be performed/observed in a measurable way.

Steve Schacher, Chevron EPMO



In aggregate the Elements define the service or product. An Element is:

A succinct statement

Not an objective

Not a feature or benefit

Measurable



Consider:

Stella Artois developing a new beer

Objective

Feature/Benefit


Improve taste

Tastes great

Taste


Elements of Performance

Limit to 15

Use Nested Value Curves to achieve this limit

Examples of Nested Value Curves Performance

Drivability


Rank Ordering Tools

Tool Description Time to complete

You rank (Delphi)

5 to 10 min.

Pairwise Comparison (PWC)

Which is the more important of the 2 Elements?

20-40 min.

Analytical Hierarchy Process (AHP)

What is the relative importance of the 2 Elements?

1 to 2h.


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Purchase Price$K


1.0 3.0 5.0 7.0 9.0


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On the right hand: The values to the

Most Important Customer for each Element (low value on left; high value on right)

Metrics for each Element allow you to define absolute values


Right Hand Side

Let’s look at:1. Value delivered – you

determine the value range2. Metrics – You define initially,

Most Important Customers will critique in Steps 6-7


Nested Value Curves

Help you to keep # of Elements to 15 or less

Allow you to drill into Elements like Quality, Ease of Use

17

Low High

Acceleration

0-60mph, seconds

Braking distance

60-0mph, feet

Safety

Crash Testing, Exceeds NHTSA standards; Yes/No

Top Speed

mph1.0 3.0 5.0 7.0 9.0

1

2

3

4

Nested Value Curve - PerformanceValue to the Consumer1st Draft

4.7 4


Low High

Road Handling

Customer Survey, Consumer Report

Stability

Customer Survey, Consumer Report

Cornering

Customer Survey, Consumer Report1.0 3.0 5.0 7.0 9.0

Nested Value Curve - DrivabilityValue to the Consumer1st Draft

1

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Copyright Value Innovations, Inc. 2004-2013. All rights reserved


Low High














Purchase Price$K


1.0 3.0 5.0 7.0 9.0


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Yes


Is Tesla swimming in a Blue Ocean with the S Sedan?


Critique of the Value Curves occurs in Steps 6-7

Elements are vetted by the MIC

Elements are rank ordered by the MIC

Metrics are defined for each Element

MIC’s vett the metrics


Comparison with Strategy Canvases

Elements

Are not rank ordered

Do not have metrics

Are not vetted by the MIC


VC Advantages

Allows a project team to establish clear project goals based on MIC input (rank ordering and metrics enable this!)

Engages your MIC’s in the process

Easy to communicate project goals


VC Advantages

Clear to Management what’s at stake

Sorts out the wheat from the chaff

Takes the Fuzziness out of the Front End of Stage-Gate


Value Curves used to:

Look at companies, business models, services, technologies, processes, products…if there’s a customer, you can develop a value curve.

Stimulate the generation of new ideas

Help idea generators develop their idea

Communicate with Key Customers and MIC’s to solicit their input and win their buy-in

Define the Value Proposition

Realize much greater value (several X)


Value Curves featured in:VIP

Step #Value Curve

Description

3 “As Is” Your current offering, or, a competitor’s offering, if you are not in the space

3 “Closest Competitor”

or“Best in Class”

One product or service; or the best value delivered by a product or service for that Element (e.g., Toyota Camry, Honda Accord, Hyundai Sonata)

5 “To Be” Shows the Value you plan to deliver for each Element (Defines the “What”)

value curve with_metrics_190914

Data & Analytics

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use nested value curves

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value curvesare actionableas

series tesla s

reports rankingoperating

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