Quest for Value Creation
The role of perspective
As we approach the end of the year, many of us are looking forward to a well deserved vacation with the family. Depending on the location and the kind of stay we want to experience, we will make the decision of choosing a platform (travel portal, hotel’s website or Airbnb) to book the stay.
The decision making pivot is straightforward. If the value been created by the service provider matches with the value perceived by the user/consumer, the value exchange is complete.
Value created matches perceived value, the value exchange is complete.
To understand the process of value creation, we need to begin with understanding “need” of the user. Need plays a central role in an individual’s life, as every human being has innate (born with) and acquired need. From a Design Thinking standpoint too, understanding need is the first step.
In my experience of working on innovation strategy projects, a large part of the time and effort is dedicated to understanding the user needs. It helps us to define the user/consumer’s point of view in the form of a problem statement. Once it’s in place, the next step is to decode the perceived value which is easier said than done.
Let’s go back to the “vacation stay” instance to understand how Airbnb perceives the entire process of booking a stay.
The trip is the product
How do technology-led companies define their product offering? Many of them describe their website or the app as “the product” and that is where the challenge lies. A website or an app is a part of the product and is essentially a channel through which the users/consumers access the services. We need to zoom-out and look at the entire journey of a user/consumer and not just the time spent on the “product” aka the website or the app.
Even before the user gets on the website/app, they have spent a lot of time offline, discussing with family and friends on the probable options, seeking recommendations and other aspects of the vacation. These elements play on the user’s mind while browsing through the website or app.
“I want to stay in the hills of Ooty in an independent house and not really in a hotel.”
Now, if you look at the above problem statement from the user’s perspective — the trip essentially becomes the product. With this realisation, the task is to present the user a curated experience built around the ask. As you can see, a simple change in perspective, creates tremendous value for the user.
Beyond the digital realm
The process of value creation encompasses across the board and is not just restricted to the digital realm. A case in point being the current COVID crisis, which has led to a spike in COVID specific micro-insurance policies, irrespective of whether an individual has a prior health cover or not.
These are fixed benefit covers, with sum assured varying from Rs.21,000 to Rs. 200,000, with premiums as low as Rs. 150 and upto Rs. 3,000 — fulfilling varied needs at varied price points.
Micro-insurance policies are essentially structured around time, coverage or usage. This in-turn makes the products more economical and accessible.
Stand-alone health insurance providers have been gaining traction over the years. As specialists in the health insurance domain, they are able to innovate products (create value) while keeping in mind the healthcare needs of different strata of the population. That led to the creation of micro-insurance solutions which fulfil customer needs, which were previously considered difficult to meet.
To sum up, a change in perspective is the first step in value creation.
What’s yours value creation story? Would love to hear them.
Until next time!
~Sajid
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