Value Map
One way to compare product strategies visually is to draw a Value Map, invented by Kambil & Ginsberg in 1997 (Kambil is Global Director of Deloitte Research) and improved by Osterwalder in 2004.
The Value Map for Thumtronics looks like this:
Caveat: In the Value Map above, Thumtronics’ various competitors are placed to indicate their overall value proposition, not to make fine distinctions as to which is slightly leftward or rightward of the others at each given price level.
The music products industry today has a well-defined Value Frontier – the solid grey line sweeping up from left to right in Figure 2 above. In the middle are most of the companies you’re likely to recognize – Yamaha, Fender, Gibson, Kawai, etc. Their products follow a trajectory of sustaining innovations along dimensions of price and functionality that customers expect. These sustaining innovations keep their products from being completely commoditized, so that they can be sold at market prices or slightly higher.
At the upper right of the Value Frontier are those firms whose products earn a premium price for excellence. Steinway and Baldwin pianos, Paul Reed Smith guitars, and Buffet-Crampon wind instruments are indicative here.
At the lower left end of the Value Frontier are firms who have found new ways to earn a profit from the sale of commoditized products at economy prices. Examples include First Act, which sells commoditized band instruments and guitars through Wal*Mart, Fender’s low-end Squire brand, and Pearl River, the first Chinese manufacturer to sell large quantities of “good enough” pianos under its own brand name in the USA.
The introduction of the eMotion Thummer shifts the industry’s Value Frontier decisively rightward, to the dashed grey line. The eMotion Thummer offers unique and disruptive advances in expressive potential, creative potential, and ease/depth/breadth of learning that no other product can offer – and does so at a Market price.
Thumtronics can then ride its new Value Frontier down and leftward by introducing the Pocket Thummer at an Economy price. Although the Pocket Thummer’s portability and low-cost polyphony are potentially disruptive to Thumtronics’ competitors, it is sustaining with regard to Thumtronics’ newly-established Value Frontier – hence its being categorized as a Sustaining Innovation.
Finally, Thumtronics’ QWERTY Thummer is an implementation of the Thummer’s note-pattern on the standard computer keyboard, offered absolutely free. Because the Thummer’s note-pattern is, by this time, “expected” on Thumtronics’ new Value Frontier, it is neither a sustaining nor a disruptive innovation from Thumtronics’ perspective, and so is categorized as offering “Me-Too” value – albeit at the all-important “Free” price level.
Once Thumtronics’ new value frontier becomes the industry’s new status quo – perhaps a decade hence – the eMotion Thummer and its related products will lose their disruptiveness and migrate leftward on the Value Map. The installed base of Thummer players (which should by then be quite large) should then allow Thumtronics – still protected by its numerous fundamental patents – to introduce a “quality” brand whose excellent products can attract premium prices (the way Toyota created the "Lexus" brand to differentiate its new low-volume, high-margin cars).
As with the Strategy Canvas, the key point of the Value Map is that Thumtronics' strategy delivers a disruptive leap in functionality at a low price through novel channels – exactly what is required to deliver rapid, profitable, sustainable sales growth.
The Value Map for Thumtronics looks like this:
Figure 2: Value Map
Caveat: In the Value Map above, Thumtronics’ various competitors are placed to indicate their overall value proposition, not to make fine distinctions as to which is slightly leftward or rightward of the others at each given price level.
The music products industry today has a well-defined Value Frontier – the solid grey line sweeping up from left to right in Figure 2 above. In the middle are most of the companies you’re likely to recognize – Yamaha, Fender, Gibson, Kawai, etc. Their products follow a trajectory of sustaining innovations along dimensions of price and functionality that customers expect. These sustaining innovations keep their products from being completely commoditized, so that they can be sold at market prices or slightly higher.
At the upper right of the Value Frontier are those firms whose products earn a premium price for excellence. Steinway and Baldwin pianos, Paul Reed Smith guitars, and Buffet-Crampon wind instruments are indicative here.
At the lower left end of the Value Frontier are firms who have found new ways to earn a profit from the sale of commoditized products at economy prices. Examples include First Act, which sells commoditized band instruments and guitars through Wal*Mart, Fender’s low-end Squire brand, and Pearl River, the first Chinese manufacturer to sell large quantities of “good enough” pianos under its own brand name in the USA.
The introduction of the eMotion Thummer shifts the industry’s Value Frontier decisively rightward, to the dashed grey line. The eMotion Thummer offers unique and disruptive advances in expressive potential, creative potential, and ease/depth/breadth of learning that no other product can offer – and does so at a Market price.
Thumtronics can then ride its new Value Frontier down and leftward by introducing the Pocket Thummer at an Economy price. Although the Pocket Thummer’s portability and low-cost polyphony are potentially disruptive to Thumtronics’ competitors, it is sustaining with regard to Thumtronics’ newly-established Value Frontier – hence its being categorized as a Sustaining Innovation.
Finally, Thumtronics’ QWERTY Thummer is an implementation of the Thummer’s note-pattern on the standard computer keyboard, offered absolutely free. Because the Thummer’s note-pattern is, by this time, “expected” on Thumtronics’ new Value Frontier, it is neither a sustaining nor a disruptive innovation from Thumtronics’ perspective, and so is categorized as offering “Me-Too” value – albeit at the all-important “Free” price level.
Once Thumtronics’ new value frontier becomes the industry’s new status quo – perhaps a decade hence – the eMotion Thummer and its related products will lose their disruptiveness and migrate leftward on the Value Map. The installed base of Thummer players (which should by then be quite large) should then allow Thumtronics – still protected by its numerous fundamental patents – to introduce a “quality” brand whose excellent products can attract premium prices (the way Toyota created the "Lexus" brand to differentiate its new low-volume, high-margin cars).
As with the Strategy Canvas, the key point of the Value Map is that Thumtronics' strategy delivers a disruptive leap in functionality at a low price through novel channels – exactly what is required to deliver rapid, profitable, sustainable sales growth.
Labels: innovation, strategy, Thummer, Thumtronics, value map
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