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Harvard Business Review
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Creating
New Market Space
W. Chan Kim and Renée
Mauborgne
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Most companies focus on matching
and beating their rivals. As a result, their strategies tend to take on
similar dimensions. What ensues is head-to-head competition based
largely on incremental improvements in cost, quality, or both. The authors
have studied how innovative companies break free from the competitive pack
by staking out fundamentally new market space--that is, by creating products
or services for which there are no direct competitors. This path
to value innovation requires a different competitive mind-set and a systematic
way of looking for opportunities. Instead of looking within the
conventional boundaries that define how an industry competes, managers
can look methodically across them. By so doing, they can find
unoccupied territory that represents real value innovation. Rather
than looking at competitors within their own industry, for example, managers
can ask why customers make trade-off between substitute products or services.
Home Depot, for example, looked across the substitutes serving home improvement
needs. Intuit looked across the substitutes available to individuals
managing their personal finances. In both cases, powerful insights
were derived from looking at familiar data from a new perspective.
Similar insights can be gleaned by looking across strategic groups within
an industry; across buyer groups; across complementary product and
service offerings; across the functional-emotional orientation of
an industry; and even across time. To help readers explore
new market space systematically, the authors developed a tool, the value
curve, that can be used to represent visually a range of value propositions.
| W. Chan Kim is The Boston Consulting Group Bruce D. Henderson Chair
Professor of International Management at INSEAD, France.
Renée Mauborgne is The INSEAD Distinguished
Fellow and Affiliate Professor of Strategy and Management at INSEAD.
She is also President of ITM Research.
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