Monday, April 30, 2012

Value Creation, Innovation, You, Me, Organization ...

Value creation is an interesting topic. So as innovation, rather micro innovation. Equally interesting is new breed of business enterprise (a.k.a Enterprise 2.0). And the ecosystems around it. Observe, how these three (value creation, micro innovation & new business enterprises)  are connected and how a new definition of value system is emerging.

Traditionally we understand the value creation by any business entities lies around three thing - value (rather wealth) for promoter/ share holder, customer & employees. Successful organization has created values for these three entities - definitely for the first two. Closer looks into some of the new generation business entities highlight another dimension, 4th dimension, of value creation - Societal value. There are whole of new generation business organization from whom you really don't buy anything. And without being a real customer in traditional sense these organizations adds tremendous value to our lives. What do you buy from Google, Facebook or Twitter? Look at the valuation of facebook, linkedin, groupon ... simply amazing! 

Let’s look at innovation now. Innovation is essentially creating values out of an idea or implementation of an idea to create wealth. Without tangible value a new idea can be invention but not innovation. Even thought Humphry Davy invented light bulb early 1800 but it was not useful. Later, in 1880 Edison made commercially viable light bulbs - this is innovation. Even though Edison didn't invent the bulb but due to unparallel impact on human civilization we call Edison the inventor. Today successful organizations, commercial or non-commercial, are fostering innovations. These innovations are like making colored bulb - each new colored bulb creates value. This is micro innovation!

Successful organizations have built in these two paradigm (creating value for society & investing in micro innovation) in their culture. Engaging employees & customers in innovation, and creating services for people in general without attaching a $ string is the way to go to build a lasting organization. Money is the byproduct of these new generation organizations.

Earlier this month Facebook  acquired  Instagram for $1B. What was insgram's revenue?

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