Current existing business simulation and diagnosis models only consider a reduced number of factors or variables, most only two variables represented by 2x2 matrices, not linking multiple existing factors and variables related to the business environment in order to deliver a final and single output, which could be used as the core indication for the decision-making process. That has led to an important question: How can information represented in multiple 2x2 matrices be reduced to a single representation? Or, in other words, can we interconnect two or more 2x2 matrices and create a new matrix that represents all variables in place?
Initially, the practical research work, which served as the base for this paper, focused on existing quantitative models of two and more variables and on theirs final delivered output. As none of those models proved to be capable of producing a final single output when considering more than two variables, the practical research derived to the tentative of finding a mathematical model that could integrate multi-variables and produce a single final output.
The proposed models in this paper will provide decision makers with single pieces of information, which have unique and unmistakable meanings, eliminating confusion and potential error at the moment of decision-making. The concept has been used in a software application dealing with multiple variables represented in different 2x2 matrices (3 or 5) and reducing all those variables to a single positioning in a final 2x2 matrix. Therefore, the proposed models provide a new view and understanding of the decision-making process, reducing multiple variables to single pieces of information, facilitating and easing the decision-making process.
The DynamicMAP software will provide practitioners and scholars with a pragmatic tool to determine product value and its relation to strategy. It will help also those in determining the innovation’s value creation path. Connecting this information with strategic thinking and planning will reduce risk and help avoiding failure.
Table of Contents
1. Introduction
2. Literature Review
3. Basic Approach:
4. The model in detail
5. Implications to Industry
6. Value to business
Objectives & Core Topics
This paper aims to bridge the gap for organizational decision-makers by providing a practical, visual model that integrates multiple business variables into a single, cohesive strategic output. It addresses the challenge of connecting disparate business factors to improve decision-making accuracy and reduce the risk of failure in innovation and strategic planning.
- Development of an integrated strategic framework for multi-variable analysis.
- Alignment of innovation archetypes with consumer value perceptions.
- Transformation of complex market environments into actionable strategic decisions.
- Practical application of value-based innovation models in business scenarios.
Excerpt from the Book
4. The model in detail
There are several factors that contribute to the margin of a product. Innovation, differentiation and perceived value by consumers can influence, among other factors, the margin that a product can provide to a business. The perceived value by the consumers must be the primary factor to be understood in order to create a profitable business.
According to the “EN 11325-1:1996 Value Management, Value Analysis, Functional Analysis vocabulary – Part 1: Value Analysis and Functional Analysis” standard the definition of “value” is “the relation between the contribution of the function to the satisfaction of the need and the cost of the function”. The standard also indicates that value is not absolute but relative, being perceived differently by the different stakeholders. Choosing from two equivalent products, it is assumed that the consumer values more the one that provides better satisfaction of the existing needs, even if he or she has to spend some extra resources, that being some extra cost. It is based on this assumption that the model is constructed, as on figure 5. The matrix evaluates two variables, the functionality use or given to the product by the consumer and the price accepted or paid (imposed to) by the consumer. “Value” increases from the left bottom corner to the right top corner of the matrix.
Summary of Chapters
1. Introduction: Discusses the historical reliance on visual models in business and the need for a simplified, operational approach to strategic decision-making.
2. Literature Review: Provides an overview of existing strategic and innovation concepts, identifying the gap in current models regarding multi-variable alignment.
3. Basic Approach:: Introduces the MAP (Moving along Alignments and Paradoxes) model and defines the fundamental variables that impact business strategy.
4. The model in detail: Explains the core matrices for assessing product value, effort, potential market, and profit, detailing how these elements combine.
5. Implications to Industry: Explores how the proposed models can be applied to real-world business scenarios to manage strategic equilibrium and paradoxical situations.
6. Value to business: Concludes by summarizing the importance of the developed model in linking innovation, value creation, and strategic planning.
Keywords
Dynamic models, strategy, innovation, decision-making, value creation, product margin, market potential, competitive advantage, functional analysis, strategic equilibrium, organizational effort, differentiation, multi-variable modeling, business planning, consumer needs.
Frequently Asked Questions
What is the primary purpose of this white paper?
The paper aims to provide decision-makers with a practical, visual tool that simplifies complex business data into clear, actionable strategic outputs by integrating multiple variables into a single cohesive model.
What are the central themes discussed in this work?
The key themes include the relationship between product value and innovation, the alignment of organizational efforts with market demands, and the development of strategies for sustainable versus disruptive innovation.
What is the core research goal?
The goal is to solve the current lack of capacity in existing models to connect multiple, distinctive variables, thereby helping managers make better-informed, less risky decisions.
Which scientific methodology is utilized?
The author uses a construct-based modeling approach, creating a series of interrelated 2x2 matrices that reduce multi-dimensional business factors into single-point strategic indicators.
What topics are covered in the main section?
The main sections detail the MAP (Moving along Alignments and Paradoxes) model, the VBI (Value Based Innovation) model, and their applications in analyzing market potential, margin, and strategy.
How would you summarize the work using keywords?
The work is best characterized by innovation models, strategic decision-making, value analysis, and multi-variable alignment.
How does the model specifically address disruptive innovation?
The model defines "turning-around" innovation as a method to create alternative products that replace existing ones by offering basic functionalities at significantly lower prices, mirroring Christensen's concept of disruptive innovation.
What is the "paradox" strategy described in the text?
A "paradox" strategy is recommended when changing market forces are extremely strong and unpredictable, requiring rapid strategic adjustments that may deviate from long-term alignment.
- Quote paper
- Manuel Fernandes (Author), 2011, "From Value to Innovation" Construct Model, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/178703
