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Model & Frameworks

Value Creation Model

2/13/2017

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There are generally 2 types of value that an organization can create by performing certain activities:
a) internally directed OR
b) externally directed values

INSIDEOUT STRATEGY
An internally-focused value creation strategy considers the capability that an organization needs to build in order to capture that value. To achieve that an organization need to take a systemic view by asking: "what values are we trying to capture by building this capability" and "which system is this capability related to"? This strategy is all about abstracting values out of systemic capabilities.

OUTSIDEIN STRATEGY (the 'mirror' effect)
An externally-focused value creation strategy takes both buyer and seller interest into consideration. Both parties should benefit from the value creation exercise: it allows customer to discover values and transform the relationship with the selling side. This 'mirror' effect cascades down the engagement process, from value discovery to extraction (mirror: transact) and ultimately realization (mirror: subscribe). 
For example, a new WeChat user discovers multiple value added services offered by the platform and adopts it (discovery). As the engagement deepens, this users finds that its possible to extract (transacts) different values from this platform beyond mere push communication. With multiple successive transact and engagement, this user becomes an advocate (subscribed) of this platform as he is able to realize value over and over again.
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