Business Strategy

HBR

1997 Most campanies focus on matching and beating their rivals. Asa result, their strategies tend to take on similar dimensions. What ensues is head-to-head competition based iargely on incremental improvements in cost, quality, or both. W.Chan Kim and Renee Mauborgnefrom Insead study how innovative companies break free from the pack by staking out fundamentally new market spacethat 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 searching within the conventional boundaries of industry competition, managers can look methodically across those boundaries to find unoccupied territory that represents real value innovation. The French hotel chain Accor,for example, discarded conventional notions of what a budget hotel should be and offered what most value-conscious customers really wanted; a good night's sleep at a low price. During the past decade, the authors have developed the idea of value innovation, often in the pages of HBR. This article presents the notion in its original, most fundamental form.

Value Innovation

The Strategic Logic of High Growth

by W.Chan Kim and Renee Mauborgne

and increasingly intense competition, profitable growth is a tremendous challenge many companies face. Why do some companies achieve sustained high growth in both revenues and profits? In a five-year study of high-growth companies and their less successful competitors, we found that the answer lay in the way each group approached strategy. The difference in approach was not a matter of managers choosing one analytical tool or planning model over another. The difference was in the companies' fundamental, implicit assumptions about strategy. The less successful companies took a conventional approach: Their strategic thinking was dominated by the idea of staying ahead

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FTER A DECADE OF DOWNSIZING

What...