Capturing Value: Innovation’s Vital Second Step

November 13, 2014


When it comes to innovation in business, creating a viable and valuable product is just the first step. After all, the arrival of the portable MP3 player made many companies stand up and take notice of this revolutionary device. One of those firms was Apple, who soon came to dominate the market with the iPod. Although the signature MP3 player was released later than its competitors, the product’s dependability and stylish design quickly allowed it to capture the bulk of the market.

Despite successes like these, some companies today appear to ignore this important second step in the innovation process. For instance, Facebook has assembled a network of more than 1.3 billion users by creating a service of immense value for their customers. However, the company’s ability to benefit financially from all that traffic remains unconvincing, causing the social network’s stock price to fluctuate wildly since its 2012 debut. In order for Facebook to remain dominant, it must become more innovative in the way it captures value for its service. If not, then another social network might unseat Facebook in a similar way that it once did to MySpace.

The sustainability company Vestergaard has done a better job retaining the value of its unique products. The Swiss business makes the LifeStraw, a portable water purifier that removes 99.9 percent of bacteria from contaminated water. Since hitting the market ten years ago, LifeStraws are now distributed at the site of nearly every major disaster. But in a world where 780 million people lack access to clean water, Vestergaard knew their product had the potential to succeed outside of immediate relief efforts. The problem was that the impoverished people in this market wouldn’t be able to afford LifeStraws, leading Vestergaard to think outside the box. The company decided to let consumers in Kenya fund their purchases with “carbon offset credits,” or documented reductions in carbon dioxide usage that can be exchanged for money. Using the LifeStraw meant that people no longer had to burn wood or gasoline to boil their water, which made it easy for hundreds of thousands of Kenyans to earn carbon offset credits. Vestergaard plans to set up similar exchanges around the world, ensuring that they’ll capture as much value for their innovative product as possible.



  1. Why does being “first-to-market” not always guarantee success?
  1. When is it most important to “think outside the box” in managing a product?


Source: Stefan Michel, “Capture More Value,” Harvard Business Review, October 2014. Photo by: Lifestraw.