What is Value Innovation?

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Value Innovation: The Cornerstone of Blue Ocean Strategy

Defy the Dogma: The Cost-Value Trade-Off

It is conventionally believed that companies can either:

1️⃣ Create greater value to customers at a higher cost; or

2️⃣ Create reasonable value at a lower cost.

Using traditional thinking, strategy is seen as making a choice between differentiation and low cost.

For example: Normally, if a law firm wants to differentiate itself from its competitors based on standard established legal industry competing factors, it would need to decide how much $$$ to spend on owning/leasing office space.

The law firm then has a conventional choice, to locate in an expensive CBD office at a higher cost, or to locate in a less expensive suburban office at a lower cost.

Value Innovation Example: "Co-working" v. Expensive Offices

In contrast, those that seek to create blue oceans pursue both differentiation and low cost simultaneously.

By adopting a co-working arrangement Blue Ocean Law Group uses offices which are shared with other companies + used when required to meet our clients (which only occurs in limited circumstances).

Co-working has effectively allowed us to locate our client-facing activities in an expensive CBD office at a lower cost than even the less expensive suburban office.

This achieves both differentiation and low cost simultaneously, defying the dogma of the traditional cost-value trade-off.

Source: blueoceanstrategy.com

The ERRC Grid

Value Innovation is created in the region where a company's actions favourably affect both its cost structure and its value proposition to clients.

Cost savings are made by eliminating and reducing the factors an industry competes on which do not add value to the client.

Value is lifted by raising and creating elements the industry has never offered before which do add value to the client.

Source: blueoceanstrategy.com

Eliminate / Reduce

In our above example, Blue Ocean Law Group have eliminated the fixed cost of owning/leasing expensive office space in the CBD.

Incurring this significant cost does not add value to the client.

Raise / Create

These cost savings have allowed Blue Ocean Law Group to invest time and resources into delivering value to clients which have not traditionally been offered directly by a law firm.

A few examples include the following:

✅ An easy to use, online 24/7, access from anywhere (including from your phone if required), Self-Service Legal Document generation portal, with support from our legal team as and when required;

✅ The option to add Authentic*/ Genuine Document Security for Fraud + Litigation Protection; and

✅ Physical + Digital Safe Custody Vault options.

Over time, costs are reduced further as scale economies kick in due to the high sales volumes that superior value generates.

Value Innovation: A Leap in Value for both the Company and the Client

Value Innovation is achieved only when the company's utility, price and cost and people are properly aligned.


This FAQ was created by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.