This tool is designed to help you identify opportunity gaps in the marketplace. This can improve your knowledge about your customers. This in turn can improve alignment of your products and services with each customer segment or even identify new customer segments not being served correctly.

Value Quotient is the ratio of a solution's desired outcomes to its undesired outcomes.

Innovation "Targeting" Tool: Value Quotient

The purpose of this tool is to assess the value of your current solutions against those of your competitors and relative to an ideal state in which a theoretical solution could fulfill all desired outcomes and avoid all undesired outcomes. Such an idealized solution (ideal innovation) would meet all expectations, cost nothing, and have zero chance of harming the user, anyone else, or the environment.

Understanding the Value Quotient tool can help you identify opportunities or value dimensions that are ripe for exploration and exploitation (Figure 1). The extent to which you can increase value along these dimensions determines the extent to which you will be successful with an innovation project.

Value Quotient

Figure-1: Every product, service, or solution in the marketplace contains a certain degree of value relative to others. The goal is to fulfill desired outcomes to the greatest extent possible and avoid undesired outcomes to the greatest extent possible.

If you can move your solution closer to the ideal innovation and beyond any and all competitors, then you have successfully innovated. Much more importantly, recognize that if you cannot move your solution (or business model) materially closer to the ideal innovation, then you will fail at innovation and lose out to your competitors in that market.

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