Creating Interactive Value

For a better example of creating interactive value, consider an Ikea example where there are four parties:

  • suppliers (e.g. manufacturing agents);
  • a provider signatory (e.g. a distributor, say, Ikea);
  • a customer signatory (e.g. a purchaser, say the father of a family);and
  • beneficiary stakeholders (e.g. the people for whom the customer signatory really wants to receive value, say, the family).

    • In this depiction, the provider signatory (Ikea) is the prime mover for the value constellation, orchestrating everything. The creation of interactive value of most interest is between the customer signatory (the father) and the beneficiary stakeholders (the family).

    In the original words of Normann & Ramirez:

    Our tradition about value … [says] every company occupies a position on the value chain. Upstream, suppliers provide inputs. The company then adds values to these inputs, before passing them downstream to then next actor in the chain [whether another business or the final consumer].

    IKEA wants its customers to understand that their role is not to consume value, but to create it. IKEA offers families more than co-produced furniture, it offers co-produced improvements in family living -- everthing from interior design to safety information and equipment, insurance, and shopping as a form of entertainment.

    To call these services amenities is to underestimate their central significance to IKEA's strategic intent: to understand how customers can create their own value and create a business system that allows them to do it better. IKEA's goal is not to relieve customers of doing certain things but to mobilize them to do easily certain things they have never done before. Put another way, IKEA invents value by enabling customers' own value-creating activities. … Wealth is [the ability] to realize your own ideas. [p. 67]
    Source: Richard Normann and Rafael Ramirez. 1993. “From Value Chain to Value Constellation: Designing Interactive Strategy.” Harvard Business Review 71: 65–65. http://hbr.org/1993/07/designing-interactive-strategy .

    The added-cost diagram was created in OpenOffice Draw and exported to SVG. The source file is as available at http://coevolving.com/maps/fed/adding-cost.odg . The enabling interactive value diagram was created in OpenOffice Draw and exported to SVG. The source file is as available at http://coevolving.com/maps/fed/enabling-interactive-value-creation.odg .

    http://coevolving.com/maps/fed/enabling-interactive-value-creation.svg

    http://coevolving.com/maps/fed/adding-cost.svg

    One conventional way of thinking about value is as "value added" (see Wikipedia ). In an alternative view that includes a theory of the offering and value constellations , interactive value resituates multi-party relationships.