Foundations of Value
Every offering delivers its value on some underlying basis - a core technology, approach, or mechanism that makes the value possible. In innovation strategy, this basis is called a Foundation of Value (FoV). Understanding your current FoV, and recognising when it is nearing its limits, is one of the most strategically important things an innovator can do.
A Foundation of Value is the underlying basis - typically a core technology or approach - upon which an offering delivers its value to customers. Each generation of an offering rests on a particular FoV, and delivers only as much value as that foundation allows.
Examples of shifting foundations
| Domain | Old foundation of value | New foundation of value |
|---|---|---|
| Photography | Chemical film | Digital sensors |
| Lighting | Incandescent filament | LED |
| Music delivery | Physical media (CD) | Streaming |
| Computing | On-premises servers | Cloud |
Notice the pattern: in each case, a new foundation of value eventually replaced an old one, unlocking a higher ceiling of value. Businesses tied to the old foundation - and unwilling to jump - were left behind. This is exactly the Kodak story from Module 3, now seen through a strategic lens: chemical film was a foundation of value that digital sensors superseded.
What is the foundation of value underneath your organisation's core offering? How much headroom is left before it hits its natural limits?
Sources
- Global Innovation Institute (GInI), Foundations of Innovation body of knowledge.
- Foster, R., Innovation: The Attacker's Advantage, 1986.
- Christensen, C., The Innovator's Dilemma, 1997.