Value Creation through Innovation
The concept of value creation is an interdisciplinary issue, combining sciences such as management, marketing, psychology, philosophy, and theology (Doyle, 2008; Waskowski, 2018). The value should be treated as a multidimensional construction that can be considered from economic, functional, and emotional benefits provided to various actors (consumers or organizations) involved in the creation of the offer and/or its consumption (Storbacka, 2019; Waskowski, 2018). Introducing innovation focused on creating value is now an important strategic imperative for many organizations (Zupok, 2015). Understanding the essence of value delivered/created through innovation, therefore, requires a distinction from the outset of three concepts: “value for the organization”, “customer value”, and “value for the customer”. According to Della Corte and Del Guardio (2014), the concept of value creation regards financial performance, market competitiveness, human resources involvement, commitment and brand image, and reputation. At present, many organizations focus on value creation through innovations (with the use of BDA) both in the context of creating increased value for customers purchasing its goods, as well as for business shareholders who want to see their stake expressed in value.
Creating Value for an Organization Using Information Resources and ICT
The Resource-Based View (RBV) provides guidelines on how to create unique values for organizations based on information resources and information and communication technology (ICT) (Fink et al., 2017, Olszak & Kisielnicki, 2018). The issue of value creation has also been interestingly described by Ross et al. (1996). The authors analyzed ICT from the perspective of various assets: human assets (technical skills, business understanding, problem-solving orientation), technological assets (physical ICT infrastructure, databases, SI architecture, standards), and relationships between these assets (relationships with clients, management support, risk, and liability management).
Feeny and Willcocks (1998) identified nine key capabilities relevant to the development of business value with ICT that can be grouped into four interlocking areas. These are ICT business and vision, ICT architecture designing, ICT services delivery, and the network of capabilities related to ICT leadership and obtaining (purchasing) information. Bharadwaj (2000) proposed six dimensions of ICT, important from creating a value point of view. These are ICT/business partnership, external links in ICT, strategic thinking in the ICT area, ICT business processes integration, ICT management, and ICT infrastructure. Research carried out by these authors shows that the ICT infrastructure is the most comfortable asset to capture and copy by competitors and, therefore, represents the most “fragile” resource in creating business value. Organizations derive value mainly from intangible assets such as new skills, new products, and new business models (Wade & Hulland, 2004).
Value creation using BDA can be accomplished through various business models (Davenport & Hariss, 2007; Erickson Rothberg, 2013; Ishikawa & Nakagawa, 2013; Schick et al., 2011). The delivery of specific products and services takes place in close connection with other organizations, e.g., telecommunication operators and enterprises from the financial sector. These organizations can operate more efficiently and optimize their supply chain and manage their innovation through BD platforms.
According to Shang and Seddon (2002), obtaining value (benefits) can be classified into five dimensions: ICT infrastructure (e.g., reduction of ICT costs), operational (e.g., improvement of customer service), managerial (e.g., better resource management), strategic (e.g., development of innovative business), and organizational (e.g., improvement of organizational learning).
However, it should be remembered that the value of the organization is mainly created by maximizing customer value for the company (Zupok, 2015). It is logical if, according to the definition proposed by Kotler (2004), we assume that “customer value” is a bundle of values (added value) provided by buyers to the enterprise, e.g., through revenues (through customer satisfaction), information and signals, trust, loyalty, and other values. According to Kaplan and Norton (2004, p. 30), “if customers value innovation and high performance, then the skills, systems, and processes that create new products and services with superior functionality take on high value. Consistent alignment of actions and capabilities with the customer value proposition is the core of strategy execution”.
Creating Value for the Consumer through Innovation
Delivering value for customers is indisputably one of the significant determinants of business success (Martins & Fernandes 2015). According to Kotler et al. (2002), “value for the customer” is the difference between the total value of the product for the customer and the cost that must be incurred in connection with its acquisition. The overall value of the product for the customer is the sum of the benefits that he expects from the product or service. Value for customers also includes contacts maintained with them, the manner of service, company reputation, brand, and outstanding organization competences (Waskowski, 2015)-
Innovation is intrinsically connected with value (Lee et al., 2012). Also, these innovations are created using BDA. Creating value through innovation is visibly a winning strategy (Martinsuo, 2019; Spacek &C Vacik, 2016; Martins & Fernades, 2015; Ritala et al., 2013)- Moreover, organizations are putting considerable effort into creating value with their customers (co-creation) as part of the innovation process to achieve competitive advantages (Prahalad & Ramaswamy, 2004).
Value Creation through Innovation: Conceptual Model
Tire literature analysis became an inspiration to create a conceptual model of creating value for the enterprise through implemented innovations (Figure 1.1).
The proposed model was based on two assumptions:
- 1. Tire implemented innovations start the process of creating value for the enterprise.
- 2. Value creation is a process, and the value itself is the result of this process.
Based on the literature review, key components necessary for the proper functioning of a company that stimulates its innovativeness have been identified.
To implement and manage innovations, an organization must have:
a. Resources (DeWitt Si Mayer, 2014; Spacek & Vacik, 2016; West & Gallagher, 2006).
b. Developed mechanisms of operations (process) (Spacek & Vacik, 2016).
c. Relationships built in its surroundings (Rangus, 2017a).
Tire implemented (managed) company’s innovations have a positive influence on its market position (e.g., Anning-Dorson, 2018, Manez et al., 2013). In turn, the market position has an impact on company perception by customers and other stakeholders (Waskowski, 2018).
Figure 1.1 Model of value creation through innovation. (Own elaboration.)
Hiis perception translates into:
a. The positive attitude of these stakeholders toward the company (Waskowski, 2018).
b. Buyers’ preference for a company’s products (e.g., Kotler et al., 2002; Keller, 1993; Adil, 2012; Zhang, 2015).
c. An increase in purchases of these products by buyers (Ataman & Ulengin, 2003).
d. Willingness to cooperate and willingness to share information with the company and among stakeholders (Chariomonte, 2006; Usman & Vanhaverbeke, 2017).
Thanks to the benefits mentioned above, the company is gaining an increasingly strong reputation on the market. The reputation (positive opinion about the organization on the market) translates into further growth and strengthening of the company’s market position. The entire process operates in a closed system.
The value for the company treated as an effect is manifested in the following elements:
a. Money from customers.
b. Information from customers and other stakeholders (Chesbrough et al., 2018; Repoviené, 2017; Roberts &i Alpert, 2010).
c. Networks of relations between the enterprise and stakeholders and between the stakeholders themselves (because they share information) (Cheng Si Huizingh, 2014; Hitchen et al., 2017; Huizingh, 2011; Lichtenthaler, 2011; Owner & Korelina, 2016).
d. A strong and positive image (Rangus, 2017b).
e. The emerging competitive advantage (e.g., McGrath et al., 1996; Sanchez-Gutierrez et al., 2019; Ungerman et al., 2018).
These effects, in turn, strengthen resources, processes, and relationships. Here again, we are dealing with a closed system, which can be a kind of flywheel to implement further innovations driving the process of creating value for the enterprise.
An increase in innovation is not the only advantage of BDA but possibly the most significant one, which makes it one of the most important global trends in the ICT industry in the 21st century. Although BDA-related issues have recently become an interesting area of scientific discourse, comprehensive research devoted to the issue of creating innovation and value based on BDA is lacking. This study constitutes a significant contribution to the development of research on BDA innovation management. It investigates the nature of BDA resources that create innovation and value for customers. The conducted research resulted in a proposed value creation model for organizations using BDA-based innovations. The conducted literaturebased research points to the need for continued efforts focused on understanding the mechanisms used for extracting value from BDA.
Tliis study is not devoid of limitations. The shortcomings of this chapter include the research method adopted by the authors. In the presented review, the authors used selected databases (EBSCO, ProQuest, Scopus, Google Scholar). Hie articles contained there do not exhaust the subject.
For future research, the authors propose conducting empirical research on generating value from BDA-based innovations. Based on the proposed model, studies can be conducted in various groups of entities, both in manufacturing and in services.