Walking through Barbizon, the northern French village des peintres, home of the 19th-century painter Jean-François Millet, Professor W. Chan Kim makes an expansive gesture: “This place is a creative hub,” he says, smiling broadly, as he watches another pack of tourists disembarking from a bus.
Silicon Valley it isn’t. At least, not yet. But Professor Chan and his INSEAD colleague, Professor Renée Mauborgne, believe that their newly created Value Innovation Institute may change the perception of the region to one of a global center for the study of the linkage between innovation and commerce. The institute, he explains, will locate managers from diverse global companies to work on cross-industry and cross-company projects that connect innovative ideas to large commercial opportunities.
Professor Kim, the Boston Consulting Group Bruce D. Henderson Chair Professor of International Management at INSEAD, and his research partner, Professor Mauborgne, the INSEAD Distinguished Fellow and Affiliate Professor of Strategy and Management, are particularly associated with the concepts of “value innovation” and “market space.” They see value innovation as the ability to challenge assumptions about strategy and to make the competition irrelevant rather than competing on established ground. Their theory of value innovation helps explain the success of many high-growth companies. Market space is the process by which companies can create new demand. It challenges companies to create new markets rather than being preoccupied with those in which they already operate.
The concepts have emerged from the colleagues’ cross-industry research over the past decade, which has sought to identify patterns in the way companies create value from innovation, invent new markets, and reinvent existing ones.
“We started off by looking at the companies that succeeded in circumventing the competition,” explains Professor Kim. “Then we moved on to how to create new market space — companies need a way to think and act out of the box if they are to circumvent the competition. Our notion of ‘fair process’ looks at management decision making and what is required to build and execute creative thinking. Most recently we have looked at how to identify a winning business idea and determine which one to bet on. Qualifying innovative ideas for commercial success is a critical strategy component of value innovation.”
Interest in the duo’s ideas about value innovation, especially among the Europeans, is growing, thanks to a series of well-received articles published over recent years in the Harvard Business Review and their presentation last year at the World Economic Forum at Davos. “Here we were at Davos, moderating a discussion on value innovation, and yet only one European, Hasso Plattner [the founder and CEO of SAP AG], was on the panel,” recalls Professor Mauborgne. “This raised the question, ‘Why aren’t there more European CEOs and companies worth listening to on this subject?’ What is the problem in Europe? The answer that kept coming back is this: Europe is strong in science and technology, but weak in connecting innovation and commerce.”
W. Chan Kim, born in Korea, and Renée Mauborgne, an American, arrived at INSEAD from the University of Michigan Business School, where both had studied and taught. Each came to INSEAD in search of new perspectives. “In the United States, international business still means the U.S. and the rest of the world,” says Professor Mauborgne. “Here it is different. We wanted to learn about the reality of international business and understand the role and scope of strategy within that.”
It seems fitting that a Korean and an American engaged in a global search for innovative business ideas should make a place like INSEAD their intellectual base. Strategy+business met Professors Kim and Mauborgne at their offices at INSEAD and asked about the intellectual stimulus offered by their move to Europe.