Value Driven Product (Service) Management
The organization, coordination and execution of activities focused on growing the net value of products (services) as one of the primary ways to build business value.

Critical Terms & Concepts

Customer Value 
Product Value - Product Price

Net Product Value
Product Value - Product Cost

Product Value
A metric that is a property of a product (good and/or services), similar to product cost as it is measured in $, but measures the worth of a product (customer's willingness-to-pay) to a specific market and is independent of use situations and price.

Product Value Drivers
Tangible and intangible attributes of a product (good and/or service) bundle that represent the building blocks of product value.

Related Terms

B2B Value Capture
Salespeople are often forced to compete on price only when selling their products in a business-to-business (B2B) transaction. B2B value capture is about quantifying the value that a supplier's solution offers for the client so that claims of "better, cheaper, faster" can be conceptualized and measured.

Challenge Driven Innovation (CDI)
A portion of a larger project is formulated as a challenge, in which a "challenge" essentially represents the problem statement for a block of work that can be modularized and in most cases rendered "portable" in that it can be outsourced or insourced as an integral unit.

Customer Referral Value
This is the value of an existing customer referring the product (good and/or service) to an acquaintance, which can be calculated in a number of ways:
  1. the reduction in upfront capital (acquisition costs)
  2. the potentially greater perceived value (due to the reduction of perceived risk)
Customer Satisfaction
A customer's perception of how well a product (good and/or service) performs in specific situations or in general relative to their expectations.

Distributed Innovation
A gathering of ideas and solutions from various sources and entities by a central organization who then integrates the pieces into what is considered the final innovation.

Qualitative: An event characterized by an act of creation or invention followed by successful implementation and deployment so that the benefits of the creation may be widely enjoyed.

Quantitative: An act of creation or invention that upon implementation and deployment increases the net product value.

Innovating the method and process of innovation.

Open Innovation
Use of inventive sources independent of the organization charged with delivering the innovation to the marketplace.

Perception of Product Value
Perception is the process by which we select, organize, and interpret information to create meaningful pictures of the world. Product Value is based on each individual's perception and can vary due to selective attention, selective distortion, and selective retention.

Process Orchestration
Overlapping with the related concept of choreography, orchestration directs and manages the on-demand assembly of multiple component services, to create a composite application or business process. Orchestration tends to imply a single co-ordinating force, whereas choreography also applies to shared co-ordination across multiple autonomous systems.

A bundle consisting of a good and/or services for which consumers pay.

A bundle of product attributes that can be used to describe and compare. 

Reference Price
Any product price that is used by a consumer to evaluate the reasonableness of other prices.

Shareholder Value
The Market Value (# of Shares x Stock Price) of the firm's stock held by shareholders, which is determined by the expectations of future performance of the firm, primarily future revenues, earnings, and cash flows.

Relative worth of a product or prospect measured in dollars.

Value Calculators
Spreadsheet-based applications that business-to-business salespeople can use to demonstrate the cost-savings or incremental value that the client will receive by using the supplier's offerings.

Value Drain
Attributes, supplementary services, programs, and systems that cost the business more to provide than they are worth to the customers and have no strategic significance.

Value Function
A function that can be used to calculate the value of a product using estimates of the relative worth of critical value drivers.

Value Leak
Customer interactions that increase the cost of doing business for the customer and/or business, but yield no offsetting cost savings or value to either party.

Value of the Customer (often referred to as Customer Value)
How much value the relationship with a customer delivers to the firm. Can be calculated on a current basis, to-date basis, an as-is basis, or projected lifetime basis.

Abstract concepts of what is right, worthwhile, or desirable. The values of management impact how an organization creates value.