The importance of product innovation – Term Paper

Importance of product innovation

This pillar focuses on aspects relating to the company’s product that involves value proposition and customers targeted who experience the outcomes concerning the value and capabilities. Therefore, it is essential for an organization it incorporates product elements to deliver the expected customer value.

Value proposition

Due to the existence of a wide range of technologies such as the ICT, the e-business is provided with extensive opportunities to develop and render value to its targeted clients than the prior usage of element-and-mortal companies. With this perspective, Osterwalder outlined several major platforms e-business may develop worth for the organization’s clients and differentiate its e-business strategies from competitors. They involve;

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By incorporating innovation by use of new and modified or complementary offerings. 

Establishing lower pricing model than that of its competitors which result to enabling customer cost saving opportunities.

Offering premium clientele servicing and the connection from, augmented services that are in line with the core offering.

Customers targeted

Organizations strategize for a business model and plans that focus on a certain group of customers. The targeted customers vary in that they could be the business-consumers or business-to- business from a specified geographical and demographic population. Therefore, when companies engage in operations that are highly based on the internet, it provides them with a wide scope range of clients as compared to the use of traditional offline business operations because of its virtual features. For instance, the digital market locations usually target particular geographical regions such as providing the classified ad websites that allow customers to swap their used products in New York geographical area. When targeting a demographic group across different and several locations it requires the creation of a platform that outsources for customers of employees that are well equipped for certain tasks from any location in the global market. Thus, the prospects of e-business are extensively plentiful. However, each of business models needs to watch out for the global and local competition threats which are on increasing rate because there is no barrier to entry in the market (Porter n.p).


Capabilities of an organization are significant of the essence because they are the aspects that enable rendering of a value proposition to business clients. Thus capabilities are defined as patterns that are repetitive of actions by use of company’s resources to develop and offer their products to the market (Wallin, p.960). When it comes to the digital peer-to-peer location of markets, the organizations not only do they require to acquire the required technical abilities to certify that the platform established can effectively operate and enable carrying out of transactions but also they must possess the technology capacities and the know-how traditional marketplaces. This helps in the creation of sufficient network effects for business prospects. 

What is infrastructure management

Infrastructure management refers to configuring the value of a system that is necessary to develop and convey value proposition for the organization. In accordance to Osterwalder (p.2), the element of infrastructure configuration for e-business consist of the activity configuration of the organization that involves the creation of value and rendering undertakings and the connections involved. Also, the infrastructure management encompasses organizational resources, company’s assets and the network with partners.

Configuration of activities

The aspect of value proposition can defined as the results obtained from a configuration or a given set of internal or external activities of a firm and ensures the organization employs the processes. The process of configuration is different across various businesses, nonetheless, in many instances it comprises of a process that develops the value of organizational services, broker, and intermediary services.

Partner network

Partner network plays a critical role in determining the parts of the configuration activities are disseminated amongst the organizational members. Further, the strategic alliance, existing in a given form, such as joint ventures or the long-term relationships between the supplier and the buyers, are essential to all business models. This is because partner network allows the company to fully concentrate on their major specialties and outsourcing of its non-priority competencies and undertakings to the partner network. Osterwalder also cited some other important definitions of partner networks that include b-webs (Tapscott et al., n.p), and fluid firm (Selz, n.p).

Resources and assets

Resources and assets are necessities of a company because they are significantly used develop and render value proposition to the target customers. The resources of a firm are such as the tangible ;plants, tools, and capital reserves- and intangible elements and human resources. The technology element is often categorized under human assets, and intangible resources includes the copyrights, brands, firm’s image, patents, and trading secrets.  

Customer relationship

Customer relationship is heftily enabled by the use of ICT technologies which creates an e-business opportunity to the building of customer networks. Osterwalder (p.2) stated that the companies could understand and experience the needs of their clienteles by illustrating data oriented strategies, cultivate creative means of delivering the proposition of value by establishing multiple channels as well as put emphasis on the essence of trust because of e-business functions mainly in a virtual context that entails a limited face-to-face interaction. 

Information technology

The three key objectives outlined by Osterwalder on data strategies include definition of the strategy to collect customer data and strategizing on the manner in which the collected information can be leveraged to develop premium customer connections. The third objective incorporates the use of data to determine new opportunities in the market and enhance customer experience. The orientation of data is acknowledged as the most important aspect in strategizing for e-businesses and has become the culture of many companies in this digital era. 

Distribution channels (feel and serve)

Usually, firms are obliged to employ several distribution channels so as to engage with customers. The aspect of ontology depicts that if the organization uses the market plan of ‘going to the market’, it must consider the various models of direct and the indirect channels they uses and evaluate if those channels are functioned by that company or delivered by the agents or intermediaries. The core importance of ICT technologies is to ensure that the companies engage and interact with clients in a manner that is creative and innovative. Thus, the distribution channels and the means that it uses should be strictly studied in detail to discover new techniques that have emerged and innovative companies.;

Reliance, protection, and loyalty

The centricity of ontology element is particularly depicted to the e-business because it mainly functions in a virtual environment. Therefore, customers conduct transactions through the cyberspace with a reasonable trust level; all e-business models are expected to factor in the trust element when strategizing their business model. Osterwalder has taken the initiative to summarize a series of mechanisms that develop trust in the e-business platform that includes the virtual societies, their performance history, and services concerned with mediation, and incorporation of insurance where there is possible harm, the process of verification and authorization of the agencies as well as intermediaries, and outlining a clear privacy policy (Teubner, n.p). When dealing with peer-to-peer digital marketplaces, the trust aspect should be managed in a two-way-traffic: trust between the organization or customer and the market platform and the level of trust among the users. Moreover, the traditional approaches incorporated within e-commerce companies, the market locations platforms have to illustrate supplementary mechanisms so as to enhance trust level and protection concerns among the participants to ensure all operations run smoothly as expected (Resnick, Paul, ; Richard, p.145). As such, customer loyalty is of the essence to any aspect of the business for example, by use of online platform it possesses as much cheaper strategy of inciting the existing customers than the approach of acquiring new ones. Hamel (n.p), depicts that positive relationship dynamics that incorporate emotional and transactional aspects in the linkage between the company and the clients contribute significantly to boosting client loyalty.;