A director in the Cisco Digitization Office, Andy Noronha works to develop research and insights that will help guide the future of digitization for the company and its customers. He is also a visiting scholar at the Global Center for Digital Business Transformation, an IMD and Cisco initiative, where he conducts research and works with executives from companies seeking to remain competitive in an era of digital disruption.
Andy is this week’s Business901 podcast guest where we talked about his new book, Digital Vortex: How Today’s Market Leaders Can Beat Disruptive Competitors at Their Own Game. The part that intrigued me most about the book was the discussion of value. This is an excerpt from our discussion. 
Joe Dager: You started out with the idea of narrowing down how digital disruption looks through the lenses of three value models. Can you explain them?
Andy Noronha: Absolutely. We looked at hundreds of disruptors and we did that to understand how they’re driving disruption in their respective markets, what sorts of value propositions are they offering. Essentially we found that they could be categorized into 3 primary types of value.
The first is what we call Cost Value. It’s really the ability to offer customers, whether they be consumers or even businesses more for their money essentially. We see a number of disruptors employing this approach.
The second is what we call Experience Value. It’s offering a better experience for a product or service, and there are again many ways that disruptors are able to do this.
Finally, the third is particularly new, and we believe a very powerful type of value that we call Platform Value. It’s the ability to build a platform, mostly, most often using software to connect parties to deliver a completely new type of value.
These are three types of value that we see disruptors using. But, what we actually found when we looked at the most effective disruptors, regardless of industry is that they employ an approach that we call Combinatorial Disruption. Combinatorial Disruption is the approach of using all three of these forms of value in very compelling and innovative ways to reinvent what customers can get essentially and to upend existing companies.
Joe: If you can use all three of them, and with a mindset that that would be the thing that would be the most successful but you don’t have to.
Andy: You don’t have to, we see, a number of disruptors using one or maybe two of these types of value but I can give you an example of combinatorial disruption which is one the probably most of your listeners will know about Tesla. When we look at Tesla, we see that they definitely offer Cost Value. For instance, they allow their drivers to save on fuel costs. Their recent purchase of solar city, a value proposition there is lowering your electricity costs. Another example is, you wake up in the morning, and you have a better car than the one you bought through free upgrades. Those are all types of Cost Value. They offer Experience Values. The new types of capabilities that they’re offering like autopilot, the ability to buy directly online rather than having to visit a car dealership and things like their service model, which is based on the concierge model.
You look at the third form of value, Platform Value, it’s a very innovative set of approaches that they’re using, right? I’ve often heard that Tesla called an iPhone on Wheels. Essentially it’s a rolling software platform. I think their most ambitious type of platform value is what they’re looking to do essentially replacing gas stations as a platform with their supercharging network. An example like Tesla shows how a company is able to combine all three types of value in a compelling way to reinvent the overall value that their customers are able to obtain.