Finding the right problems to solve: value creation unpacked

Abstract

Purpose

The current innovation environment is characterized by complexity, networking and internationalization and calls for managerial approaches that not only foster value‐capture activities, but acknowledge value creation as equally important. The purpose of this study is to clarify and define in more useful conceptual detail the nature of value creation, an area within the Knowledge Management field that has not received as much research scrutiny as it warrants. The authors' main contribution in unpacking a logic of problem finding is to expand understanding of how organizations choose valuable problems on which to work.

Design/methodology/approach

The research findings are based on a literature review. In particular, the paper aims to increase understanding of value creation in innovation by critically examining and augmenting the problem‐finding/problem‐solving (PF/PS) perspective.

Findings

Based on the PF/PS approach, the paper proposes a managerial cognitive frame that shows the challenges faced by managers in the value creation process and also the associated decision points. The paper argues that three distinct discriminating alignment choices – process selection, problem‐selection, and governance choice – are essential parts of value creation, and can in time lead to efficient value‐capture and improved innovation outcomes. Also, concentrating on the early stages of innovation, the paper identifies relevant processes and the various management biases that impede successful problem‐finding.

Research limitations/implications

As the paper is conceptual, the findings await empirical confirmation. However, the paper presents a framework that will provide a useful basis for further work.

Practical implications

The discussion of problem‐finding and the different processes that can be used to overcome various biases can be utilized by managers to improve processes within their organizations. Using the proposed framework as a tool, organizations can reduce resources wasted trying to solve inappropriately defined problems.

Originality/value

The contribution of the paper lies in presenting a new approach to value creation and capture, with a focus on the neglected area of problem‐finding. A new legalistic bias is specified in some detail, and the importance of awareness of bias by teams to diminish its impact on problem‐finding efficiency is discussed. Closer examination of value creation increases the potential for improved competitive advantage and value‐capture. Limitations of this and prior work are also discussed and directions for future work suggested.

Citation

Hurmelinna‐Laukkanen, P. and Heiman, B. (2012), "Finding the right problems to solve: value creation unpacked", Baltic Journal of Management, Vol. 7 No. 3, pp. 238-250. https://doi.org/10.1108/17465261211245436