When we base our innovation definitions and approaches around “creating” or “adding” value, we risk heading off into a world of disappointment, failure and missed opportunities (the innovation problem).

Instead, let’s realise everyone is trying to progress – to move over time to more desirable states.

progress: move over time to more desirable state

Where i) reaching that more desirable state implies maximum value has emerged, ii) before starting the journey there is only the potential to reach a particular state (potential value) and iii) the more desired state – progress sought – may evolve during the progress attempt.

With this mindset shift, we see that:

• value incrementally emerges as progress is made (value-through-progress)
• value is a trailing indicator of progress.

However, this emerging value is still an abstract thing. To mean something to the actor seeking progress it needs to be “recognised” by them.

And this recognition may take place on a different schedule to emergence. At the end of each sub progress-making activity, for example, or at defined milestones, or perhaps only at the end of the journey.

Now we can answer questions like “how valuable is reaching 80km of a 100km journey?”. Well, it depends on the progress seeker’s value recognition approach.

Progress, like value, is a complex concept. But one we can neatly capture as a noun, a state, a verb, and a state transition. And we can define it in terms of functional, non-functional and contextual elements.

Two additional benefits of focussing on progress are that we get a:

• more actionable definition of innovation: helping improve progress made and reducing hurdles to progress
• powerful way to segment seekers (on progress origin and progress sought) to identify opportunities to help make progress

For centuries we’ve built our economy around exchanging value. We manufacture products, embedding value along the way, and sell them for cash.

As successful as this value-in-exchange perspective has been, we are hitting its limitations with respect to growth. The heavy focus on a point of exchange ignores what happens before and after that point, leaving missed opportunities. Moreover, it fools us into believing that we, as suppliers and producers, determine value.

In the progress economy we instead view the exchange of service – applying skills and knowledge for benefit – as the fundamental exchange. I help you progress and in return you help me progress^*. This is Vargo & Lush’s service-dominant logic.

Now our focus is on how to help make progress – a process that occurs over time. We are invested in the whole journey, which increases our growth opportunities. Addressing the circular economy becomes natural (if that is part of the progress sought). And we can react to changes in progress sought during the journey.

A further implication of this thinking is that “price” no longer signals value. Instead it signals the equitable effort requested in return. I can propose that the effort involved in my service is 5 units. An equitable exchange (direct or indirect) would be for a service I need that also uses 5 units of effort.

And business model innovations flow naturally from this insight. For instance, 5 executions of a service with 1 unit of effort (subscription, credit) can meet that equitable exchange. So can a service of 3 unit effort together with 2 units of effort coming from another party (subsidisation).

^* service exchange often occurs indirectly. For instance, through transitive exchanges – I help you progress, receiving service credits from you for that; and using those credits I seek progress help from another party.

Where service credits can take various forms, including traditional currency like cash, cryptocurrencies, or even rocks; they also mediate temporal and magnitude differences in service exchange.

Our current world view is built around goods – the tangible items we sell. And we define services from that perspective – usually as poor relatives (intangible, inconsistent, inseparable, need involvement, no inventory)

By doing so, we create an unnecessary and constricting division.

In the progress economy, we look at things differently…defining service first and then seeing how goods fit:

service: applying skills and knowledge for another’s benefit

It turns out that goods freeze service; enabling it to be transported and unfrozen when/where needed.

Think about trying to entertain yourself. You could go and watch a live band playing. They apply their skills to instruments in order to entertain you. Or you could listen to their CD. Where you still get entertained by those same skills.

The same functional progress is made in both cases. Just in the first it happens immediately performed by employees, without you doing anything. Whereas in the other it happens through a goods where the original performance has been frozen and transported. And you have needed to do something (the huge task of hitting “play”).

These resources are practically interchangeable from a functional progress perspective.

This interchangeability allows us to build and offer different resource mixes to meet a particular progress sought. Where a proposition’s resource mix can include different levels of: employees, systems, goods, physical resources, data, locations.

Interestingly, altering the offered mix is an inspiration for innovation.

We see this in offerings that relieve people, “the shift to the service economy”, Platform as a Service, digitisation, and integration of artificial intelligence (AI), etc.

As well as in offerings that that enable people through increasing goods/systems elements of a mix . Such as home diabetes test tools or hospital at home approaches^*, etc.

* my father was recently ill but rather than needing to remain on a hospital ward and be monitored, he was able to go home with a collection of measurement devices (heart rate, blood pressure monitor etc). He had to use those loaned items daily and report the figures via a tablet for remote monitoring. The resource mix shifted from employee based to goods and system based. He benefitted by being home and the health service benefitted from freeing up a bed.