Competence mode I derives from the cognitive flexibility of an organization to conceive of alternative ways of creating value in markets. The source of this mode of competence is, in essence, the collective corporate imagination of an organization's managers in perceiving feasible market opportunities for the organization to create value. Competence mode I depends on an organization's managers’ ability to perceive market needs and identify specific market preferences the organization might serve, to determine the characteristics of products and services that can satisfy those needs and preferences, to design supply chains and select appropriate distribution channels for realizing new products, and ultimately to define product offers that will be perceived by markets as having attractive net delivered customer value.