Monday, September 24, 2007

Value Is Subjective

If you sent me an e-mail over the last few weeks and were expecting a response, I apologize if it may seem like I was ignoring you. I finally got around to cleaning out the TVCNet inbox this morning and came across a message from a colleague, Corey Smith, VP of Innovation at Fisher's Document Systems.

In addition to a blog he maintains at Fisher's, Corey also maintains a blog with a group of other blog authors called Master the Business. Corey's message to me reminded me of his blog and he gave me an open invitation to reference anything I found on it that would be of interest to the TVCNet readers. One post of interest, "What is value?", caught my attention.

Since starting this blog I have written a lot about value and how a consultant's reputation rests on the value that he or she demonstrates to the client through the services they provide. I definitely agree with Corey that value is subjective in the minds of the client. What I may find valuable may not be valuable to you. The only thing I would disagree on (or perhaps it is something I may not be entirely clear on) is that value doesn't exist in a vacuum.

The diagram Corey provides in his post would assume that all clients (maybe in a selected industry) perceive the value of a product or service the same way. They conduct a sort of trade-off in their minds - "I'm willing to pay more if I get more benefits in return."

In consulting, I think the aim is different. It's about providing more benefit or more value for the least amount of cost, both to consultant and the client. If I'm not mistaken this approach would be more of a "Blue Ocean Strategy" approach.

I'm merely speaking from the context of the consulting profession (a service-oriented business). It may be a different ballgame in Corey's profession. I don't believe either of us are right or wrong. We certainly have different approaches and viewpoints and that's what keeps things interesting.

1 comment:

Corey Smith said...

Thanks for the post... I think that the purpose of my chart is to show that value is subjective. The greater the benefit as related to the price, the greater the value.

If price goes up then the only way to increase value is to increase the benefit. That is because when price goes up, value goes down.

It can be broken down to a mathematical equation... value equals benefit divided by price or v = b/p. If v is less than one, there is no value. If v is greater than one, there is value.

The problem is that the benefit one person sees is different than what another person sees. I want as much benefit for my cost regardless of the product or service I buy. It might be a car, groceries or a cleaning service. It could be consulting.

I determine the level of the benefit, not the seller.

No matter the product, I want the greatest benefit for my dollar spent... or, in other words, I want the greatest value.