What is value?

We chase after value in our organisations, work and personal lives all the time and often with our best intentions and effort, it still seems to evade us. It's one of the most important concepts to grasp but do we really know what it is? Better yet do we know how to obtain it?

“Value” is thrown around a lot and like everyone else, I’ve always felt it's meaning was plainly obvious. I like the Android phone better than the iPhone, so it's more valuable to me but my wife instead likes her iPhone better. Value must be related somehow to personal preferences and seems freely talked about and understood by comparisons too. Still though, none of this tells me much about what value really is or how to obtain it.

In business, it’s not uncommon that value (cost) of people's’ time and effort on various projects outweighs what comes back in revenue. I’ve seen that on the ground many times. The fact that organisations of every tier make products, services and experiences and get less value out than is put in, shows they probably don't know enough about value or how to get it exactly either. By framing value own its own and simplifying it, we all should gain a better grasp and be more likely to reach it. Let's start with the current accepted definition of value.

I often prefer consulting Black's Law dictionary on definitions, as lawyers tend to get very specific and that's exactly what we need. Here's a key extract from the definition of VALUE (Black's Law Dictionary):

“The utility of an object in satisfying, directly or indirectly, the needs or desires of human beings...”

In other words, value is anything that helps us meet our needs, wants and desires, either directly or indirectly. The Value Proposition Canvas (VPC) by Strategyzer, quite popular now in the design and business world is even more specific about “directly” and “indirectly” of the Black’s Law definition.

The VPC tool (shown above) focuses on the fact value comes from:

1. Creating gain - by meeting more needs, wants and desires directly
2. Relieving pain - by removing what gets in the way, indirectly meeting needs, wants and desires

I’ve found it helpful framing value this way. What I’ve noticed with all the ethnographic research I’ve done, is that it's abundantly clear everybody's’ needs, wants and desires are numerous and unique. The challenge often becomes designing for what we have in common in large groups of people. This challenge might have been one that confronted Abraham Maslow, who created the Hierarchy of Needs, possibly to address the same thing.

See the hierarchy below:

To have any needs on the hierarchy met, requires a degree of agency, power or influence first. I’ll simplify these like-terms together as influence. For example, enough influence with our environment helps to have our physiological and safety needs met; enough influence with others helps to have our safety and belonging needs met; enough influence with ourselves, helps with our self esteem, cognitive and self-actualisation needs; and so on. A problem arises when we have particular needs but not enough influence to have them met. So when we help people gain influence in those areas, we directly help them have their needs met there.

According to VPC, value is also about relieving pain too. To explain this better imagine you’re jumping hurdles to get to the finish line, it’s harder than just running on the track because you’ve got to exert more force at every hurdle. Eventually you get so exhausted, probably can’t jump as high and you’re body might be in pain. You might fall too, hit the gravel hard and that’s gonna hurt a lot. This illustrates that forcing ourselves over resistance soon enough creates pain. So by removing obstacles (hurdles) for others, we reduce the force required to maintain their influence. This is the indirect way to ensure their needs are met.

What products, services or experiences should do then is either increase people's influence with their environment, others and themselves and / or reduce the force those people need to maintain their influence. If they do all those things at once, those products, services or experiences will be completely unmatched in value.

Simplifying this into a formula, gives us a very straightforward way to articulate what value is:

Value = Influence / Force

Over the coming posts I'll be covering in more detail how to apply this formula to things that directly impact our organisations. Specifically, how we can align it to current methods of business value and performance measurements to get an accurate value-pulse of any organisation.

For now, you might be interested in some earlier posts about how this might work with the Value Growth Model and why this is important for organisations and any project work that you're involved in.