A product’s value to customers is, simply, the greatest amount of money they would pay for it.“Market strategy and the price-value model” Golub, H. et al, McKinsey Quarterly (2000)
‘Value’ emerges when a progress seeker makes unique and phenomenological judgements of (remaining) progress potential and progress achieved.the progress economy
Value is a trickier creature than it first appears. And maybe, given it’s history, we shouldn’t even refer to value.
Here’s the challenge.
- Value is usually seen through applying our pervasive goods-dominated lens. Which ties it closely to cash. And requires a value-in-exchange moment. See the quote above on the left. It’s a view that has served us well. But, through the same lens, the world is increasingly service based, and services are seen as different to goods.
2. An alternative to goods-dominant logic are logics that are service forward. Such as service-dominant logic. These remove the moment of exchange; focussing on how outputs are achieved rather than the output. And we find phrases such as value co-creation, co-production of value, value-in-use. Value is no longer tied to cash or exchange.
But what is value in these service forward logics? I’m not really sure. One could say the word value is used to compare and contrast back to goods-dominant logics. That though brings the history.
Traditionally we learn and experience that value is determined by manufacturers, signalled by price, and we exchange cash to obtain that value (in the form of goods or services). We call this value-in-exchange. And once we own the value we go about using it up or destroying it.
Such a view misses growth opportunities past the point of sale (circular economy, servitisation etc). And requires limited (frequency) insight into customers needs, usage and satisfaction. It fools us into a short-sighted view of solutions. Further limiting our innovation and growth opportunities.
There is a better way. One that sees value as being co-created whilst parties integrate their resources to make progress. This is value-in-use. And revolves around seeing value is derived from making progress.