Realising value emerges from progress comparisons allows executives to focus organisations on helping customers progress better (which is actionable), rather than chasing value (a concept that most struggle to define and measure).

Looking at Value

Let’s start by thinking value. I believe our traditional view is holding us back. Our assumptions about who creates value, how it’s created, and when it emerges shape how we sell, how we innovate, and how we grow.

If I asked you, “What is value?”, what comes to mind?

For many of us, it’s tied to physical or digital objects we own. Take my car: I see it as valuable. The bus or taxi? Less so; even if both get me to the same place. Why is that?

It’s the way we’ve been taught to see the world. Formal education, business training, and day-to-day experience push us to equate value with ownership, price, and exchange. We pay a significant sum for a car; we pay a small fee for a bus ticket. So we tend to see the car as valuable and the bus as less so. Your perspective might be different as the owner of the bus…or if you don’t have a car and the bus is the only form of transport.

You see, value is hard to define.

Merriam-Webster, as dictionaries tend to do, gives a definition. Value is both a noun and a verb:

• noun:
  • the monetary worth of something
  • a fair return or equivalent in goods, services, or money for something exchanged
  • relative worth, utility, or importance
  • something intrinsically valuable or desirable

• verb:
  • to consider or rate highly
  • to estimate or assign the monetary worth of
  • to rate or scale in usefulness, importance, or general worth

https://www.merriam-webster.com/dictionary/value

Adam Smith drew out a classification in his seminal Wealth of Nations. He saw “value in exchange” (power of purchasing) and “value in use” (the utility of an object).

The word value, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called ‘value in use’ the other, ‘value in exchange’.

The things which have the greatest value in use have frequently little or no value in exchange; and, on the contrary, those which have the greatest value in exchange have frequently little or no value in use.

Nothing is more useful that water: but it will purchase scarce anything; scarce anything can be had in exchange for it.

A diamond, on the contrary, has scarce any value in use; but a great quantity of other goods may frequently be had in exchange for it.

Adam Smith (1776) “Wealth of Nations”

Karl Marx built on this, distinguishing between worth (value in use) and value (exchange value):

in English writers of the 17th century we frequently find worth in the sense of value in use, and value in the sense of exchange-value.

K Marx (1886) “Capital: Vol 1“

IAdam Smith settled on value-in-exchange as the predominant model driving wealth growth in a nation. In his time, manufacturing was driving wealth and so he naturally saw that as productive labour. On the other hand, services – such as maids, housekeepers, butlers etc – were seen as unproductive labour.

Since then, and over time, we’ve become anchored to this exchange view, especially in business. McKinsey put it succinctly:

A product’s value to customers is, simply, the greatest amount of money they would pay for it.

Golub, H., and Henry, J. (1981) “Market strategy and the price-value model” via “Delivering value to customers”, McKinsey (2000)

This view dominates boardrooms and pricing strategies today. The dictionary reinforces it: value, the monetary worth of something.

But defining value turns out to be far harder than these definitions suggest.

Value is difficult to define

Move beyond textbook definitions, and you’ll find many experts agreeing: value is slippery. Grönroos tells us value is a “concept that is difficult to define.”

value is a “concept that is difficult to define”

Grönroos (2008) ”Service logic revisited: who creates value? And who co-creates?”

More worryingly, Anderson and Narus found that B2B suppliers struggle to answer basic questions like, “How do you define value?” or “Can you measure it?”:

“remarkably few suppliers in business markets are able to answer…” questions like “…How do you define value? Can you measure it?”

Anderson and Narus (1998) ”Business Marketing: Understand what customers value”

This is not a minor problem. Every business claims it is trying to maximise value. But if we can’t clearly define it, how can we reliably create, deliver, or maximise it?

The challenge deepens. Karababa and Kjeldgaard identified a long list of competing value concepts, each “lacking a definitive basis”, including:

…use value, exchange value, aesthetic value, identity value, instrumental value, economic value, social values, shareholder value, symbolic value, functional value, utilitarian value, hedonic value, perceived value, community values, emotional value, expected value, and brand value…

…are examples of different notions of value, which are frequently used without having an explicit conceptual understanding in marketing and consumer research.

Karababe, E. and Kjeldgaard, D. (2013) “Value in Marketing: Toward Sociocultural Perspectives”

Across marketing, strategy, consumer research, innovation, sales, and more, we often use these terms without a shared, rigorous understanding. The result: we talk about value as if it’s obvious – when in fact, it’s anything but.

Why this is a problem

Our beliefs about value drive how we sell, how we design propositions, and how we innovate.

If we believe value is embedded during successive manufacturing steps with a focus on making exchanges, we optimise for that. And that mindset has indeed powered centuries of growth. You only have to look at GDP growth to see that.

But that growth is not there anymore. Global GDP growth over the last few decades is decelerating.

When there is a mismatch in understanding value between manufacturers and customers the sales and innovation processes are set up to eventually fail.

The same disconnect plays out in start-up failure rates. A top reason start-ups fail is lack of market fit. Customers simply don’t see the same value the founders see.

If we don’t have a clear, practical grasp of what value really is, or how it is created/emerges, our sales and innovation efforts will keep missing the mark.

What’s the answer?

At first glance, the answer seems simple: we just need a definition of value everyone can agree on.

But as we’ve seen, defining value isn’t simple at all. It’s notoriously slippery, contested, and hard to measure in practice.

So let’s try a different path. I propose we stop making value the primary focus. That may sound radical, until we realise this only feels radical when we’re stuck in our traditional mindset, where value is synonymous with price.

Instead, I suggest we make progress our primary focus.

progress: moving, over time, to a more desirable state

Instead of chasing value as a transaction, we focus on enabling progress. Progress is tangible. It’s measurable. It’s what customers are actually seeking. And it turns out the concepts of value emerge from sets of progress comparisons. For example, potential value, when making progress by myself, is a comparison of progress sought (the state I want to get to) with progress potential (where I think I can get to).

From this perspective, sales is an exercise in persuading a customer (seeker in progress economy terms) that your proposition will help them best reach the progress state they are seeking. Innovation is the act of improving progress that can be made.

Getting to this answer is a process of moving from value-in-exchange to value-in-use, and then onwards to value-through-progress model.

Join me as we lightly explore these views on value models in this page whilst linking to separate deeper pages on each view. At the end of this page, we’ll compare and contrast each view in a table highlighting key attributes.

From our traditional view: Overview of value-in-exchange

As we’ve discussed, our default understanding of value equates it to the maximum amount of money someone is willing to pay for a good or service. This is often referred to as value-in-exchange.

value-in-exchange – our traditional, manufacturing (goods-dominant), view. Where value is incrementally added through supply chain and we boil ir down to being the simple idea of how much someone is willing to pay

Value is incrementally added through the supply chain and ultimately distilled down to what someone is willing to pay at a point of exchange; and then subsequently destroyed or used up.

It is deeply rooted in manufacturing and reflects what is known as goods-dominant logic. We try and see services (plural) through the same lens, leading to a divisive, unhelpful, goods vs services perspective. This has been its strength over the centuries, when we were in a goods-dominant world.

Unfortunately, we’re not in a goods-dominant economy anymore (see “shift to service economy“). It also aligns with a linear economy way of thinking, hampering circular economy thinking. Ultimately, the focus on value exchange gives several blindspots:

• consistency over customisation
• chase next exchange over understanding/helping after exchange
• more exchanges are better than circular economy thinking or longevity
• goods better than services
• marketing myopia
• simple exchange over business model innovation
• value is determined by provider

Can we address those blind spots? I believe we can, by evolving to a different view of value.

Evolving to value in use

Grönroos observed:

It is of course only logical to assume that the value really emerges for customers when goods and services do something for them. Before this happens, only potential value exists.

Grönroos (2004) “Adopting a service logic for marketing”

This is the value-in-use view:

value-in-use – A view of value creation that sees value being co-created through service (offered as value propositions) to improve a beneficiary’s well-being.

Since the point of exchange is removed, this view offers us the opportunity to minimise the value-in-exchange blindspots. We see everything as a service (singular) – applying skills and knowledge to help another – with goods assuming a role as distribution mechanism for service (no goods vs services debate here!). Now we can truly meet Levitt’s call to action:

“people don’t want to buy a 1/4 inch drill; they want a 1/4 inch hole”

Levitt (1975) “Marketing Myopia“

But there are some challenges with this perspective:

• well-being, whilst better than value, is still hard to define/agree upon
• requires deeper understanding of what beneficiary is trying to achieve
• we lose the connection to price / signalling value
• is still not the full picture – we miss descriptive levers to make sales/innovation more systematic

Observing Value emerges from making progress

With on more evolution we can solve even the challenges that value-in-use leaves.

Value-through-progress focusses on a Seeker’s desire to move to a more desirable state and that there is no value before the progress journey begins, only potential value, and maximum value has emerged when the Seeker reaches their progress sought.

value-through-progress –  a view of value creation where value emerges from comparisons of progress.

Since it builds on value-in-use we inherit the benefits. Progress gives us a framework to understand what a Seeker is trying to do. It is an actionable concept – Seekers look to make progress; propositions offer to help; sales looks to align propositions to a Seekers; innovation is all about improving progress that can be made.

Value emerges from a set of progress comparisons.

Progress between two states is more understandable, and actionable, than a focus on value. It reveals a number of tools and levers we can use to improve sales and innovation success. These include understanding:

• progress sought from a functional, non-functional and contextual perspective
• where progress seeker will begin their journey in terms of functional, non-functional, and, contextual elements
• a seeker’s foundational progress hurdle: a lack of resource (time, skills, knowledge, tools, etc)
• what supplementary resources (progress proposition) may help the seeker progress (includes the proposed progress-making activities and a resource mix)
• the five additional progress hurdles that proposition introduce, and how to minimise them (adoptability, resistance, lack of confidence, continuum mismatch, and inequitable exchange).
• which progress judgements a seeker makes (and how to influence them)
• that emerged value from making progress needs to be recognised by a Seeker for it to be meaningful (akin to revenue recognition in firms)

Notice how we don’t use the word “value” above. This is what I mean about focussing on progress; value follows.

Comparing the three Views

So how do these models compare? We can take various attributes, such as how value is defined, measured, created and destroyed, and which actor and resource focus, as well as how they impact innovation and the challenges the model had:

Why this matters?

The Progress Economy reframes value as “value‑through‑progress” offering an actionable framework (of progress) as opposed to a hard to define concept (value). This shift transforms value from a transactional artifact into an ongoing signal of relevance, effectiveness, and customer alignment.