In my last post
, we arrived at a working definition of value. Now, I would like to have a brief discussion of different types of value that could all contribute to business value
In my conversations with customers over the years. I've generally found that value can be divided into 4 main types:
- Commercial or market value -- This is, by far, the easiest one for most businesspeople to understand. Incremental revenue generated or cost savings obtained, market share gained, customers acquired, etc. Value that can be expressed in typical financial or commercial metrics falls into this category.
- Sentimental value -- Sometimes, a thing or action has value because of the emotions it creates or conveys. Retirement parties, meetings (or happy hours) where you look back at (hopefully positive) shared experiences, brands expressed by beloved characters...these are all examples of things that have greater emotional or sentimental value than they may have commercial value. In some cases, the goal of brand marketing (which I will cover in a later post) is to convert sentimental value or investment in a brand into commercial value.
- Social good value -- This category is value that is intrinsic or inherent in an action because of the action itself. Sustainability initiatives, waste reduction (whether in garbage or process flows), supporting the troops...this category covers value that people may assign to the results of the action even if the action itself results in negative commercial value (higher costs or lower revenues). Many activities that carry this type of value could be viewed as inherently political.
- Political/status value -- This category covers value tied to "bragging rights". Being first, being biggest, being fastest...all of these achievements may have perceived value to the firm or its customers but by themselves do not guarantee positive commercial value or sentimental value.
Understanding these different value types allows you to frame conversations within your organization. For example, you might say "yes, we may keep that feature in the product just because people really like it even though it has no tangible commercial value."
A classic example I like to cite of this (i.e. sentimental value) involves the database query software TOAD (now owned by Oracle). When launching TOAD, there is a little ribbit
sound when the splash screen appears (get it?). At one point prior to the acquisition by Oracle, TOAD made a decision to remove the ribbit
sound since, while cute, it did not really add anything to the product (and could even be seen as unprofessional). Boy, did they hear about it from their users, however? Support cases flooded in about what happened to the ribbit
sound -- to the point where they lost little time in restoring the beloved audio cue to their software.
Have other good examples of the different types of value? Categories you think I missed? Find this useful or useless? Comment away!