It’s a complex question. If you’re asking it, you probably know that it differs from person to person. What is valuable to me is not necessarily valuable to you, and vice versa, making it a tricky concept to define.
In fact, I’m not going to attempt to define it conclusively here. I’m not a big fan of prescriptive definitions, because there is always an exception to any rule that you could come up with. Instead, I’ll give you several examples of value that I experience and that you’ll be able to draw your own parallels with.
In the world of business, I’ve generally found that value comes in 3 different forms: time, money, and capacity.
Every company utilizes at least one of these three forms of value in the products or services that they offer. The first two are fairly obvious, being probably the most well-known and commonly advertised types of value. The third, capacity, is a bit more elusive. Capacity is where things get complicated, because it’s not just the capacity in the sense of a measurement (like the volume of a water bottle), but also the ability to do something that you otherwise would not be able to do.
Let’s go through a few examples of each of the three types of value to get a better understanding of how they all work.
Less — These are some services that I use that save me time. At the end of the day, regardless of what task the service is meant to streamline, they reduce the time I need to spend on routine processes, and that is why I find them to be valuable.
More — When a company spends more time working for less of a cost to the customer, they are using more time as a value add. Typically, the businesses that offer more time as a value are going to be service-based companies. If you’re spending $1,000 on a DJ, you want the party to last an extra hour. If you’re getting a message, 5 more min is preferred. The problem with using more time as a value metric if you’re the seller is that the customer will commoditize and devalue your service. This is a tough hill to climb for most startups. If you have a choice to provide value, a product or service that leverages more time shouldn’t be your first choice. It’s certainly not the most scalable.
Less — Suggesting that your product or service saves customers money is probably the most common way to advertise value. Of course, many don’t really fulfill their promises, but those that do can easily win loyal customers. I buy a lot of things from Boxed.com, both for myself and for my office. It’s cheaper, we get more stuff. It’s awesome.
More — Most often, more money being provided is tied to two things: financial services or the elimination of an existing fee. It’s hard to find something that will give you more money for a particular service. If you’re trying to provide more money as a value add, then you want to be strategic about the industry and be hypersensitive to all of the costs associated with that industry. More often than not, the reduction of a fee provides more money to the customer. I use a service called Robinhood, a very appropriately named stock trading application that doesn’t charge any trading fees, effectively giving me more money.
Here is where things get tricky. Capacity can be given in addition to one of the types of value previously mentioned. It can also exist on its own, without any coupling to time and money value types.
In my opinion, capacity is the mothership of value. If you can dream up a system that can give people more capacity in their actionable or emotional context, then you’re in a great spot as a business.
Actionable capacity is the most common type of capacity that businesses offer as value. It gives customers an ability they would not otherwise possess, and takes the form of an experience, a journey, or a function. For example, Snapchat gives us the capacity to share moments with people while it deletes by default, helping to preserve users’ privacy. Snapchat gave us something new that we simply did not have a mechanism to facilitate previous to their existence. Often, actionable capacities ties into doing something in less time. But in some cases, like Snap inc, it gives us a new avenue of engaging, or a new option to socialize that has different “rules” of how that medium can be used to communicate.
The second form of capacity that delivers value is Emotional Capacity. This has the most potential in the next 10 years to deliver results for a new business. Emotional capacity is the value derived from things like ‘impact’ and ‘conscious commerce’. This is the ‘social enterprise’ sector of business that has yet to emerge as a key value delivery system to the consumer, but is definitely on the rise. Some breakout brands like Ben & Jerry’s, Tom’s Shoes or Warby Parker are leading the charge, but delivering emotional capacity as a form of value spans much farther than ice cream, shoes, and ridiculously affordable eyewear. I believe that emotional capacity has the potential to transform every industry in the same way that modern technology has.
With all other aspects of the products being equal, the customer will always pick the product that has more impact and more emotional capacity.
Value is in the eyes of the beholder- or in this case, the customer. As the customer has evolved into a more aware and globally conscious individual, these various forms of value will take different shapes as they are manifested through products and services by startups all over the world. If you are looking to create value, I’d recommend looking to expand someone’s emotional or actionable capacity. It’s an open door that has tons of opportunity. Give it a shot, and let me know what you think. What does value mean to you? How does your business create and think about value?