What Does "Value" Really Mean?
by Markos Symeonides, on 04-Sep-2020 13:15:00
"Value" is one of the most frequently used (and frequently misunderstood) words in business. Why? Because we all want it, but it means different things to different people. ITIL 4 has value creation at its heart, so the meaning of value is critical to the success of service management.
Part of our Making ITIL 4 Simple series.
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Why is Understanding "Value" so Difficult?
ITIL 4 defines value as:
The perceived benefits, usefulness, and importance of something.
At first glance, it's a simple statement. So why do we find it so difficult to pin down the definition of value? Because value isn't objective, or fixed, or easy to define. Perception is subjective. Usefulness is situational. And Importance is relative.
- Value is subjective: The definition of value is different from one person to the next. A person's definition of value can be based on reason or emotion (or a blend of the two). For example, it is logical to have home insurance so that if your possessions are stolen or destroyed they will be replaced—but the emotional value is peace of mind.
- Value is contextual: Your definition of value will change depending on where you are and what you are doing. For example, if you are in the Arctic without a jacket, the value of a jacket—in that context—will be higher than the value of a bowl of ice cream. On a hot day in California, the value of these two things is reversed. Value priorities change when situations change.
What can we learn from this?
First, because value is subjective and customer expectations are evolving, you will see rising demand for customized services—services which are tweaked to individual customer requirements (while still sustaining operational economies of scale). In many cases, achieving this balance of custom service versus efficiency requires advanced automation.
Second, because value priorities change rapidly, you will need to be agile to respond to changing demands. If you can't deliver services that satisfy the new definition of value, somebody else will. It's essential that you are able to quickly create new services (or adapt current services) to meet emerging demands. ITIL 4, and the Service Value Chain in particular, can help you do this more quickly by facilitating the rapid creation of new value streams which draw together new and existing service components.
What do People Value?
- Mitigation/removal of risk – Peace of mind. Make the stress of bad things happening go away. Make people feel safe. Get them out of the fight-or-flight stress zone.
- Outcomes - To quote Joe MacMillan in the series Halt and Catch Fire, "Computer's aren't the thing. They're the thing that gets us to the thing". Likewise, services aren't the thing—they're the thing that gets the customer to the thing. Services are a vehicle for value because they deliver outcomes.
- Stability/predictability - Neophobia is an irrational fear of new and unfamiliar things. Most people don't have an irrational fear of change, but having at least some sense of predictability is of value. They want tomorrow to be much the same as today.
- New things - The opposite of neophobia is neophilia. People are inherently curious about the new because new things can present opportunities. But they can't be too unfamiliar. The famous designer Raymond Loewy invented the principle of "Most Advanced Yet Acceptable" (MAYA) to solve this problem by ensuring new designs had the right balance of novel features and comforting familiarity. Customers want tomorrow to be much the same as today, but a little better.
- Time - Every activity has an opportunity cost—e.g. it's possible you could be doing something better with your time. If your services save people time they will love you for it.
- Money saved - For most people and organizations, having money in the bank means more stability and represents a valuable buffer to risk. Service which save quantifiable sums of money will be in high demand.
- Social interaction - Homo Sapiens is a pro-social species. We haven't become the dominant species because we have the biggest teeth and claws. Teamwork is how we survive and thrive. We know this on a subconscious level, which is why we have a sense of calm when we are being sociable. It is the comfort of knowing that help is at hand if we need it—embodied by the old saying "a problem shared is a problem halved". Services which facilitate positive social interaction (for example crowd sourcing and group problem solving) appeal to our sense of social belonging.
Most of the things that we value are deeply rooted in the prehistoric psychology of the human species—universal traits that have evolved to help us survive. In every human being there is a different balance of these values. Some people are all about finding out what's new. Others are creatures of ingrained habit who are more resistant to change. That's why it's so important, as a service provider, to understand your customers.
Engagement with customers—beyond the transactional engagement that is necessary to request and deliver services—is important. In ITIL 4, the Service Value Chain introduces the Engage activity and recommends frequent and varied engagement with customers above and beyond the operational.
The ITIL 4 Service Value Chain
This means talking to customers and stakeholder to find out about their context and objectives, how they use your services, how they feel about them, how their demands are shifting over time, and more. This is how you get to understand your customer's definition of value.
As the old military saying goes: "Time spent in reconnaissance is seldom wasted".
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