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Wednesday, 20 January 2010

Understanding Value Part 2

While value is contextual and temporal, it is also multi-dimensional. Work by Hartmann (value theory), Haglund (who attempted to validate Harmann's work) and Mattsson (who brought the thinking into service research) is conceptually interesting although philosophically challenging. If you want to go further back (and get your brain tied in philosophical knots), GE Moore talks about the science of value. For me, who like to keep things simple, value has emotional, practical and logical dimensions (that's Jan Mattsson's words, not mine).

If you don't believe in emotional value, take a look at your watch. If it's worth anything more than £10, you bought it for emotional value because if you truly only bought it for functional reasons, you wouldn't have bought any watch above £10. So the ferrari that is sitting in my driveway (I wish) gives me great emotional (ownership, status) value even if I don't drive it. Practical value is an abstract concept that can be described as function. If you think of a chair, the practical value of a chair is the abstract notion of a seat. Conversely, there is nothing abstract about logical value. Its value is defined and purposeful. If you want to buy a tape measure, it must be a correct tape measure i.e. the measurement on the tape measure must be accurate. If it's a hotel, you want it to have a bed, a bathroom, i.e. logical value is about objective standards.

What is interesting to me about these dimensions of value is not merely that they exist, but from an organization's perspective, many firms just do not design and deliver all dimensions of value to the customer. Often, they reduce it to some six-sigma of practical or logical value but to be truly able to deliver value to the customer, the organization must be able to deliver all dimensions of value, not merely one or two. This is hard, because design and delivery of services often do not design and deliver emotional value because the transformation required to deliver that value is the transformation of the customer itself. I discussed this in my recent paper (submitted to Management Science and to La Londe Service Conference). Question then: How should we design and deliver emotional value? We could, of course, go back to Marketing and talk about brands but marketing usually talks about creating the brand and do not usually talk about delivering on the brand promise....operations management? the ops chaps would run a mile...strategy? strategy organizes the firm, they don't get their hands dirty with delivery... have I made the case for transdisciplinarity yet? When you truly line value towards design, delivery and evaluation, you can really see where the gaps are...

Next up: Perception and expectations of value

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