#143 Paradigms of Models of Value Part One

 

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Carol’s topic for discussion:  Examine a question that is at the core of business itself and underlies most conversations about and in business. That is the question of value. What does it mean, how do we get it or give it?

 

How does the idea of value affect the way people operate business in the world? The article for reference is from Harvard Business Review September 2016 “The Elements of Value ” by Eric Almquist, John Senior, and Nicolas Bloch. The authors are seeking to redefine Maslow’s hierarchy of needs into hierarchy of value.

  • If you use the processes we suggest to put your discerning mind to work, the article could be used to educate people about almost every framework and process we use to build critical thinking skills. In fact, when Carol started doing that, she were over 30 pages in before realizing she were writing a book and had to back up.
  • There is a reference in the article to the idea of providing a model to think iwth, suggesting it could be used by any and all businesses to design products providing new combinations of value.
    • They offered a rigorous model with the idea of using scientific methods based on a business scoring system. This was to be used to assess how well their model improved performance for a company in terms of loyalty, repeat buying and other performance and financial measures. It was very enticing to show how their model matched up. But we could also see what got dropped out once you build a model and everything was a priori assumed to be in the model and you just had to provide it.
      • For this reason, we use HBR to examine how businesses think and are instructed to think by business schools and consultants who come out of them.
        • Harvard Business Review is primarily a journal which provides a way to present models that consultants develop that speak to categorizing human activity and how to make money on it, and help leader gain power over others. They can then can propose  a solution, that can be a packaged program which you assume fits all people for all time. It is the source and drive for finding a better model. It is the drive for research and finding the best definition of categories. There are so many important questions that get ignored because of the idea of models.
        • On the contrary, at Business Second Opinion we work to increase your our own capacity to let go of model for business. To instead see their damaging  role on our planet and to one another. And to be able to think from a discerning mind that can examine anything more deeply, less abstractly (i.e. models always abstract by definition).

What is the difference in practice at Business Second Opinion? 

  • A few years ago, when I arrived at Seventh Generation, they were using buyer categories. To which they had added many of the demographically determined categories that are popular plus adding the equivalent of self-transcendence offered here since they offered green products. The authors think they have done more by making it a “needs” category, but it still has the same problems that all categorizing has.
    • The buyers become abstractions made up of lumping them into what seems like similar enough groups. They  are grouped in a small number of categories, that they can work with and not have to take on making bespoke household and personal care products. But you don’t really know or experience buyers this way, as living beings, or families, or communities but as a segmentation of some artificiall but fragemented  idea of the whole.

What are the Effects of Categorization?

  • By using categories, it required businesses to perform consumer research and try to understand the people who counted on them.
    • Research by a firm who also researches for other consumer products companies and are thought to be an expert at it using pretty much the same questions that they used for say,  P&G. They gave the answers back to the client, that are as generic as the questions, handing them off to the marketing department who commissioned them. Who then translates those answers into “insights” and sent them to a few decision makers.

What was the effect of this decision? 

  • First, the answers they have, their competitors also have. Research is so generic now that it is often published for the industry. What you get is sold in a predigested form to the company and their employees who have no connection to the questions, or the people who gave them and it is just a delegated segmented objectives for assignments during the workday. They don’t relate to the users ( users include a distributor running a warehouse of z distribution center called a drugstore). They are just put into a box. The first rule of living systems is to see each form and entity as alive.

What did Seventh Generation do that stopped categorizing?

  • What we did with Seventh Generation (also with Colgate Palmolive) is really radical. We connected every person in any business directly to the people who used their products and services. We have spoken in other podcasts about the details of this. But generally, you create teams to which everyone belongs that are responsible for knowing, not by surveys, but engagement with them and their lives, with what they are seeking to create in their lives. Not what they wanted from the product.  Categories made people think that they know what people need but it was not really a true source for design or innovation.
    • And Seventh Generation grew revenues from 35-65% per year which far exceeds this models research on the clients of Bain, the consulting version of the model.
      • But more importantly people making the products had connection to, and therefore meaning from their work. From the responsibility they felt to their buyers. It was powerful.
        • This connection is completely lost when it is marketing firms, consulting firms, marketing translation and then assignments to the worker bees. That seems to be the biggest loss.
        • That and the fact the teams in Seventh Generation, Colgate Europe, and Africa, were discovering specific capacities that overlap with some of the ideas on their pyramid. But were able to integrate the function, being, and will experiences without a mechanical process which dropped out the people and entities values they were buying for.
          • Innovation in ecosystems health, community development, family and organization experiences were integrated when the walls of predetermined category needs.

 

What is the summary of this exploration on value that we have covered so far?

  • The takeaway for is that we need people connected to LIFE and the lives they are affecting and serving. All categorizations break that connection, make them artificial and generic thus taking meaning out. But also, leaves no real spaces for innovation. Innovation drops out.
    • The crazy thing is that the companies we were talking about gain meaning, human, and life connection. While they also get the performance measures that the authors use of loyalty and financial growth.
      • They are not very complete in what they measured including leaving out the internal effects of workers which are the real source of performance and growth.
      • They did not measure innovation which is also a bit disconcerting. By avoiding models and categorization of life, it allows you to get more effortlessly, to what they purport are values of higher order. This is near the top of the pyramid, rather than a method of driving from fragmented categories. It is from part of a company and its consultants- which is the driver of this article and model. Get clients!

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