#144 Paradigms of Models of Value Part 2

by | Jan 28, 2020 | Second Opinion | 0 comments

A Paradigm of Value & Values Part two

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Carol’s topic for discussion:  Continue to 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?

 

There are many opportunities to use the HBR article discussed in episode 138 for the purpose of learning, and looking at value itself. Value is held in this article as an exchange between buyer and seller. A broader exchange than price and value, but still a transactional exchange. It suggests you need this model to tell you the bases you can cover. But the model itself is driven by a particular paradigm.

    • To help better understand the concept of value, let’s start with a Living Systems thinking framework. This article is contrary to the regenerative paradigm that we have been looking at. It offers an aggregated set of categories, not the whole.

 

  • First, how do we define value? 

 

      • It is usually a price equal to the intrinsic worth of a thing;” late 14c.,” degree to which something is useful or estimable,” Quid Pro Quo worldview; price equates with intrinsic worth like esteem, respectable. Representing an esteemed being.
      • What is harder to see is that the usual definitions are relative, not to one another but to different paradigms and worldviews. Value exchange is the meaning in extract value paradigm they just gave an example of.
        • In an entropic paradigm or arresting disorder, the meaning is extending life and use. E.g. try to outlasts average.
        • “Do good” adds an aspect of values- What is at the highest importance and has a more specific worldview of “what is good and right?”
      • At the regenerate level, value is defined by what works for an ecosystem’s vitality and evolution, not just any sub-entity. It goes from an individual or small set of entities and what it gives to them and to a class defined term, to a living system framework view.
      • When in business is seen at an arrest disorder level, things are seen as assets to protect or care for, to improve or leverage for more.
      • At Physical (extract value) equate with money. Compared to intrinsic worth- assets is a way to measure with entropic consideration or the price for sale.

How do we get to a whole Framework that gives us paradigms of value?

  • Image, in your mind, an ordering framework. That is what tends to be the most encompassing view. We can use the paradigms framework itself that we just mentioned.  You asked the question of value in terms of what that looks like as you shift paradigms. Value has its own ordering based on different paradigms. And ways of viewing how the world works. That is understood by considering a paradigm way of ordering.

 

Value and Values Generating/Regenerating/Adding
Values Giving/Improving
Value-Added or Value-Sustaining
Value-Absorbing/Extracting

 

What is the base paradigm that has the most limiting view and how do we relate it to value?

  • The base paradigm is extract value which already included the term “value”. It is then value-absorbing or extracting. And here the desired idea is to view what will extract the most value or is absorbing the value and not up-level it.

What do we design for and measure when we are at extract value?

  • What we get is like the “better performance of the company in buyer loyalty and financial performance”. Which is what this article’s  model is based on. We need to stay in business but when we design from this we are pretty limited in making a difference in the world including for employees. The author’s model looks at how to add-on additional value to the consumer for higher return but does not speak to the highest meaning for people in the company. It is transactional.
    • Meaning, the major view at extract value is value to the seller. We need to get a value return which takes the top of this lowest paradigm up a bit but is still focused on getting more for the business, not considering how the consumer or each stakeholder gets more value.

What is the next level?

  • It might be called value sustaining?  We want to stop anything that does not bring value. The question is, “in whose eyes?” The company’s value or the customer. Often it is only cutting inefficiencies  to get better net margins.Worthwhile, but limited. The idea of Value-addED (value+ed) seems to fit here as well. Can we add something for which we get a return?
  • Value is considered here as getting good at adapting to threats and opportunities presented from external forces. That is not a part of this model in HBR but someone else’s job in the company to figure out.
    • But they do leave out the idea to add value is to maintain or sustain a good Relative Competitive Position; relative to investors, buyers or in governing situations, a constituent base.

What is the next level of paradigm relative to value?

  • We often talk about going from Value-addED, to Value-adding. That is where the business connects with the EFFECT produced in the Stakeholder’s Use of The Offering.
    • The HBR author’s model has no connection to anything beyond the customer’s request or needs via a survey where people are taught to listen well to understanding their current existence and how to improve it. get rid of their frustrations, meet their priorities and overcome compromises.
    • But a value-improving process which engages with their life beyond our products/services transaction points ask us to consider more. It allows the design of systems offering, not single point offerings. The single point being  where your product exists.
    • That is actually why Apple is successful. It is not building a product up from one value node at a time as implied here. The model is a misrepresentation of their success and I suspect the same for the other examples. Luckily they do not take credit for them.
      • Their opening examples,of Apple (maybe otthers) are not doing building blocks to a product a s they suggest, but are looking at the ecosystem of the lives of those using and putting into a non-fragmented systems as a whole. The articles is a misunderstanding and misrepresenting of how Apple conceive of product offering design.
    • The next level of paradigm seems to be where value becomes values. Where we ask what matters to the life of people who buy from us. That is what you, Carol, are describing with Apple. They went to dorms and engaged with students and faculty, not listening to what they said they wanted. They authors are using just survey research in their examples, but with a new template of categories.
      • With a Improving paradigm, Apple is watching an ecosystem and seeing with great skill, patterns at work across their entire lives, particularly on students campus and later creative workers.
        • Apple, and the teams in Seventh Generation could see the dynamic and living processes, how they all fit together and what made the eco system work and what was needed to improve the system; that which touched consumers and they could NOT speak to but most importantly, what no one could not see directly but could be grasp by Apple and Seventh Generation. Value- improving is about a system.

 

The top level is value generating and really regenerating. It has to take into account the real capacity that can be evolved for the consumer versus problem solved (which also underlies the lowers elements of the value pyramid). Value-REgenerating  is based in understanding the essence of the buyers- in their ecosystem and life as they live and effect it. But particularly, what the potential is they, as persons are striving to realize.

 

This also sounds like What Apple was doing. Looking at potential and asking, “what is the Essence of that in this situation?” E.g. students learning situation.

        • These tactics are similar to ones used with Seventh generation, Colgate, Dupont and many other companies the Regenerative Business has worked with.
          • We worked to find the essence of buyers not by demographic cluster the article author’s are using and their model promotes, buyer categories of some kind which they slots buyers into.
          • But by seeing value nodes that came from starting with the buyer’s life as understood by the Market Field Teams. They consider, “Who were the company’s employees?” The MFT are in roles responsible for discerning the user lives and also implementing creative systems designs to give them more capacity in those lives. It turns out that there are patters that emerge, but are not fragmented segments, that are used to design. They are based on the Essence of a family of buyers.
          • For example, they ended up with Essence connections among Natural Parents that allowed designing of new products, product systems and buyer systems in collaboration with distributors like Stores and professional dedicated to families that were conscious of the connection between the health of their families and ecosystems health.
            • It allowed the education of parents and raised their aspiration further; to understand more than a problem solving survey does. It created a whole new understanding with resulting growth of 35%-65% per annum in revenue growth while reducing the impact of their own company on Mother Earth, and that of their consumer’s impact.

 

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