As continuous improvement practitioners we are always discussing value-added versus non-value-added activities. We are also tasked with identifying cheaper or cost-cutting alternatives. Employees are considered valuable if they do the job that is asked of them. Lost in all of this is the genuine meaning of value – what is value?
Well, let’s start with some definitions for the word “value” found online (as a noun):
– the regard that something is held to deserve; the importance, worth, or usefulness of something
– the amount of money that something is worth : the price or cost of something
– something that can be bought for a low or fair price
– usefulness or importance
All of these definitions hit on a piece of what we can really consider value.
To me, the genuine definition of value is
“receiving more benefit out of something relative to the cost to acquire it”.
I specifically make no reference to money in that definition because value goes above and beyond money. I also make no reference to lowest price. Value is in the eye of the beholder and the customer. It all depends on what resource the customer finds most important – money, time, space, prestige, and so on.
For example, a Kia and a Bentley perform roughly the same function – provide a means of transportation. A Bentley is far more expensive vehicle, though. With the higher price tag, the Bentley provides a value of scarcity and prestige – an attitude and a feeling of luxury and wealth.
Does that mean the Bentley is more valuable than the Kia? Financially, yes. A Bentley’s replacement cost is far higher than Kia. From a utility standpoint (the ability to transport oneself to and fro) though? No. But a person can’t get the Bentley prestige from a Kia experience.
I have a coupon entitling me to $5 off of a steak dinner. Let’s assume the coupon is for the local family dinner joint where the steak normally runs $15. How valuable is that coupon? If I’m eating at this establishment, I’m probably not going for luxury or prestige nor do I expect the cow from which this steak originated to be a special perfect luxurious cow- I just want a steak cooked well. My expectations are a properly-cooked steak that relieves my hunger. A $5 off coupon would provide me a good enough value to entice me to order a steak at this joint.
Now what if this coupon was for a high-dollar chop house steak that runs me over $50? Dollar-wise, that’s not much of a cost savings. However, eating at the chop house brings about a higher level of elegance and prestige. The steak I eat at the chop house could be very close in quality to the steak I got at the dinner joint. After all, a cow is a cow (essentially). There are no guarantees that the steak from the chop house is from a better cow than the cow providing my steak at the dinner joint.
What you pay for is the prestige, the ambiance, the luxury. And besides, a place like that would probably frown upon anyone using a coupon anyway. It takes away from the luxury if someone uses a discount to get it.
So what is value to someone attending a baseball game? Here is a general idea of your typical game attendee’s expectations:
– Watch a good game, perhaps with their favorite team or players
– Entertainment for the attendee and those with him/her (such as family)
– Safety provisions in place (minimize being put in harm’s way from flying objects or poorly cooked food)
– Being able to watch the game or experience entertainment without significant distraction or deterrents
Now what is the typical game attendee investing in these expectations?
– Money for tickets and concessions
– Time from arriving to the parking lot until getting home
– Opportunity costs of possibly doing something else more productive
Value is the difference between the benefits reaped (relative to expectations) and the cost investment to do so. What do teams do to take away from your value?
– High ticket prices relative to other options
– High concessions prices relative to food quality
– Poor location to get in/out for parking due to poor logistics and infrastructure
– Long waits at concession stands due to inefficiencies and ineffectiveness in concessions management
– Dirty stadiums with safety hazards
– Poorly maintained entertainment options
– Poorly constructed and maintained safety provisions
Does your team provide you positive value? Do you feel you get more benefit from going to a game than it costs to attend? If not, then something needs to change – either you should find something else to do or the team needs to clean up its act.
Value does not mean cheap. Yes, sometimes lowest cost is the most valuable option. Tell that to the chophouse owner or the Bentley driver, though.